by Tim Martins
If you’re thinking of buying property, Cyprus has a lot to offer. Of course the wonderful climate is one of the first aspects that people think about, but there is also the mellow way of life, the warm sea to swim in, the healthy foods, the rustic landscape and the welcoming people.
There are daily flights from many UK airports to Cyprus so you will always be able to hop on a flight with little notice. Cyprus is a modern day European country with all the mod cons that you are accustomed to and most of all you can get Sky TV there so you will be able to keep up with whatever soap you are hooked to.
The advantage of buying a property in Cyprus is that you will can use it as a holiday home too as well as being able to let it out for extra rental income over the long mild period, which is about 10 months of the year. Imagine it, you get free holidays, pay the mortgage and money left over after all outgoings are taken into account.
Loans and Mortgages - You will find the local banks very welcoming in Cyprus if you are looking to invest in buying a property on the island. The banks will often finance the new build developments in the area you are looking at, so try and get your mortgage from the same bank that is also financing the new development property that you are interested in.
The alternative would be to use a different bank but this would then include a bank guarantee payment that is equivalent to a 1.5% to 1.8% of the property value annually up until you sign the final deeds.
Legal Procedures When Buying Property - Thankfully the legal system in Cyprus is a virtual copy of the British system and you will soon feel safe when you see how well protected a purchaser is. As a way to protect purchasers, once the sales contract is signed and sealed and the deposit is paid, the Land Registry in Cyprus gives an easy and effective legal instrument known as the ‘Specific Performance’.
This procedure protects the purchaser’s ownership rights until the title deeds are issued in their name. The contract cannot be withdrawn by anyone and therefore the property cannot be mortgaged, leased, sold or transferred. This status can only be changed by the purchaser.
To handle the legal issues an English speaking lawyer should be appointed and if you’re buying a new build in Cyprus, ensure the lawyer is not concerned with any aspect of the property development so that conflict of interest does not arise. The fees of the lawyer are generally 1% of the property price.
by Tim Martins
You may have heard of “Buy to Let” quite a lot recently on the financial section of Sky news and be wondering what this really means. Well it’s not too complicated as it implies, you buy a property and then you let it out. The only trick in order to do this successfully is to let the property out for more than your monthly mortgage payment.
One thing to bear in mind when venturing on a property investment like this is the total month duration times of the high and low seasons. In Northern Cyprus for example, the low season lasts just five months and the high season stretches over seven months. To put the icing on the cake, there are over 300 sunny days a year, allowing thousands of travel makers the luxury of all year round holidays in places like Northern Cyprus.
To make things totally clear I am going to give you a real working example from start to beginning in order to explain just how you can reap the benefits from a “Buy to Let” property investment in Northern Cyprus. A rental villa in Northern Cyprus will cost about 250.000 Euro, so in order to start the reservation possess you will need to pay 3000 Euro. After that you will still have to pay 25% of the total amount, so including the initial holding fee, you will then have to pay a second amount of 72.000 and the rest on signing the property deeds.
With the deposit out of the way we just have to deal with the 175.000 Euro balance, which we are going to finance. Have a good look at all of the different mortgage options but I would recommend a interest only mortgage, as this way your monthly payments are lower. We will take the best rate in current conditions then the resulting monthly payments work out at about 800 Euro, that being 9.600 per year.
There are figures available in Northern Cyprus that show that a rental villa has an average rental activity for 10 months of the year. For a 250.000 Euro villa in Northern Cyprus you can expect an average of 2.600 Euro per month in the high season and about 1.500 Euro in the low season.
To best thing to do now is get out you calculator and start to work out just how much rental income can be generated from a villa in Northern Cyprus. With an average 6 month high season and 4 month low season rental income you would total up a staggering 21.600 Euro annual gross profit. To see what is exactly left in your pocket, you just deduct the 9.600 Euro mortgage payments and about 1.000 Euro fees in property management. My calculator now shows 11.000 Euro of net profit in rental income for a “Buy to Let” villa in Northern Cyprus. Sounds interesting?
