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Cyprus set to extend 5% VAT on new homes

Nigel Howarth
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Cyprus set to extend 5% VAT on new homes

Cyprus is poised to extend the reduced 5% VAT rate on primary residences until the end of the year, as lawmakers move urgently to support homebuyers facing persistent bureaucratic delays with planning and building permits being issued.

A legislative proposal – originally tabled by Stavros Papadouris, leader of the Greens has been brought before the plenary of the House of Representatives of Cyprus under an expedited procedure.

The measure has secured backing from all political parties, with the exception of except AKEL, and was reviewed in an extraordinary session of the parliamentary finance committee ahead of a same-day vote.

Key change: extended deadline for VAT relief

At the heart of the proposal is an amendment to Cyprus’ VAT legislation, extending the deadline for submitting the required declaration to qualify for the reduced 5% rate.

Under the revised framework, applicants will have four years, rather than the current three, from the entry into force of the 2023 amending law to file the necessary documentation.

Why the extension matters

The change addresses ongoing delays in issuing planning and building permits – an issue that has disrupted construction timelines and risked disqualifying eligible buyers from the reduced VAT rate. By extending the transitional period, the government aims to ensure that the original intent of the relief scheme is preserved.

Current VAT rules and what’s changing

The existing transitional arrangement, which was introduced nearly three years ago, is due to expire this June. It currently applies to applicants who submitted planning permission requests between early June and 31 October 2023, allowing them to retain the 5% VAT rate regardless of when their primary residence is completed.

Updated VAT Thresholds

Under the current regime until December 31, 2026:

  • 5% VAT on the first 200 sq m, regardless of the property’s total size

From January 1, 2027:

  • 5% VAT applies to the first 130 sq m of a primary residence, up to a value of €350,000
  • A 19% VAT rate applies to properties sized 131–190 sq m, up to €475,000

Market impact and outlook

The extension is expected to provide breathing space for both developers and buyers navigating administrative bottlenecks. In a market already facing affordability pressures, maintaining access to the reduced VAT rate could prove critical in sustaining demand for primary residences.

With parliamentary approval anticipated, attention now turns to how effectively the extended timeline will offset systemic bureaucratic delays – and whether further structural reforms to the planning process will follow.

Cyprus real estate crisis: ageing buildings raise safety fears

Nigel Howarth
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Cyprus real estate crisis: ageing buildings raise safety fears

Days after a deadly building collapse in Germasogeia left two people dead and many homeless, Cyprus is confronting uncomfortable questions about the safety of its ageing housing stock and the absence of mandatory structural inspections.

As reported by philenews, the scale of the problem is huge. Around 270,000 (56%) buildings across Cyprus are more than 25 years old, yet there is still no legal requirement for regular structural inspections or mandatory maintenance regimes.

According to national statistics, more than 114,000 homes were built before 1981, while a further 155,000 were constructed between 1981 and 2000. In many cases, these buildings are now between 25 and 45+ years old, with no unified safety reassessment framework.

Building maintenance is left entirely to individual owners, creating significant variability in safety standards across the island’s housing market.

Structural risks, materials legacy and seismic exposure

Experts warn that Cyprus’ vulnerability is compounded by historical construction practices. After the 1974 Turkish invasion, the loss of high-quality quarry materials led to widespread use of beach gravel in construction – often without proper treatment to remove salt, accelerating corrosion in reinforced concrete structures.

In addition, a large share of the housing stock was built before modern seismic regulations were introduced in 1994, meaning thousands of buildings predate today’s safety expectations or were constructed before supervisory measures were fully enforced.

Evidence from public housing inspections raises concerns

Findings from the KtiZO programme underline the scale of potential structural risk. Out of 358 apartment blocks inspected in refugee housing estates, 43 (12%) were deemed beyond repair, with a further 70 requiring major reconstruction.

Officials note that these estates were originally built under more controlled conditions than much of the private housing market, raising concern that privately built apartment blocks could be in similar or worse condition.

Inaction leaves safety gap unresolved

Despite repeated calls from engineers and professional bodies for mandatory inspections, proposed legislation has stalled for years.

Although draft bills were discussed and supported at ministerial level, they were never submitted for final approval. With parliament nearing dissolution, there is now little time left to introduce reforms.

Critics argue the lack of regulation has created a system where property owners can rent out ageing buildings without being legally obliged to carry out essential maintenance — a gap that some say is now contributing to preventable structural risks.

Cyprus unfair loan reform law sent back over legal concerns

Nigel Howarth
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Cyprus unfair loan reform law sent back over legal concerns

The President of Cyprus, Nikos Christodoulides, has referred a newly passed borrower protection law back to Parliament, citing serious legal concerns that could have implications for Cyprus property and lending markets.

The legislation was approved by the House of Representatives on 26 March 2026, following a proposal by Stavros Papadouris. It aims to strengthen safeguards against unfair terms, which are often referred to as abusive clauses and used by financial institutions in loan agreements, including mortgages.

Concerns over law applying rules to old contracts

A key issue raised by the President is the law’s retroactive effect. The proposed changes would allow contracts signed before earlier legislation was repealed to be reviewed under the new rules.

In practical terms, this means loan agreements already in place could be reassessed using legal standards that did not exist at the time they were signed. According to President Christodoulides, it risks undermining legal certainty and could disrupt established contractual rights.

Such uncertainty is particularly significant in the Cyprus property sector, where long-term mortgage agreements are central to both residential property ownership and commercial investment. Banks and investors rely on the stability of these agreements when assessing risk and financing developments.

The President also warned that the law could open the door to retrospective penalties or claims for compensation, further complicating the legal landscape for lenders.

Law may conflict with contract rights

In his formal statement (English translation), President Christodoulides argued that the bill may conflict with the constitutional principle of freedom of contract. This principle allows individuals and businesses to agree terms freely, if they comply with general legal standards.

He questioned whether the proposed intervention is necessary and proportionate, noting that the law does not clearly demonstrate why such a far-reaching measure is required to protect borrowers. Under legal principles, any restriction on contract rights must be justified as appropriate and balanced.

The President also pointed to potential compatibility issues with European Union consumer protection law, suggesting the bill could face further scrutiny if adopted in its current form.

Urgent review ahead of final vote

The law will now be examined by the Parliamentary Commerce Committee in an urgent session before returning to the full House for a final decision.

The timing is critical, as the vote is expected to take place during the last sitting of Parliament before it dissolves ahead of upcoming elections. This adds political urgency to what is already a significant legal and economic issue.

For the property sector, the outcome could be far-reaching. A decision to proceed with the law may reshape how mortgage agreements are enforced and challenged, particularly in relation to older contracts. On the other hand, further revisions could delay reforms aimed at strengthening borrower protections.

Either way, the debate highlights the ongoing tension between consumer protection and legal certainty, an issue at the heart of the Cyprus property and financial markets.

More than 500 dangerous buildings in Larnaca

Nigel Howarth
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More than 500 dangerous buildings in Larnaca

The Larnaca district of Cyprus is facing a significant urban safety challenge, with more than 500 dangerous buildings across the city and surrounding communities, according to the head of the Larnaca District Local Government Organization.

(In April 2025, it was reported there were 170 dangerous buildings in Larnaca. If the increase is applicable to the other districts, the total number of unsafe building in the country is around 3,800.)

Angelos Hadjicharalambous, President of the Larnaca District Local Government Organisation, confirmed in statements to the Cyprus News Agency that the structures are dispersed across multiple neighbourhoods, including Agios Ioannis, the former Turkish Cypriot quarter, as well as other parts of Larnaca and nearby settlements such as Lefkara.

Dangerous buildings across the district

According to officials, the dangerous buildings are not concentrated in a single area but are spread throughout both urban and rural locations. Some of the properties are listed as listed or protected heritage buildings, complicating intervention processes as responsibility may fall under the national planning authority rather than local bodies.

This division of responsibility has created administrative complexity, with certain cases requiring oversight from the Interior Ministry and its planning department.

Regulatory challenges and resourcing issues

The Larnaca District Local Government Organization has been formally responsible for managing dangerous buildings since 1 April 2025. However, officials say the transfer of duties was not accompanied by sufficient staffing, funding, or technical infrastructure.

As a result, existing personnel and financial resources have been reallocated to address the growing backlog of unsafe properties.

Authorities have already begun consultations with local municipalities and the district administration to compile an initial registry and develop a structured response framework.

Demolition priorities and legal reforms

Officials say the next step involves prioritising buildings based on risk level, with the most hazardous structures potentially earmarked for immediate demolition. Property owners will also receive formal notices requiring them to take corrective action.

However, the current legal framework has been described as slow and inflexible, significantly delaying enforcement procedures. Calls are now being made for legislative amendments to accelerate decision-making and enforcement, like mechanisms used for abandoned land clearance, where municipalities intervene and charge owners directly.

Listed buildings falling into disrepair

A notable concern involves listed buildings that, despite their protected status, have deteriorated over time and now pose safety risks. Authorities stress that owners are legally required to maintain such properties, but long-term neglect has led to widespread structural degradation.

Officials have also referenced recent fatal incidents elsewhere in Cyprus as a stark reminder of the consequences of delayed intervention, urging proactive rather than reactive enforcement.

(Translated and summarised from an article published by the Cyprus News Agency)

Cyprus golden visa scheme faces urgent review

Nigel Howarth
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0
Cyprus golden visa scheme faces urgent review

Cyprus’ investor residency programme is once again under intense scrutiny, as lawmakers move swiftly to tighten oversight of the so-called “golden visa” scheme ahead of impending parliamentary elections.

The Parliamentary Committee on Internal Affairs is set to convene in an extraordinary session on Wednesday to examine a legislative proposal put forward by AKEL. The aim is to fast-track the bill to a plenary vote before Parliament dissolves.

Proposed reforms to investor residency rules

At the heart of the proposal is an amendment to the Aliens and Immigration Law, which would require formal regulations to govern the continuation of Cyprus’ fast-track residency scheme for non-EU nationals investing in the island.

Crucially, the bill introduces a three-month deadline for the government to approve these regulations once the law comes into force. Failure to do so would automatically terminate the programme.

Currently, the scheme grants permanent residency to non-EU nationals investing at least €300,000 in real estate, shares, or investment funds. Applicants must also demonstrate an annual income of at least €50,000, with permits extending to spouses and dependent children.

Processing times remain relatively swift of around four months while residency does not require continuous presence in Cyprus. Citizenship may be obtained after approximately eight years.

Rising pressure from housing market concerns

The proposed reforms come amid growing concern over the impact of foreign investment on Cyprus’ housing market. Lawmakers argue that increased demand from international buyers is driving up property prices, placing pressure on local residents.

According to data submitted by the Migration Department, a total of 7,088 golden visas have been issued since the programme’s launch in 2013, all of which remain valid due to the lifetime nature of the residency permit.

The overwhelming majority – 7,054 permits – were granted through residential property investments, with only a small fraction linked to commercial real estate, corporate share capital, or collective investment schemes.

AKEL representatives have emphasised that stricter controls and enhanced transparency are essential to avoid controversies like those surrounding the disgraced “golden passport” scheme, which was irrevocably terminated in November 2020.

Flexibility versus oversight: a policy balancing act

Government officials, however, have cautioned that transferring approval powers to the legislature could reduce the programme’s flexibility. The Migration Department noted that investment criteria have already been revised four times since 2013 in response to shifting economic and social conditions.

Officials argue that maintaining executive control allows for quicker adaptation to market changes, EU obligations, and unforeseen developments, which is an increasingly important factor in a competitive global investment landscape.

Cyprus in the European golden visa landscape

Cyprus remains a popular destination for investor residency within the EU, competing with countries such as Greece, Italy, and Hungary.

Elsewhere, several nations have already scaled back or scrapped similar schemes. Spain and Portugal have moved to curb or eliminate golden visas in an effort to cool their overheated housing markets.

Meanwhile:

  • Greece requires property investments ranging from €250,000 to €800,000.
  • Italy offers residency through a €250,000 investment in innovative start-ups.
  • Malta maintains a residency-by-investment model following the termination of its citizenship scheme.

Outlook for the Cyprus property sector

With elections looming and pressure mounting from both domestic stakeholders and the European Union, the future of Cyprus’ golden visa programme hangs in the balance.

Whether the proposed legislation results in stricter oversight or an outright halt to the scheme, the outcome is likely to have significant implications for the island’s real estate sector, particularly at a time when affordability and supply remain pressing concerns.

Cyprus urged to act on dangerous buildings

Nigel Howarth
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0
Cyprus urged to act on dangerous buildings

The partial collapse of a residential building in Germasogeia, which killed two people and hospitalised three more, has issued a stark warning over a longstanding and dangerous issue within the Cyprus property sector of inadequately maintained and dangerous buildings.

In a statement following the incident, the Cyprus Scientific and Technical Chamber (ETEK) raised serious concerns that numerous buildings across the country remain in conditions that threaten public safety.

Many dangerous buildings pose risks

According to ETEK, the incident highlights a widespread problem: many property owners are failing to take necessary measures to ensure their buildings are structurally sound and safe for occupants and passers-by.

The chamber stressed that, under current legislation, property owners are responsible for maintaining their buildings and addressing any hazards if a structure is deemed unsafe. It added that it is “unthinkable” for dangerous buildings to remain occupied or rented, placing tenants and the wider public at immediate risk.

New law being discussed

ETEK also noted that current rules are not strong enough to deal with the problem effectively. It has already submitted proposals to the government to improve how dangerous buildings are managed.

A new bill is now being discussed in parliament includes measures including:

  • Forcing the evacuation of unsafe buildings
  • Banning the rental of dangerous properties
  • Cutting off water and electricity
  • Placing legal restrictions on properties if owners fail to act

Regular inspections and better tracking needed

One of the main suggestions is to introduce regular building inspections. This would help identify problems early and prevent buildings from becoming dangerous.

ETEK also supports creating a digital register for buildings in Cyprus. This would store key information about each property, including its condition, making it easier to monitor safety.

Call for immediate action on dangerous buildings

ETEK is urging the new parliament to move quickly and approve the proposed law to better protect the public.

It also called on property owners to take responsibility and fix any issues in buildings that are unsafe, to protect both residents and the wider community.

(Translated and summarised from an article published by the Cyprus News Agency)

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