Illegal rentals still plague Cyprus property market

Nigel Howarth
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Illegal rentals still plague Cyprus property market

Cyprus’ short-term rental market is growing fast, but problems with illegal rentals refuse to go away. New figures from the Deputy Ministry of Tourism show a sector expanding at pace, while regulators continue to chase unregistered properties.

Official data shows that 9,153 registered short-term rental homes are now operating across the island, offering 39,218 beds. This marks a sharp rise in legal accommodation, yet authorities say the true size of the market is much bigger due to ongoing illegal activity.

Research carried out for the Ministry suggests there may be around 12,000 registered properties in total, even before counting rural and agro-tourism accommodation. This indicates that the short-term rental sector is larger and more difficult to control than previously thought.

Registrations almost double in two years

The Register of Self-Catering Accommodation highlights just how quickly the market has expanded. In April 2023, Cyprus had 4,765 registered properties with 21,636 beds. Today, those figures have almost doubled.

Paphos leads the island with 4,231 registered properties, followed by Famagusta (1,791), Larnaca (1,407), Limassol (1,267) and Nicosia (457). Officials say the growth reflects strong demand and a greater effort by property owners to follow the rules.

Illegal rentals remain a major concern

Despite progress in registrations, illegal short-term rentals remain a serious issue. Since the start of 2025, authorities have received 81 complaints about unregistered properties operating across Cyprus.

The Deputy Ministry of Tourism has stepped up enforcement, using site inspections and online monitoring to track down illegal listings. Cases with enough evidence are sent to the Legal Service for prosecution. Officials say this marks a tougher stance aimed at protecting public revenue and restoring order to the market.

Tourism officials warn that illegal rentals do more than reduce tax income. They also worsen housing shortages and place extra strain on the already pressured property market.

New rules aim to restore order

Cyprus is preparing for a major regulatory shift after Parliament approved the 2025 Amendment Law, aligning national rules with EU Regulation 2024/1028. The new framework comes into force on 20 May 2026 and aims to improve transparency across Europe’s short-term rental sector.

The changes will:

  • Standardise registration rules for hosts and properties
  • Improve reporting and enforcement procedures
  • Require platforms like Airbnb and Booking to share data
  • Prevent illegal listings through a unified system
  • Apply consistent penalties for rule breakers

Authorities believe the new EU-wide system will give them better data and stronger tools to control illegal rentals, while allowing compliant operators to compete fairly.

As Cyprus’ short-term rental market continues to expand, officials hope tougher enforcement and clearer rules will finally bring stability to a sector that has grown rapidly — and sometimes out of control.

Cyprus to tackle money laundering in the property sector

Nigel Howarth
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0
Cyprus to tackle money laundering in the property sector

Cyprus is stepping up efforts to address rising money laundering risks in the property sector, with the Ministry of Finances Directorate of Finance Ministry drafting a new bill and launching it for public consultation.

According to an explanatory note accompanying the draft legislation, the need to strengthen preventive measures in property transactions stems from the National Risk Assessment on Money Laundering and Terrorist Financing (NRA AML/CFT2), findings from the Republic of Cyprus’ Mutual Evaluation Report by the Council of Europe’s MONEYVAL Committee, as well as the most recent experience of the authorities.

These initiatives also align with government policy aimed at reinforcing measures against financial crime and enhancing Cyprus’ standing as a credible and reliable international financial centre.

The bill, titled “The Prevention and Suppression of Money Laundering and Terrorist Financing (Amendment) Law of 2026“, has been placed under public consultation on the e-Consultation platform until 14 February.

Cabinet decision and supervisory framework

The Ministry of Finance prepared the bill in line with Cabinet Decision No. 92.715 of 16 March 2022, focusing specifically on the real estate sector.

The working group comprised representatives from the Ministry of Finance, the Ministry of Interior, the Central Bank of Cyprus, the Tax Department and MOKAS. The draft legislation was developed based on the provisions of the Cabinet decision.

Under that decision, preventive AML/CFT supervision in the real estate sector is to be assigned to the Tax Department. The entities subject to supervision will include all professionals who buy or sell property, or who professionally represent buyers or sellers in property transactions, provided they are not already supervised by another competent authority.

The Ministry reiterates that the heightened money laundering risks associated with real estate are also highlighted in the EU-wide Risk Assessment on AML/CFT (2022) by the European Commission, which notes that the property sector is particularly exposed to money laundering and vulnerable to tax-related crimes.

Alignment with new EU money laundering rules

The bill also anticipates upcoming European legislation. EU Regulation (EU) 2024/1624, adopted on 31 May 2024, extends its scope to cover estate agents and other real estate professionals. These provisions will come into force in July 2027 and reflect the international AML/CFT standards set by the Financial Action Task Force (FATF).

FATF guidelines issued in 2022 clarify that all professionals involved in property transactions should fall under preventive AML controls. In parallel, Article 52 of EU Directive (EU) 2024/1640 requires that supervision of obliged entities be carried out by a public authority, a requirement fully met by assigning this role to the Tax Department.

As a result, amending national legislation is considered necessary both to manage existing risks in the interim period and to ensure a smooth transition to the new EU regulatory framework.

What changes under the proposed amendment?

The proposed amendment transfers AML/CFT supervision of estate agents from the Estate Agents Registration Council to the Tax Department, while also extending supervision to all real estate professionals not overseen by another authority.

Credit institutions and credit-acquiring companies already supervised by the Central Bank of Cyprus will continue to fall under its AML/CFT oversight for property-related transactions carried out as part of their professional activities.

The choice of the Tax Department as the competent supervisory authority is justified on several grounds, including:

  • its direct involvement in property transactions and the existence of a dedicated Property Unit,
  • its existing AML/CFT supervisory role over persons trading or acting as intermediaries in works of art,
  • lower implementation costs by utilising existing structures, and
  • established practices in other European countries where public authorities undertake preventive supervision.

Comparable models are already in place in the United Kingdom (HMRC), as well as in Luxembourg, Greece, the Netherlands and Latvia.

The Ministry also points out that the 5th EU AML Directive (EU) 2015/849 obliges member states to extend AML/CFT measures to sectors particularly exposed to money laundering or terrorist financing risks.

Consequently, extending AML/CFT obligations to all real estate professionals before the new EU framework takes effect in 2027 is not only permissible, but necessary, based on identified national risks and international standards.

The Tax Department concludes that the reform will significantly strengthen Cyprus’ legal and supervisory framework, reduce money laundering risks in a key economic sector, enhance financial stability and reinforce the country’s position as a trusted international financial centre.

MPs warn coastal land in Cyprus sold to third-country nationals

Nigel Howarth
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0
MPs warn coastal land in Cyprus sold to third-country nationals

Large sections of Cyprus’ Larnaca and Limassol coastlines have been acquired by third-country nationals operating through indirect ownership structures, raising concerns over national security, market transparency and housing affordability, lawmakers have warned.

Speaking before the Parliamentary Interior Committee, AKEL general secretary Stefanos Stefanou said e that extensive plots of land have already been sold east of Larnaca and west of Limassol. Interior Committee chairman and AKEL MP Aristos Damianou told Phileleftheros that in Larnaca, coastal areas from the former refinery zone to Dhekelia have changed hands, while in Limassol sales have focused on the Lady’s Mile area.

Third-country investments

Third-country buyers are not limited to residential developments, MPs said, but are also acquiring hotels, hospitals and commercial properties, with investment activity extending into city centres.

Lawmakers also raised alarms over widespread linked to third-country buyers, with third-country nationals allegedly conducting property transactions while presenting themselves as project managers or business consultants.

DISY MP Nikos Georgiou warned that illegal estate agency activity by third-country nationals is rife. He said individuals frequently move in and out of district administrations claiming to be business consultants or project managers while handling property sales. Georgiou called for a registry of professional entities under anti-money laundering legislation to allow immediate oversight of lawyers, accountants and estate agents.

Stavros Papadouris, leader of the Greens, said many land development companies were effectively foreign-owned and conducted sales abroad, with some transactions remaining unregistered in Cyprus until properties were resold. Damianou added that some deals involved investment funds acquiring shares in real estate companies rather than the underlying assets.

The concerns were raised during debate on two legislative proposals aimed at restricting large-scale land acquisitions by third-country nationals and banning housing purchases by companies representing foreign interests, particularly near critical infrastructure.

Damianou said lax regulation in previous years, combined with the now-defunct golden passports scheme and extensive high-rise developments, had contributed to sharply rising property prices, undermining housing affordability for most Cypriot households.

The Cyprus property market “Hot Spots”

Nigel Howarth
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0
The Cyprus property market “Hot Spots”

A recent analysis by Landbank Analytics for January–October 2025 highlights the islands ‘hot spots’ shaping the Cyprus property market and driving investment across the island.

The report reveals a multi-speed market: Limassol dominates in transaction value, Paphos tops the charts for average sale prices, and Larnaca and Nicosia lead in the number of deals, attracting mid-range buyers seeking accessible housing options.

Limassol and Paphos dominate high-value transactions

Limassol District continues to act as the engine of the Cyprus property market. Three areas in Limassol rank among the top nationwide, collectively generating over €737 million in sales.

  • Germasogeia: €351.5 million in sale transactions, average price €583,905
  • Limassol Municipality: €274 million in sale transactions.
  • Kourion area: €111.7 million in sale transactions.

Together, these areas recorded around 1,600 deals, confirming Limassol’s position as a hub for high-value property.

Meanwhile, Paphos is emerging as the island’s prime luxury destination. The Akamas area posts the highest average sale price in Cyprus, exceeding €646,000, outperforming even Germasogeia.

Other standout locations include Paphos Municipality, with sales worth €123.6 million, and Geroskipou, with nearly €78 million. All areas in the district maintain an average price above €420,000, underscoring Paphos’ appeal to affluent buyers.

Larnaca and Nicosia maintain transaction volumes

Larnaca District is the busiest market in terms of transaction numbers. Larnaca Municipality recorded the highest number of deals nationwide, completing transactions worth €207.2 million.

Alongside Aradippou, which logged 394 deals valued at €77.9 million, the district attracts buyers seeking more affordable property, with average prices between €200,000 and €220,000.

The market in Nicosia remains stable. Nicosia Municipality ranks fourth nationwide, completing 624 transactions worth €130 million, while Lakatamia rounds out the top ten with an average sale price of €195,000, the lowest among leading areas.

A property market of depth and diversity

Landbank Group CEO Andreas Christoforides commented that the analysis highlights the diverse nature of the Cyprus property market.

He noted that Limassol and Akamas attract high-income capital, sustaining record-level prices, while Larnaca and Nicosia show resilience through strong transaction volumes and continued demand for affordable housing.

Cyprus Bar warns of third-country property restriction risks

Nigel Howarth
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0
Cyprus Bar warns of third-country property restriction risks

The Cyprus Bar Association (CBA) has expressed serious concerns over draft legislation currently being debated in Parliament concerning the acquisition of immovable property by third-country nationals.

While acknowledging the aim of strengthening oversight, the CBA warns that the proposals could undermine legal certainty, property rights and freedom of contract, while potentially deterring foreign investment.

The debate comes amid growing concern over housing affordability. Land Registry data shows that over 26% of real estate sales in 2025 involved third-country nationals, with Paphos and Limassol recording the highest activity – prompting political parties to submit proposals restricting sales.

Four draft bills are before the Committee on Internal Affairs: two from AKEL, one from DISY, and one from members of the Parliamentary Audit Committee. AKEL’s proposals seek to curb what they describe as uncontrolled property acquisitions by third-country nationals and protect access to housing for lower and middle-income groups. The Audit Committee proposal targets intermediary structures used by third-country nationals, while DISY’s bill focuses on modernising procedures in the public interest.

In its assessment, the CBA argues that proposals preventing the deposit of sale contracts prior to compliance checks exceed the purpose of contract registration. It recommends that such checks are carried out only at the title transfer stage.

The Association also highlights legal uncertainty arising from vague criteria, undefined documentation requirements and the absence of decision deadlines for authorities, which could delay or effectively freeze transactions. It further warns of conflicting control regimes, lack of transitional provisions, and inconsistencies between proposed ownership thresholds and existing legislation.

Regarding the DISY proposal, the CBA suggests practical amendments, questions the feasibility of strict timelines, and raises proportionality concerns over additional documentation requirements for foreign buyers.

Finally, the CBA reiterates its call for all property sale agreements exceeding €100,000 to be drafted exclusively by lawyers, stressing that regulated legal oversight is essential for transparency, legality and legal certainty. It concludes that effective regulation should rely on clear, proportionate and constitutionally compliant measures, rather than broad restrictions or undefined powers.

Parliament to debate controls on foreign property purchases

Nigel Howarth
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2
Parliament to debate controls on foreign property purchases

Cyprus’ parliament is set to debate new proposals aimed at tightening controls on property purchases by third-country nationals, amid growing concern over large-scale acquisitions and the use of company structures to bypass existing restrictions.

The discussion begins on Thursday at the House interior committee, where two bills tabled by AKEL general secretary Stefanos Stefanou will be examined. The proposed legislation seeks to curb what the party describes as “uncontrolled” foreign property buying, particularly cases where acquisitions are carried out through companies acting as a front.

A central provision of the bills would prohibit foreigners from acquiring forest or agricultural land, as well as property located adjacent to the ceasefire line. The proposals also restrict foreign buyers to the purchase of just one residential property – either an apartment or a house – and explicitly close loopholes allowing individuals to acquire multiple properties via corporate entities.

Importantly, the bills clarify that companies controlled by foreign nationals will be treated as “foreigners” under the law. This includes Cypriot or EU-registered companies where control ultimately lies with non-nationals, ensuring such structures cannot be used to circumvent restrictions.

Property size thresholds for foreign buyers

Under the proposed framework, ministerial council approval would no longer be required for the acquisition of:

  • One apartment or one house up to 200 sqm.
  • One office up to 300 sqm.

These thresholds would apply both to foreign individuals and to companies controlled by foreign interests.

According to the explanatory memorandum, the bills amend the Transfer and Mortgage of Immovable Property Law to prevent the Department of Lands and Surveys from approving transfers or registering sale contracts where restrictions under the Acquisition of Immovable Property (Aliens) Law apply.

The stated aim is to strengthen legality checks, prevent indirect ownership through assignment contracts or corporate vehicles, and improve transparency around the beneficial owners of legal entities acquiring property in Cyprus.

Key measures at a glance

The proposed legislation includes:

  • An expanded definition of “company controlled by foreigners”, covering any entity whose beneficial owner – as defined under anti-money laundering legislation – is a foreign national.
  • The removal of provisions in existing laws that create legal grey areas, particularly those allowing the acquisition of extensive landholdings by foreigners.
  • Clear exemptions from ministerial approval for limited residential and commercial purchases within defined size limits.
  • Restrictions on foreign-controlled companies acquiring more than one commercial property.
  • An outright ban on foreign ownership of forest land, agricultural land, property near the ceasefire line, and sites linked to critical infrastructure.

If adopted, the measures would represent a significant tightening of Cyprus’ foreign property ownership regime, with potential implications for investors, developers and the wider real estate market.

(In 2025, third-country nationals accounted for 4,809 property sales, as measured by the number of property sales contracts deposited at Land Registry offices, which accounted for  26.5 per cent of the total number of property sales in the year.)

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