Expanded fast-track building licence procedure announced

Nigel Howarth
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Expanded fast-track building licence procedure announced

The Minister of Interior, Constantinos Ioannou, has announced the implementation of an accelerated procedure for issuing urban planning and building permits for low and medium-risk developments as part of the wider licensing sector reform.

This new procedure applies to developments of up to 12 terraced houses and four-storey apartment buildings with up to 20 apartments and a basement, aiming to simplify licensing and improve efficiency.

The fast-track system will reduce the permit approval process to a maximum of 80 working days.

Building licence application

Applications will be submitted through the “Ippodamos” System, where private designers certify the accuracy and completeness of applications, assuming responsibility for compliance. The reform also introduces significant changes in development control, shifting from paper-based assessments to on-site inspections conducted in three stages.

Quality checks and impartiality

To ensure construction quality alongside faster permit issuance, Building Inspectors will be appointed to conduct inspections at two phases of the construction process.

A final inspection will be carried out by EOA officers, responsible for granting final approval. If deficiencies are found in prior inspections, complaints can be filed against the Building Inspectors.

To ensure impartiality, inspectors will be randomly selected, and each development will be examined by different individuals at different stages.

Building licence reforms to date

The Minister highlighted that the licensing reform builds upon 22 measures introduced since October 2023 to streamline processes and reduce bureaucracy.

An automatic licensing system for low-risk developments (up to two dwellings) has already been implemented since October 2024, reducing permit issuance to 40 working days.

So far, 491 applications for single-family and duplex houses have been submitted, with 347 processed. For Category B developments, 61 building permit applications have been submitted since February 2025, with seven already approved.

Mr Ioannou emphasised that the reform will accelerate permit issuance for 50% of developments while allowing authorities to focus on more complex cases.

The Government remains committed to enhancing state services for the benefit of citizens, ensuring efficiency, transparency, and economic growth through modernised licensing procedures.

Solutions needed NOW for jointly-owned buildings

Nigel Howarth
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0
Solutions needed NOW for jointly-owned buildings

In an open letter to the Interior Ministry & Land Registry, the Cyprus Association of Condominium Managers is demanding urgent action on the new bill for jointly-owned buildings.

“We don’t want excuses; we want solutions.”

The letter criticises the lack of progress on the bill, which was meant to end the chaos surrounding jointly-owned buildings.

The Association is calling for the immediate submission and approval of the bill, arguing that despite repeated assurances and promises, “there has been no real progress.”

It stresses the importance of the bill, as it directly affects “thousands of property owners and building managers.”

The Association accuses the authorities of serving vested interests, pointing out that “the lack of clear legislation creates loopholes leaving the present system open to abuse.”

The letter highlights ongoing issues, such as “unauthorised charges by unregulated managers and a lack of transparency concerning the financial responsibilities of property owners.”

Additionally, it warns that the absence of legal regulations allows irresponsible owners to avoid paying their share, shifting the burden onto others. At the same time, it “leaves those who strive for transparency and proper management powerless.”

The Association holds the Ministry and the Land Registry responsible for the delay and their continued silence. It is demanding answers about who is causing the holdup, who is benefitting from it, why the Association’s requests are being ignored, and for how much longer the situation will drag on.

Finally, they ask whether there is there “real political commitment to resolve this or if certain individuals benefit from maintaining the chaos?”

Scrap 5% reduced VAT rate for foreign property buyers

Nigel Howarth
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Scrap 5% reduced VAT rate for foreign property buyers

AKEL has proposed a bill scrapping the 5% reduced VAT rate for foreign nationals buying or building homes in Cyprus.

The bill, put forward by MP Giorgos Loukaides, suggests changing the Value Added Tax Law so that third-country nationals can no longer benefit from this lower tax rate.

The proposal argues that this tax break has been misused, leading to unfair advantages for foreign buyers.

Instead of helping middle and lower-income families as intended, the reduced VAT has encouraged large-scale property purchases by foreign nationals. This has contributed to rising housing prices, making it harder for locals to afford homes.

According to the proposal, removing the tax break would help control property prices and prevent further housing shortages. It would also reduce financial losses for the state, ensuring that public funds are used more effectively.

Support should go to those who need it, not foreigners

Mr Loukaides highlighted that, in recent years, there has been a sharp increase in foreign nationals, particularly wealthy investors and high-earning professionals, buying property in Cyprus. This trend has worsened the housing crisis by pushing up demand and prices.

He pointed out that AKEL MPs had recently raised these concerns in the Parliamentary Interior Committee. As part of broader efforts to address the issue, the party has now officially proposed ending the reduced VAT rate for foreign buyers.

Loukaides explained that the goal is to ensure that tax benefits are only given to those who truly need support. He criticised past and current governments for applying the tax reduction too broadly, allowing it to be exploited in ways that harm local buyers.

He emphasised that VAT reductions should be part of the state’s social policy, helping lower and middle-income families rather than benefiting foreign investors. He argued that, for too long, the government has prioritised wealthy investors over ordinary citizens struggling to afford housing.

 

One third short-term rentals illegal

Nigel Howarth
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0
One third short-term rentals illegal

Around one third of self-catering accommodations advertised on platforms such as Airbnb are illegal, as they remain unregistered with the Ministry of Tourism.

Data presented to the Parliamentary Committee on Commerce indicates that, out of 8,248 registered properties, many continue to go unlisted, while the Ministry has only filed 14 reports against illegal operators.

Despite efforts to promote compliance, challenges persist. The number of legally registered properties has risen significantly, from 2,343 in late 2022 to 8,248 by 2025. However, the Ministry faces difficulties in enforcing regulations due to inadequate legal tools. Furthermore, a backlog of pending applications remains a concern, with over 1,200 properties still awaiting approval due to incomplete documentation.

In response, the Ministry is considering introducing restrictions on the number of properties an individual can register. Additionally, a new bill is in development to address gaps in the existing regulatory framework. However, industry representatives, including the Self-Catering Accommodations Association, have raised concerns that the continued rise in unregistered properties – particularly during peak tourist seasons – creates unfair competition for legitimate operators. Many legal businesses argue that such unregulated accommodations enable tax evasion, reducing government revenue and distorting the market.

Consumer protection has also been highlighted as a pressing issue. Reports have surfaced regarding misleading listings, substandard accommodation, and even non-existent properties being rented out. The Consumers’ Association has received numerous complaints related to fraudulent practices, with customers facing financial losses and disrupted travel plans. These concerns have led to increased pressure on the Ministry to implement stricter monitoring and enforcement measures.

Despite these challenges, the Ministry remains optimistic about the continued growth of the tourism sector in 2025, with projections indicating record-breaking visitor numbers and revenue. However, calls for stronger oversight are mounting. Members of the Parliamentary Committee have urged the Audit Service to conduct a thorough investigation into the scale of illegal rentals, arguing that the lack of regular inspections has exacerbated the problem.

As the short-term rental market continues to expand, authorities face the challenge of balancing the benefits of tourism with the need for regulation. While stricter measures are under consideration, effective enforcement will be essential to ensure fair competition, protect consumers, and prevent tax evasion. The coming years will likely determine whether these efforts lead to meaningful change or if the issue of illegal rentals continues to persist.

Cyprus property prices remain steady in 2024 fourth quarter

Nigel Howarth
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0
Cyprus property prices remain steady in 2024 fourth quarter

The RICS Cyprus Property Price Index with KPMG in Cyprus, which records the property price and rental index by tracking property and rental prices across all Cyprus districts and main property types, has been issued for the fourth quarter of 2024.

On behalf of KPMG in Cyprus, Christophoros Anayiotos, Board Member and Head of the Real Estate Industry Group, stated:

“The Index for the fourth quarter of 2024 shows stabilization, a trend continuing from past quarters. Most asset categories show a minor or no changes in pricing, apart from Warehouses and Apartments, with changes in Paphos and Nicosia. Limassol, Larnaca and Famagusta recorded no increases, while retail recorded a minor decrease in pricing.

“Rental values continue to rise, with a significant increase in Offices, followed by increases in residential assets, while at the same time, retail and holiday apartments have shown decreases. Overall, the Index reflects increases in rental values compared to previous years, although property yields have shown very marginal movements”.

On behalf of RICS, Simon Rubinsohn, RICS Chief Economist, commented:

“The flatter trend emerging in the RICS Cyprus Property Price Index with KPMG in Cyprus is broadly consistent with the feedback garnered through the RICS Commercial Property Monitor which tracks sentiment in the real estate sector. Significantly, the metrics in the latter charting both investment inquiries and foreign buyer appetite now appear to be levelling off.

“That said, a largely resilient macro environment is continuing to provide a measure of support for the property market in the face of an increasingly uncertain geopolitical climate.”

Extracts from the Q4 2024 property prices and rental index

Cyprus property market values year-on-year

Looking at the data on a year-on-year (YoY) comparison, the latest numbers show a strong increase in Apartments, with Offices some way behind. Houses and Warehouses recorded a minor increases, whilst Retail once again stands out showing a minor decline.

  • Apartments +3.39%
  • Houses +0.95%
  • Retail premises -0.21%
  • Warehouses +0.96%
  • Offices +1.74%

Holiday home prices

Over the past year both Holiday Apartments and Holiday Houses are showing minor price increases, with apartments leading the way.

  • Holiday apartments +0.43%
  • Holiday houses +0.25%

Rental values year-on-year

Rental values on balance continue to increase compared with a year earlier with the largest percentage rise found in offices, followed at a distance by holiday houses. retail and holiday apartments recorded modest declines.

  • Apartments +2.01%
  • Houses +2.29%
  • Retail premises -1.08%
  • Warehouses +1.37%
  • Offices +4.05%
  • Holiday apartments -1.39%
  • Holiday houses +2.30%

Rental yields

Yields have recorded very marginal movements since last year with holiday apartments falling and offices rising, albeit marginally for both.

  • Apartments -0.07%
  • Houses +0.04%
  • Retail -0.05%
  • Warehouse +0.02%
  • Office +0.13%
  • Holiday Apartments -0.11%
  • Holiday Houses +0.04%

Coverage and Variables Monitored

The RICS Cyprus Property Price Index with KPMG in Cyprus monitors the urban centres of Nicosia, Limassol, Larnaca, Paphos and Paralimni-Famagusta. The Index only tracks prices in Republic of Cyprus’ government-controlled area and not in the occupied North.

In each of these centres, the index monitors the Market Value and Market Rent, as defined in the RICS Red Book, across the four main property sectors – office (CBD), retail (high street), industrial (warehouse) and residential (houses and apartments).

Recognising that there are sub-districts within these urban areas which operate and behave in a varying manner, a number of these is monitored in order to derive the composite index for each category per urban area.

The information provided in this publication is based on the average price and rent of the sub-districts monitored per urban centre per sector.

RICS notional buildings

The RICS Cyprus Property Price Index with KPMG in Cyprus monitors hypothetical or notional buildings, each having specific characteristics. The methodology underpinning Index was developed by the University of Reading.

The price per sqm is based on the Gross External Area of the property (as defined in the RICS’ Code of Measurement Practice 8th Edition), which includes the living area and covered verandas but excludes common areas.

The estimation of price levels is carried out by accredited RICS property professionals who are active in the relevant markets.

Further reading

The full publication can be found on the RICS website at The RICS Cyprus Property Index with KPMG in Cyprus.

Incentives for the “Renovate and Rent” scheme strengthened

Nigel Howarth
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0
Incentives for the “Renovate and Rent” scheme strengthened

The revised texts of two bills aimed at increasing the supply of affordable housing through incentives for property owners participating in the “Renovate and Rent” scheme were presented yesterday before the Parliamentary Finance Committee.

Speaking before the committee, Rena Makri, Senior Audit Officer at the Ministry of Finance, stated that following consultations with relevant stakeholders and services, the revised bills clarify that income from affordable rentals will be exempt from income tax and the special defence contribution for the entire period the property is rented to tenants meeting the scheme’s income criteria.

She further explained that despite the rental income tax exemption, taxpayers will still be eligible to claim increased capital allowances against other income within the same tax year.

State Aid Commissioner Stella Michailidou informed the committee that, following prior consultations, her office maintains its position that the scheme does not fall under state aid regulations, as it is open to all.

Deductions regardless of tax exemptions on rental income

A representative of the Institute of Certified Public Accountants of Cyprus (ICPAC) noted that the amendments address their concerns regarding capital allowances, which will be granted irrespective of the rental income tax exemptions.

In response to a question from AKEL MP Andreas Kavkalias regarding the potential fiscal impact of implementing both tax exemptions, Ms. Makri assured that no such issue was raised during discussions.

It is recalled that, under the provisions of the first bill submitted to Parliament, property owners will be exempt from corporate tax or income tax on rental income from properties participating in the “Renovate and Rent” scheme.

Additionally, they will be entitled to claim increased capital allowances – rising from 3% to 5% for buildings and from 10% to 15% for machinery and equipment.

These benefits will apply during the implementation of the Ministry of Interior’s “Renovate and Rent” scheme, with the estimated fiscal impact for 2024-2027 projected at €1.75 million per year.

Regarding the second bill, the estimated fiscal impact of exempting rental income from the special defence contribution is projected at €100,000 annually for 2024-2027.

When asked how it would be ensured that properties receiving renovation grants will be rented out at affordable rates, a Ministry of Finance official clarified that property owners benefiting from the renovation incentive must legally commit to offering the property for six years to eligible tenants under the scheme.

Eligible tenants and application process

Eligible tenants must meet specific income criteria based on family status. For example:

  • Single individuals: annual income up to €25,000
  • Couples or single-parent families: annual income up to €45,000
  • Families with three to five members: income limits ranging from €50,000 to €65,000

Interested property owners and tenants can submit their applications online via the Ministry of Interior’s website, the Cyprus Land Development Corporation (KOAG), and the “Affordable Housing” platform. Applications will be evaluated by KOAG, with approved applications linked to the beneficiaries’ tax records.

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