Corporate Real Estate Handbook 2010/11

Country Q&A

Cyprus
Lefkios Tsikkinis and Mariorita Neocleous www.practicallaw.com/6-503-2936
Andreas Neocleous & Co LLC

THE CORPORATE REAL ESTATE MARKET REITs

Cyprus law provides for REITs, but as yet, they have been rarely used.
1. What have been the main trends in the real estate market in
your jurisdiction over the last 12 months? What have been Institutional and private investors
the most significant deals? As most commercial property is occupier-developed, institutional
investors are rarely involved in Cyprus property development. Pri-
vate investment is the main market driver.
Cyprus’s entry into the Eurozone on 1 January 2008 made invest-
ments in Cyprus, including real estate investment, considerably more
marketable. Despite the global economic slowdown, there is a buoy- REAL ESTATE LEGISLATION
ant demand for office space, particularly in Limassol and Nicosia,
the main commercial centres, and a number of shopping malls and 3. Please briefly set out the main real estate legislation that ap-
leisure developments have opened recently or are under construction. plies in your jurisdiction.
A EUR250 million development, comprising a 1,000-berth marina,
restaurant, residential and conference facilities is under construction
in Limassol and the government has announced an agreement with The main legislation regulating real estate in Cyprus is the:
Qatari Diar Real Estate Investment Company for a joint development
„„ Immovable Property (Tenure, Registration & Valuation) Law,
project in Nicosia. The initial investment will be in excess of EUR200
Cap. 224.
million and the total project cost is estimated to be in the order of
EUR500 million. As at 1 September 2010, US$1 was about EUR0.8. „„ Sale of Land (Specific Performance) Law, Cap. 232.

There has been a slowdown in the residential property market as „„ Acquisition of Immovable Property (Aliens) Law, Cap. 109.
UK buyers, a key source of demand for residential property, have

Country Q&A
„„ Immovable Property (Transfer and Mortgage) Law, No. 9/65.
been affected by the UK’s economic slowdown and the depre-
ciation of sterling against the euro. Developers are increasingly „„ Immovable Property Tax Law, Cap. 322.
looking to other markets, such as Russia and the Middle East, to „„ Immovable Property (Towns) Tax Law, No. 89/62.
replace British buyers and a number of developers are rumoured
to be under financial pressure. „„ Capital Gains Tax Law, No. 52/80.
„„ Town and Country Planning Law of 1972.
REAL ESTATE INVESTMENT
„„ Rent Control Law, No. 23/83.

2. Please briefly outline the opportunities for investing in real In addition, many other laws contain provisions applicable to
estate in your jurisdiction. In particular, consider: rights in immovable property. These include the:
„„ The structures commonly used (for example, property com- „„ Constitution of Cyprus.
panies and partnerships).
„„ Contract Law, Cap. 149.
„„ Are real estate investment trusts (REITs) available? If so, are „„ Civil Procedure Law, Cap. 6, and Rules.
they commonly used?
„„ Stamp Law, Cap. 228.
„„ Institutional investors.
„„ Wills and Succession Law, Cap. 195.
„„ Private investors. „„ Administration of Estates Law, Cap. 189.
„„ Probates (Re-Sealing) Law, Cap. 192.
Structures „„ Trustee Law, Cap. 193.
Development in Cyprus is generally carried out by construction „„ Central Bank of Cyprus Law, No. 138(I)/2002.
companies and, to a lesser extent, by private individuals and part-
nerships. Speculative development is common in the residential „„ Movement of Capital Law, No. 115(I)/2003.
field, but much less so for commercial and industrial properties,
most of which are occupier-developed.

© This article was first published in the PLCCross-border Corporate Real Estate 2010/11
and is reproduced with the permission of the publisher, Practical Law Company.
 Corporate Real Estate Handbook 2010/11
Country Q&A

TITLE „„ Register.
„„ Cadastral plan.
4. Please briefly state what constitutes real estate in your juris-
„„ Tax register.
diction. Is land and any buildings on it (owned by the same
entity) registered together in the same title, or do they have „„ Certificate of registration.
separate titles set out in different registers?
The Register contains the key information about the property,
namely:
Under the Immovable Property (Tenure, Registration & Valuation)
„„ Owner.
Law, “immovable property” means:
„„ Address.
„„ Land.
„„ Purchase price.
„„ Buildings and other erections, structures or fixtures affixed
to any land or to any building or other erection or structure. „„ Location.
„„ Trees, vines and any other thing whatsoever planted or grow- „„ Area.
ing on any land and any of their produce.
„„ Tenure.
„„ Springs, wells, water and water rights whether held with, or
independently of, any land. „„ Declarations of transfer.

„„ Privileges, liberties, easements and any other rights and „„ Mortgages.

advantages whatsoever relating, or reputed to relate to any „„ Easements.
land or to any building or other erection or structure.
„„ An undivided share in any of the above. 7. Can confidential information or documents be protected from
disclosure in the public register of title?
Land and the buildings on it are registered together and are
inseparable for title purposes. The owner of the land owns the
buildings on it. Information or documents in the public register of titles con-
nected with the ownership of immovable properties, as well as
5. How is title to real estate evidenced, for example by registra- charges or encumbrances over immovable property, are treated
tion in a public register of title? Which authorities manage as confidential. They are therefore protected in the sense that the
the public title register? Land Registry’s practice is to give information about the status of
such properties or copies of title deeds or details of the charges
only to the registered owner or his duly authorised agent and at-
Country Q&A

Land registration is the responsibility of the Department of Lands torney, or to the administrator of his estate or a judgment creditor
and Surveys, one of the longest-established government depart- of the registered owner.
ments.
8. Is there a state guarantee of title? Is title insurance avail-
The system of land registration is a system of registration of title able? If so, is it commonly used?
(as distinct from registration of title deeds). The legal value of
registration lies between an indefeasible title and a defeasible ti-
tle. A registered person is considered to be the undisputed owner There is no state guarantee of title and no government indemnity.
of the land and its title to ownership is absolute, subject to the Any person who disputes the facts recorded on the land register
power of the Director of the Department of Lands and Surveys to can seek rectification by application to the Director of the Depart-
correct errors or omissions under certain circumstances, and the ment of Lands and Surveys or to the court. Title insurance is not
inherent power of the courts to order amendment or cancellation available in Cyprus.
of a registration.

Registration of rights acquired in land (for example, by purchase 9. How can real estate be held (that is, what types of tenure
or mortgage) is not compulsory, but these rights have no legal exist)?
status unless they are registered, and owners or lenders who fail
to register new or transferred rights lose the benefit of registration
and their priority. Three types of registered tenure exist. They are:
„„ Freehold. This is an estate in fee simple absolute in posses-
6. Please briefly set out the information and documents regis- sion, that is, land held in perpetuity.
tered in the public register of title, for example a description „„ Leasehold. This is an interest for a term of years absolute,
of the real estate, the owner, matters affecting the title and that is, land held for a limited time. There must be a mini-
any relevant documents. mum unexpired term of at least 15 years of a lease for it to
be registered.

Land registration records mainly comprise the:

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„„ Shared ownership. This is property held in undivided shares When title transfers
by two or more persons, who can be physical or legal.
The transfer of title is effected by application to the Land Regis-
try in the prescribed form signed by the seller and buyer, accom-
The concept of joint ownership of property does not exist in Cy-
panied by the prescribed transfer fee (see Question 18). Notarisa-
prus law.
tion is not required.

SALE AND PURCHASE OF REAL ESTATE

11. Does a seller have any statutory or other liability to the buyer
in a disposal of real estate, for example to disclose real estate
10. What are the main stages and documents in the sale and
information, or in relation to title?
purchase of real estate? In particular:

„„ How is real estate marketed, when does commercial nego-

tiation occur and what pre-contractual arrangements are There is no statutory obligation for the seller to disclose informa-
used? tion about the property, or in relation to title. There may be a con-
tractual obligation if warranties are included in the sale contract.
„„ When is the sale contract negotiated and executed?
12. Please briefly outline the real estate due diligence that is
„„ When are the parties legally bound?
typically carried out before an acquisition (including title in-
„„ When is the change of title registered? vestigation and searches of public authorities).

„„ When does title transfer and what are the formal legal
Due diligence typically carried out before acquisition comprises
requirements to transfer real estate (for example, in writing
a search with the Land Registry to confirm the validity of the title
and signed by the parties)? Is notarisation required?
and the absence of mortgages, charges and other encumbrances.
Buyers can also search the Register of Companies for information
on a corporate seller, to confirm its soundness. For second-hand
Marketing
property it is usual to obtain a report by a qualified surveyor on
Real estate is marketed by estate agents (who must be licensed), the condition of the property.
developers and individuals.
A number of well-publicised problems have arisen in relation to
Commercial negotiation foreign buyers of domestic property, particularly relating to in-
The terms of the sale and purchase are negotiated between the ability to obtain title deeds. Most of these problems could have
parties, assisted by their advisers. been avoided by taking thorough, independent, legal and other

Country Q&A
professional advice at the time of purchase.
Pre-contractual arrangements
Pre-contractual arrangements are rare and, in most cases, the
13. What real estate warranties are typically given by a seller to
sale contract is the only agreement.
a buyer in the sale of corporate real estate and what areas do
they cover?
Sale contract
The parties are legally bound on the execution of the sale con-
tract. Stamping the contract and depositing it at the Land Regis- Warranties usually cover the following matters:
try enables the buyer to obtain specific performance and makes
the contract enforceable. „„ Legal ownership of the property.

„„ Absence of mortgages, charges or other encumbrances.

When legally binding
„„ Timely completion of the property, if under construction.
Contracts are binding on signature. The Specific Performance
Law stipulates that the buyer can secure transfer of the property „„ Ability to deliver clear title deeds.
by depositing a signed and stamped copy of the sale contract at
the Registry. The deposit must take place within two months of Warranties can sometimes be supported by personal guarantees
the contract having been signed. This provides the buyer with an from directors of the company and (rarely) by bank guarantees.
effective means of enforcing the contract.
14. Can an owner or occupier inherit liability for matters relating
Registration
to the real estate even if they occurred before it bought or
Change of title is registered at the time specified in the contract. occupied it? For example, environmental liability, or liability
This is usually when the full purchase price has been paid and in under a lease.
the case of non-EU citizens needing a licence to hold immovable
property in Cyprus, when the licence has been issued.
Such liability follows the property and attaches to the owner.
However, the owner can, in certain circumstances, claim against

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the previous owner in relation to any damage suffered as a result REAL ESTATE TAX
of such liabilities.
17. Is value added tax (VAT) (or equivalent) payable on the sale
15. Does a seller or occupier retain any liabilities relating to the or purchase of real estate? Who pays? What are the rates? Are
real estate after it has disposed of it? For example, environ- there any exemptions?
mental liability, defects in the real estate, and contractual
liability to the buyer.
The sale of immovable property has been subject to VAT since 1 May
2004. VAT is payable at the standard rate (currently 15%) on the
sale of buildings, or parts of buildings, and the land on which they
The seller can be liable to the buyer in certain circumstances (see
stand if the application for a building permit was submitted after
Question 14).
1 May 2004. Transitional provisions exempt buildings for which a
valid application for planning permission was submitted before that
16. What costs are usually paid by the buyer? What costs are usu- date. VAT is only payable on property before its first use.
ally paid by the seller?
18. Is stamp duty/transfer tax (or equivalent) payable on the sale
or purchase? Who pays? What are the rates? Are there any
Buyer’s costs exemptions?
In addition to its own professional fees, the buyer is usually re-
sponsible for payment of VAT if applicable (see Question 17)
stamp duty (see Question 18, Stamp duty), and transfer fees (see Stamp duty
Question 18, Transfer fees). Stamp duty on contracts is charged at 0.15% on the first
EUR170,860 of the consideration and at 0.2% on any con-
Seller’s costs sideration above that sum. Stamp duty on transactions above
The seller is responsible for payment of any capital gains tax EUR8,585,715 is capped at EUR17,086.
(CGT) and its professional fees.
Transfer fees
CGT is imposed at 20% on gains from the disposal of immovable Transfer fees are payable by the buyer to the Department of Lands
property in Cyprus, and from the disposal of shares in companies and Surveys. The amount payable is based on the purchase price,
owning such property, unless the shares are listed on a recog- or under certain circumstances, on the current market value as
nised stock exchange. All other gains are exempt from CGT. Ex- follows for the tranche of price or value:
emptions are also available to individuals in relation to their main „„ Up to EUR85,430: 3%.
residence and certain other categories of disposal.
Country Q&A

„„ Between EUR85,430 and EUR170,860: 5%.

CGT is not charged on gains subject to corporation tax. As with „„ Above EUR170,860: 8%.
corporation tax, CGT is paid by reference to the calendar year,
under a self-assessment system. No transfer fees are charged on transfers in the course of corpo-
rate reorganisations.
The taxable gain is calculated by deducting from the sale price
(or in certain circumstances market value): Annual immovable property tax
„„ The market value of the property at 1 January 1980, or, if it In addition, immovable property tax is payable annually on 30
was acquired after that date, the price paid or the consid- September and is calculated on the basis of the market value as
eration given for the acquisition of the property. at 1 January 1980 of immovable property owned by the taxpayer
on the preceding 1 January.
„„ The cost of any major improvements.
The rates of immovable property tax are as follows for each
„„ The subsequent increase in the value of the property due to
tranche of value:
inflation, calculated by reference to the Retail Price Index
issued every month by the Department of Statistics. „„ First EUR170,860: nil.

„„ Expenses related to the acquisition and disposal of the „„ Next EUR256,290: 0.25%.
property, such as transfer fees and legal costs. „„ Next EUR427,150: 0.35%.

Current year and brought forward capital losses on chargeable „„ Above EUR854,300: 0.4%.
assets can be offset against gains.
19. Are any methods commonly used to mitigate real estate tax
Gains on disposals of shares in companies owning real estate in
liability on acquisitions of large real estate portfolios?
Cyprus are calculated by determining the amount of the share
disposal proceeds attributable to such real estate, and then com-
puting the taxable gain as above. There are a number of techniques available depending on the cir-
cumstances of the case and the use to which the property will be put.

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Corporate Real Estate Handbook 2010/11
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HOLDING BUSINESS PREMISES ing 33 years or a shareholding in a company falling within

the provisions described above. “Trust in favour of a foreign
person” means any kind of trust of which the beneficiary
20. Are there targets to reduce greenhouse gas emissions from
or one of the existing beneficiaries is a non-Cypriot and in-
buildings in your jurisdiction? Is there legislation requiring
cludes any express or implied contract or agreement, written
buildings to meet certain minimum energy efficiency crite-
or oral, under which a non-Cypriot will not be the absolute
ria? If yes, please give brief details.
owner but will have ownership for the benefit of another or
where ownership will be held on trust for its benefit.
Cyprus has ratified the Kyoto Protocol, but is not subject to a spe-
Normally permission is routinely granted to bona fide foreigners
cific reduction target. However, regulations for minimum energy
to acquire a flat or a house or a piece of land not exceeding three
efficiency standards for new buildings have been in operation
donums (about 4,000 square metres) for the erection of only one
since November 2007.
house for use as a residence only by the buyer and his family.

21. Is it common for companies to manage their real estate port- Members of the family of an original buyer can also acquire their
folios and their accommodation needs by using third parties, own property, provided that they are completely independent of
for example through outsourcing transactions? If yes, please the buyer, both financially and residentially, such as married chil-
give brief details. dren with their own family and business. Permission is granted
for personal use, and not for letting or commercial use. This rule
is relaxed for international companies that are permitted to ac-
Outsourcing of real estate portfolios and facilities management is quire business premises, as well as houses or flats as residences
currently in early development stages. for their members or directors.

Although it can take up to 12 months for the Council of Ministers’

22. Are there restrictions on foreign ownership or occupation of permit to be obtained, buyers are entitled to occupy the property
real estate, or on foreign guarantees or security for ownership in the meantime.
or occupation?
After the permit has been granted and the property registered in
the name of the buyer, no further restrictions are imposed and the
The Acquisition of Immovable Property (Aliens) Law regulates property can be disposed of in any way.
the purchase of property by non-Cypriots. Under the Law, a non-
Cypriot wishing to acquire immovable property requires the prior
permission of the Council of Ministers. 23. Does change of control of a company affect its holdings of
real estate?
The definition of “alien” under the original law comprised any

Country Q&A
person other than a citizen of the Republic of Cyprus, including
local companies controlled by non-Cypriots, foreign companies Change of control of a company does not affect its holdings of
and trusts in favour of foreign persons. However, with effect from real estate unless majority control of a locally-incorporated com-
1 May 2009, citizens of EU member states or companies incor- pany passes to third country (non-EU) nationals, in which case a
porated in an EU member state other than Cyprus (irrespective licence under the Acquisition of Immovable Property (Aliens) Law
of the identity or nationality of their shareholders) are no longer is required (see Question 22).
treated as aliens and no restrictions on ownership of property in
Cyprus apply to them. Accordingly, restrictions on property own-
24. In what circumstances can local or state authorities purchase
ership apply only to third country (non-EU) nationals or compa-
business premises compulsorily? Is the purchase price mar-
nies, or Cyprus companies controlled by third-country nationals.
ket value?
As well as a straightforward purchase, the term “acquisition of
immovable property” includes:
The right of ownership of immovable property is considered one
„„ The grant or purchase of lease of immovable property for a of the fundamental human rights under the Constitution of Cy-
period exceeding 33 years. prus, and as such, it is very well protected. Compulsory acquisi-
tion or imposition of restrictions on immovable property by the
„„ The acquisition of shares in a company that is duly regis-
government is regulated by Article 23 of the Constitution and
tered as a legal entity in the Republic or in the British Sov-
by the Compulsory Acquisition Law, No. 15/62. Properties can
ereign Base Areas and which (in either case) has acquired
be compulsorily acquired only by the government or local au-
immovable property in the Republic or the Sovereign Base
thorities, for specified purposes only and the acquisition must
Areas. If a majority of shares in the company belong to
be in the public interest. Immediate compensation at the current
non-Cypriots, the company is considered as “controlled by
market value must be paid to the owner, who has recourse to the
non-Cypriots”.
courts in the event of disagreement. The compulsorily acquired
„„ The formation of a trust in favour of a foreign person that property can be used only for the specific purpose it was acquired
involves, wholly or partly, the leasing of immovable property for. If this purpose has not materialised within three years of
falling within the provisions of a lease for a period exceed- the date of acquisition, the property must be offered back to its
former owner for the price paid to him.

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Any other person interested in the charge can submit the particu-
25. Are municipal taxes paid on the occupation of business lars to the Registrar of Companies for registration and recover the
premises, for example business rates? Are there any exemp- cost from the company (Article 91, Companies Law).
tions?
Article 96 of the Companies Law gives the court power to extend
the time for registration or to register a charge out of time if it
An annual immovable property tax is payable (see Question 18). considers it appropriate to do so.

Council and other service charges, such as water and sewage A charge that is not registered in the prescribed manner is void
charges, are also payable. They are much lower than in most against the liquidator and any creditor of the company (Article
European countries. 90, Companies Law), but remains valid and enforceable between
the parties to the charge.
REAL ESTATE FINANCE
29. Is real estate securitisation common in your jurisdiction? If
26. How are acquisitions of large real estate portfolios or compa- yes, please give brief details.
nies holding real estate generally financed?

To date, there has been only one significant transaction of this na-
Such acquisitions have customarily been financed by local and ture (see Question 27). Others may follow as the global economy
overseas banks and financial institutions. Cyprus’s first lever- recovers.
aged buyout of a listed property company took place in 2007.
There have been no further such transactions since, but this may
change as the global economy recovers. REAL ESTATE LEASES

30. Are contractual lease provisions regulated or freely negotiable?

27. How is real estate commonly used to raise finance?

Contractual lease terms are freely negotiable within the frame-

Financing methods are usually traditional in nature. Real estate work of the Contract Law. The Rent Control Law applies only to
can be mortgaged to raise finance for the owner. To secure its property occupied by Cypriot nationals or companies under their
position, the lender registers the mortgage with the Land Registry control (see Question 31).
and, if the borrower is a company, with the Registrar of Compa-
nies. Sale and leasebacks are rare. The leveraged buyout trans-
action referred to above involved the securitisation of income 31. How are rent levels usually reviewed and are there restric-
streams from property for the first time in Cyprus (see Question tions on this? Is VAT (or equivalent) payable on rent?
Country Q&A

26).

There is no VAT payable on the leasing or letting of immovable

28. What are the most common forms of security granted over property in Cyprus. The rental market can be divided into two
real estate to raise finance? How are they created and per- broad categories:
fected (that is, made valid and enforceable)?
„„ Properties controlled by the Rent Control Law (1983).
„„ The free market.
The most commonly granted security over immovable property is
a mortgage. A mortgage does not constitute an “estate in land” The Rent Control Law and its updated amendments apply to ten-
but a contractual right for the benefit of the lender and a charge ancies of residential or business premises that lie within what
on the immovable property. the law defines as “Controlled Areas”, that is towns, suburbs and
rural centres, which were completed before 29 December 1995.
Formalities However foreign persons (except the non-citizen wife of a citizen
To have legal effect, mortgages, charges and other rights over of the Republic of Cyprus) and legal entities controlled by non-
immovable property must be registered with the Department of residents are not covered by the Rent Control Law and do not
Lands and Surveys (Immovable Property (Transfer and Mortgage) benefit from its protection.
Law, No. 9 of 1965). However, registration is not compulsory.
After the first tenancy has expired or been terminated, the law
A company creating a charge over any of its property is required allows for an agreed increase of no more than 14% of the exist-
to send particulars of the charge accompanied by the charge it- ing rent, but not before the lapse of two years from the date of
self to the Registrar of Companies within 21 days after creation the last application, or the date of the last voluntary increase. In
of the charge (Article 91, Companies Law). If a company acquires case of refusal by the tenant, the Rent Control Courts determine a
property subject to a charge, it must send the same particulars “reasonable rent”, taking into account the opinion of the official
together with a certified copy of the charge within 21 days of valuer, and factors such as age, dimensions, location and condi-
acquiring the property (Article 92, Companies Law). The charges tion. A rent control tribunal is composed of a president (who is
must be properly stamped to be accepted for registration. If Ar- a judicial officer) and two lay members, representing the tenants
ticles 91 and 92 are not complied with the company and every and the landlords.
officer can be liable for a default fine of EUR427.

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Corporate Real Estate Handbook 2010/11
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ing, and repair and decoration of the common parts, and can
32. Is there a typical length of lease term and are there restric- recover the cost from the tenant through a service charge.
tions on it? Do tenants of business premises have security
of occupation or rights to renew the lease at the end of the Leases generally provide that on termination or expiry, the tenant
contractual lease term? If yes, please give details. must reinstate the premises to the state and condition that the
property was in at the start of the tenancy, unless the landlord ac-
cepts any conversions or improvements. It is unusual for tenants
Leases in Cyprus are generally for less than ten years but this is to receive any compensation for these.
a matter of custom rather than any legal restriction. The length
of the lease and arrangements for extension are determined by
the lease rather than by any statutory provision. During the term 36. Who is usually responsible for insuring the leased premises?
of the lease and any agreed extension the tenant enjoys security
of occupation subject to compliance with the terms of the lease.
The landlord, who has the insurable interest, is responsible for
Leases with an unexpired term of at least 15 years can be regis- insuring the structure. However, the lease can require the tenant
tered with the Land Registry, in which case registration should be to pay the insurance premium.
effected within three months of signature of the lease. Registra-
tion is not compulsory, but it gives the tenant certain advantages,
37. On what grounds can the landlord usually terminate the
including the right to trade the lease. Third country (non-EU)
lease? Please briefly outline any restrictions or procedure
nationals may not take a lease of immovable property for a period
that applies. Can the tenant terminate the lease in certain
exceeding than 33 years without prior permission from the Coun-
circumstances?
cil of Ministers, and they are not allowed to let their premises.

33. What provisions or restrictions typically apply to the disposal The landlord can terminate the lease and claim vacant posses-
of the lease by the tenant (for example, can the tenant assign sion of the property if the tenant is in breach of any of the es-
or sublet the lease with the landlord’s consent)? sential terms of the lease, for example by:
„„ Failing to pay the rent.

The following provisions are typical regarding disposal of leases: „„ Committing a nuisance to neighbours.

„„ Assignment of whole: usually prohibited unless otherwise „„ Subletting the premises, or part, without authority.
agreed with the landlord on special conditions. The assignor
„„ Deliberately damaging the property.
generally remains liable under the lease in the event of
default by the assignee. „„ Failing to vacate the premises on expiry of the tenancy.

„„ Underletting of whole: usually permitted with landlord’s „„ Insolvency of the corporate tenant.

Country Q&A
consent subject to conditions.
The court is guided by what is reasonable, and the breach must
„„ Underletting of part: typically permitted with landlord’s be wilful and ongoing for the court to make an order for vacant
consent subject to conditions. possession. For example, no order will be made if the tenant
„„ Sharing with group companies: typically permitted with promptly remedies the breach complained of (for example, by
landlord’s consent subject to conditions. paying all rent due, unless there is a history of persistent non-
payment, or by paying the cost of any damage to the property).
„„ Charging of whole: typically permitted with landlord’s con-
sent subject to conditions. The tenant has no statutory right to terminate the lease and leas-
es rarely include break clauses.
34. Can tenants usually share their business premises with com-
panies in the same corporate group? If yes, on what terms? 38. What is the effect of the tenant’s insolvency (under general
contract terms and insolvency legislation)?

Tenants can usually do this, subject to obtaining the landlord’s

consent. If the tenant is a legal person, the lease can be terminated im-
mediately (see Question 37). If the tenant is a physical person,
35. Who is usually responsible for keeping the leased premises in his bankruptcy does not affect the lease, as long as the tenant
good repair? continues to fulfil his obligations under the lease.

PLANNING LAW/ZONING
If a lease is of the entire building, the tenant is usually responsi-
ble for keeping the building in good repair and decorative order. 39. What authorities regulate planning control and which legisla-
tion applies?
A tenant of part of a building is usually liable for internal repairs
and decoration of the part that it occupies. The landlord is gener-
ally liable for external and structural repairs of the whole build- Planning in Cyprus is the responsibility of the Department of
Town Planning and Housing, a government department within

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 Corporate Real Estate Handbook 2010/11
Country Q&A

the Ministry of Interior. The Development Control Section of the

department functions as the central planning authority of the REAL ESTATE ORGANISATIONS
country. It includes sub-groups responsible for Plan Implementa-
Department of Lands and Surveys
tion and Planning Enforcement, and provides the administrative
umbrella for five of the nation’s nine independent Local Planning Main activities. This department manages the major land mat-
Authorities (District Offices). ters of Cyprus concerning surveying, including maintenance
of the state survey infrastructure, mapping, investigation into
Planning is carried out under the provisions of the Town and title, registration, conveyance, valuations, conservation and
Country Planning Law of 1972, which provides, among other management of State Lands, compulsory acquisition or requi-
things, for the: sitions and encumbrances.

„„ Preparation of Development Plans. W www.moi.gov.cy/moi/DLS/dls.nsf/dmlindex_en/dmlindex_

en?OpenDocument
„„ Control of development.
Local Planning Authorities
„„ Definition of areas of historic, architectural and environmen-
tal interest. Main activities. These authorities examine planning applica-
tions in the context of the Island Plan and grant planning per-
mits as appropriate. A full list can be found at the following
40. What planning consents (for example, planning permission or website.
building permits) are required and for which types of devel-
W www.moi.gov.cy/moi/citizenscharter/CitizensCharter.nsf/All/
opment?
3BAD0A9256302DAFC2256E520024FEEF?OpenDocument

Ministry of Finance
All developments require planning permission and a building
permit. The first step in the development process is to obtain Main activities. The Ministry of Finance administers all taxa-
planning permission from the Planning Authority. A building per- tion in Cyprus, including capital gains tax, stamp duty, immov-
mit can then be obtained from the local municipality or district able property tax and VAT.
administration office, incorporating any planning permission con- W www.mof.gov.cy/mof/MOF.nsf/DMLindex_en/DMLindex_
ditions. en?OpenDocument

41. In relation to planning consents:

Appeals
„„ Which body grants initial planning consents? Appeals must be submitted within 30 days of notification of the
decision. They are examined by a Ministerial Committee, which
„„ Do third parties have the right to object? If yes, please give
bases its final decision on the applicable Development Plan, the
Country Q&A

brief details.
planning policies (which may be included in other documents)
and other material considerations related to the development.
„„ In what circumstances is there a public inquiry?
Because a number of government departments may need to be
„„ How long does an initial decision take after receipt of the consulted during the appeal process, there is no specified time
application? limit for dealing with appeals.

„„ Is there a right of appeal against a planning decision? If The applicant can lodge an appeal against a Ministerial Commit-
yes, please give brief details. tee decision with the Supreme Court, which will base its decision
on the legitimacy of the planning decisions, and not on the judge-
ment of the Planning Authority or the Ministerial Committee in
relation to the planning parameters that were taken into account.
Initial consents
The application is made to the Local Planning Authority for the
district concerned. REFORM

Third party rights 42. Please summarise any proposals for reform and state whether
Owners of adjacent properties whose rights may be affected by they are likely to come into force and, if so, when.
the proposed development can object to the Planning Authority.

Public inquiries The Cyprus government has promised to streamline procedures

and eliminate delays in the issue of title deeds (see Question 12).
There is no public inquiry procedure. The Planning Authority as-
However, at this stage no concrete steps have been announced.
sesses the application and any representations or objections, and
makes a decision based on these.

Initial decision
The Planning Authority aims to make an initial decision within
three months of receiving the application in 60% to 70% of
cases. In practice, it is sensible to allow for six to eight months.

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CONTRIBUTOR DETAILS

LEFKIOS TSIKKINIS MARIORITA NEOCLEOUS

Andreas Neocleous & Co LLC Andreas Neocleous & Co LLC
T +357 25 110000 T +357 25 110000
F +357 25 110001 F +357 25 110001
E [email protected] E [email protected]
W www.neocleous.com W www.neocleous.com

Qualified. Cyprus, 1968 Qualified. Cyprus, 2007

Areas of practice. Immovable property; wills; succession Areas of practice. Commercial law; anti-trust and land law.
and probate; and foreign investment in Cyprus. Recent transactions
Recent transactions Advising on reorganisation of client’s EUR25 million property
„„ Advising on property aspects of EUR500 million prop- holdings in Cyprus.
erty development joint venture.
„„ Advising on property acquisition for Russian and East-
ern European purchasers.

A particular strength is its

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