Beware of Cyprus real estate scams - Financial MirrorBeware of Cyprus real estate scams - Financial Mirror

>T To obtain a permanent residence permit you must purchase a residential property worth at least €300,000. To obtain a passport (when it was valid), the minimum value of a home was €500,000 (plus VAT).

In some cases, however, real estate agents, intermediaries, developers and others inform potential applicants that it is the value of the property, not the purchase amount, that is important. For example, in our recent review from a client in Larnaca, the real estate agent informed him that even though the price of the apartment he was going to buy was €170,000 (the agreed price), he could get a visa because the value of the apartment was at least €300,000. This is fraudulent because the State will not accept such a statement in respect of the €300,000 limit. If such promises or assurances lure the client, they may be left without a visa and perhaps, after paying €170,000 plus lawyers' fees and other expenses, discover that something has gone wrong. This is a dangerous phenomenon that could, together with others, damage this very successful measure that attracts foreign investors. The Home Office should therefore issue a directive or statement on this issue clarifying what is meant by "value" and its relationship to the purchase price.

In an attempt to convince unaware applicants that a lower price will mean lower transfer fees (in favor of the buyer), various intermediaries and sellers will not tell them that there will be higher sales tax on resale. As for transfer fees, the Land Registry will do the assessment.

Another curious example is that visa applications for new properties are processed in about six months, whereas for the sale of a secondary dwelling (secondary sale), the applicant may wait a year. This is very odd because it puts sellers in an unequal position that may or may not be in accordance with the Constitution (where everyone is equal). I understand why there is such a statement (incentivizing development), but caution is needed.

Another example of fraud is the fees of lawyers and accountants for carrying out the visa process. A lawyer asked our client in Paralimni to pay €7,500 for visa procedures and when we offered him to decline, he received a letter from a large law firm for the same service for €2,500.

In another case, a Chinese real estate agent offered a private individual to sell land in Protaras for €3.0 million, but suggested that he would first draw up a sale document between them (for a lower amount), and within six months he would sell it for a much higher amount, receiving the difference. In this case the problems (sale deposit, taxes on the higher price) are obvious, but the value of the property does not exceed €2.0 million and it was a tempting offer for the Cypriot seller.

The way things are now, this measure has brought many billions to the Cypriot economy in recent years, but this could be jeopardized by dishonest behavior and lust for money.

Finally (although there are many other fraudulent schemes), on the subject of racketeering, we were informed by a client who is a major shareholder and director of a project in Ayia Napa that through a false statement another shareholder had submitted a declaration to the Registrar of Companies that he had bought shares in the former and that he was the owner. The problem was uncovered because the racketeer sold the property to third parties who also submitted the deed to the Land Registry. In discussing this with the Registrar of Companies, he informed us that they cannot verify the authenticity of such applications and generally "anything you submit, they accept", especially if it is in electronic form, so who is now insured? Our office may also have to lose its real estate trade name because a third party submitted the appropriate form to the Registry. This is shocking, especially as the country aspires to become an international financial center.

I don't believe this situation exists, but it does.

Antonis Loizos F.R.I.C.S. - Antonis Loizou & Associates EPE - Real Estate Appraisers, Real Estate Salespersons and Development Project Managers