Permanent residence incentives a great injustice

09:35 - 24 Σεπτεμβρίου 2013

Απόψεις InBusiness

Back in May the government went ahead and amended the relevant regulation offering incentives to foreigners to acquire a permanent residence permit in Cyprus.
All foreigners who buy a brand new property or two properties from the same developer and fulfill some other simple requirements are entitled to permanent residence within a couple of months.
There is a simple question which begs to be asked though: Why does this only concern new properties? Is it designed to bail out land development companies in dire economic straits?

Wrong

Or is it perhaps because they wrongly believe that the sale of a new property heats the economy more than the sale of an older property would?
To begin with the incentives are a great injustice to used property owners trying to sell.
It also has to be taken into account that foreigners wish to buy a house with a title deed to be sure that they own what they’ve paid for. It is well known that new properties acquire a title deed 2-4 years after completion.

Earn more

What is even more important is that the government stands to earn more from the sale of a used property as new houses have a 5% VAT whereas used ones pay 8% transfer fees, (for values over €170.000).
If we are to consider a new property selling for €300.000, the VAT for it would be €15.000, while a used property of the same value would reap in €17.200 for the government.
And guess what. If the used property is not sold its owner will never need to buy another property to replace it, so nobody wins.

Spoiled for choice

Another factor to consider is the fact that if foreign investors had the option to buy new or used properties they’d be spoiled for choice. Most of the new properties available now were built with British and Russian investors in mind. We cannot be at all sure they will be appropriate for Chinese, Egyptian or Lebanese investors.

The government must act quickly to include used properties with title deeds in the relevant regulation.

Permanent residence incentives a great injustice

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