Filenews 30 January 2025 - by Fanis Makrides
Foreigners buy land in Cyprus without any real impediment, skyrocketing property prices on our island while affecting groups of citizens, such as local young couples, who are daily faced with the housing issue.
Legislation exists and even restrictions are placed on foreign persons. However, all the information that has been put before "F" indicates that the relevant Law is bypassed, as nationals of other countries with the existing data currently buy property through legal entities, ie companies, avoiding control.
The debate
The whole issue has been raised several times in the sphere of public debate, but this time it will be attempted to be highlighted in detail, through parliamentary scrutiny. Today, the parliamentary committee on Internal Affairs will discuss a relevant proposal for a law by the MP for DISY Famagusta, Nikos Georgiou.
Representatives of the Ministry of Interior, the Department of Lands and Surveys, the Ministry of Finance, the Law Office of the Republic and the Registrar of Companies and Intellectual Property have been invited to attend the meeting, among others. As a result, they will be able to give opinions on the basis of evidence and enlighten the members of the parliamentary committee on the dimension of the issue. Most importantly, they are expected to be asked to comment on information that carries foreign persons circumventing the law by purchasing real estate through legal entities (companies and trusts).
Due diligence rules
According to the explanatory memorandum accompanying the proposal for Georgiou's Law, the intended result is the modernization of the provisions of the legislation, as well as the protection and safeguarding of the public interest. It is noted: "The purpose of the proposed law is to amend the Acquisition of Immovable Property (Foreigners) Law, in order to modernize its provisions concerning the procedure for the acquisition of immovable property by a foreigner. In particular, the proposed arrangements are necessary for the purpose of protecting and safeguarding the public interest, by enhancing transparency, effective control and the timely application of due diligence rules by professionals who are required to carry out these actions at the behest of applicants".
However, based on what we read in the proposed amendments, it is obvious that an attempt is being made to set a control framework for foreigners who want to acquire land in Cyprus. In essence, this framework resembles the provisions of anti-money laundering legislation. Specifically, the draft law introduces lawyers, accountants and real estate agents into the whole process. As is well known, lawyers and accountants have obligations to ensure due diligence rules ("Know Your Client" (KYC). In other words, it is proposed that in the process, executives of professional sectors commit themselves to the quality of the foreigner.
Query for companies
The issue, as we have noted, is not the first time that citizens and officials have been concerned. The existing Law has restrictions (Article 3) on the acquisition of immovable property by a foreigner and more specifically, this is prohibited without prior permission from the Council of Ministers. In fact, the relevant article of the Law defines the absolutely necessary area for the construction of premises for residence or business premises. This, always according to the legislation, should not exceed the area of the two stairs.
However, the issues raised, such as information about circumvention of the Law and in particular the purchase of real estate by foreigners through companies, have also taken official form. It is indicative that Nikos Georgiou, in a parliamentary question he had submitted to the Minister of Interior, Konstantinos Ioannou, last summer (30/7/2024), had asked whether "restrictions on the acquisition of immovable property in our country by third-country foreigners concern only natural persons".
Besides, in an article by George Coucounis (lawyer) in "F" about 3.5 years ago, it was characteristically noted: "(...) Any foreigner may form a Cyprus company and acquire immovable property regardless of its managerial or shareholding structure, without any restrictions. It is reasonable to ask why the above restrictions exist for natural persons, if they can acquire immovable property through a company."
Wanted for usurpation with land in the Republic
- The 51-year-old wanted son of defendant Simon Mistriel Aykut with a fortune of €1.2 million. in the free areas
Proof that there is insufficient control over foreign persons acquiring immovable property in the Republic is the fact that the two sons of Simon Mistriel Aykut, accused of large-scale usurpation in the occupied areas, had assets in the Republic of Cyprus. In fact, recently the Unit for Combating Cover-Up Offences (MOKAS) frozen the property in question and in January made an official update on its actions.
Aykut's sons, who have been wanted on a warrant issued by the Cyprus Police since last summer, are 51-year-old Afik Yakov and 49-year-old Michael Mistriel Aykut. Both are presented as directors of the group that allegedly made the illegal developments in the occupied territories for which their father is accused. They hold Israeli and Portuguese passports.
In particular, 51-year-old Afik Yakov, whose activities have been the subject of police investigations since 2020, has an apartment in Larnaka Municipality worth €121,300 (pledged).
In addition, the property of LIOLIA COMPANY LTD, of which Afik Yakov was the sole beneficial owner, was frozen:
> Carob field in Larnaca with an estimated value of €245,900 (2018).
> Carob field in Larnaca (Kalavasos) with an estimated value of €321.100 in 2018.
> Field in Larnaca (Kalavasos) with an estimated value of €222.800 (2018).
> Field in Larnaca (Kalavasos) with an estimated value of €240.000 (2018).
> Field in Deftera (Nicosia), worth €60,000.
Ban in Greece for border areas
A survey among EU member states shows that there is no ban on the acquisition of immovable property by foreigners. However, in several states there are restrictions and controls, based on national laws, and the scepticism that exists in European countries is evident.
The example of Finland confirms this. Last autumn, at the initiative of the Finnish Minister of Defence, a report was prepared aimed at improving the country's national security. The aim is to introduce stricter legislation in relation to the purchase of real estate by foreigners. It proposes not to grant permission to persons whose country of nationality has been determined by the European Union to have violated the territorial integrity, sovereignty and independence of another country. The aim is to eliminate risks to national security.
In the UK, the relevant legislation has safeguards, since conditions are set that have to do with tax issues, transparency and anti-money laundering rules. In addition, there are restrictions on foreigners purchasing critical national infrastructure in specific sensitive areas of the economy.
In Greece there are restrictions on the purchase of real estate by foreigners in border areas. That is, at the borders of the country. In particular, a special permit from the Ministry of National Defence is required.
