A number of people buy property in Cyprus in order to let either wholly or partly. With special regard to foreign buyers who do not use their property the whole year, this buy to let alternative is quite attractive and for those who wish to supplement their income, it is a good way out. If however this buy to let is a primary consideration in a purchase care is needed to select the location and type of property which can be relatively more attractive to let.

In terms of maximum occupancy we provide the following statistical analysis (the higher the score the higher the occupancy) on the occupancy rates in a relative form:

Paphos 10/10
Limassol (villages) 7/10
Larnaca 4/10
Paralimni 3/10

We estimate that the 10/10 occupancy is, on average, 4-6 months per year (much of the let period depends also on the weather conditions and the economic situation of the tenant to let country). Most lets come from abroad (95%) with the locally generated interest representing only a small percentage.

The properties which are more in demand are villas of 3-4 bedrooms with a pool, offering attractive views. The more the bedrooms the lower the cost per head, so in this sense, it is more letable. However we will say that the 4 bedroom alternative is the best. Two bedroom units can sleep only 4-5 people, making it more expensive, hence less attractive.

The letting rates vary from period to period and from one location to another. On average a 3 bedroom with pool villa should produce an income of around €20.000 p.a., but one should also take into account the increased depreciation and maintenance, breakages, etc. It is acceptable that holiday short let tenants do not pay particular attention to “others” goods/property and the damage could be extended from little things, such as excessive suntan oil (which damages the pool filter) to blocked drains, broken glass and doors, to pure theft of goods.

Another matter to consider is that in Cyprus strictly speaking short lets (i.e. letting periods of less than 30 days) are not allowed under the Cyprus Tourist Laws. This law however is not enforced, save upon reporting by third parties. Another consideration to bear in mind is that the income derived from such lets, must be declared either to the Cyprus or to the country of origin of the owner (tax authorities). Also if one wants to be “proper”, local authorities are allowed to charge a small rent tax and if one lets the property, he must also report this to the local authority. It is appreciated that very rarely these buy to let buyers report their income and so far they got away with it. The U.K. tax authorities are getting more aggressive on this however and recent reports even suggest some form of investigation to be carried out by the U.K. tax authority on its own not only for Cyprus, but other countries as well.

Our experience has been however that locally just about everybody turns a blind eye accommodating cheating of the authorities and notwithstanding the fact that “everybody does it” it is good you know where you stand.

Rental income tax, provided one is taxed under Cyprus law, bears no income tax up to the amount of €19.500 (p.a.), 20% tax up to €28.000 (on the difference), 25% up to €36.300 and 30% over that – The above income is calculated once one deducts 20% for expenses etc. In addition a 3% defence tax is charged on the total income (after deduction of 25% from the gross income). In case of Cos, you have to pay the ordinary 10% corporation tax after allowing for actual expenses +3% defence tax. Please consult your accountant for details.

These who want a more permanent income on a yearly basis, Buy to let should be directed towards residential areas, where there is a stable demand forthcoming both from locals, as well as foreign people and for letting periods in excess of 12 months.

For those who borrow in order to buy, must not depend on the rental income in order to pay off their loan, if the loan is in excess of 50% of the acquired price (this is a general rule).

Notwithstanding the above, do not think that running one’s own lets is an easy task. Cleaning, maintenance, looking after small and big problems, making sure that everything works prior to the tenant’s occupation, can cause a lot of problems. For this reason most let properties are given out to specialized villa-let firms, which can either provide a guaranteed income (with all costs etc undertaken by them) or they can provide clients only for a commission (usually 15% on the income) and the owner does all the running around. If one does not wish to use the services of agents, the best way to promote one’s property is through the internet under the appropriate headings. Do not expect that you will get more than 3%-4% return (approximately) on the present value of your property, but then during these difficult financial times, any level of income counts.

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