It sounds like a walk in the park: buy your dream property in Cyprus, advertise it for tourist rental, then sit back and count the euros. It is possible, but you need to stay on the right side of the law.
Buying that dream home in Cyprus needn’t cost you much in the long term. If you fancy yourself as a landlord, you can capitalise on the island’s popularity with tourists – over 3 million visited in 2016 – by renting out your property. Will you be sitting back as the euros roll in? Well, yes it can be a great source of income, but there are potential stresses and pitfalls in the old rental game, including renters who don’t pay, tenants who won’t move out and property that gets wrecked. Non-EU citizens are not allowed to rent property out there, so you’ll need to consider whether that will cause a problem when the UK leaves the EU.
It can still be worth doing, however, but you need to plan ahead, to ensure your relationship with your tenant (and the Cypriot authorities) remains a good one. Here are some tips for anyone considering dipping their toes in the Cyprus rental market.
Draw up a rental agreement that details your relationship with the tenant and sets out the finer points of the rental.
As a landlord the simplest way to protect both you and your property is to get everything written down. Draw up a rental agreement with the tenant that covers:
• The tenant’s full contact details
• Term of the rental
• Limits on occupancy. For example, banning sub-letting
• Deposit and fees
• Repairs and maintenance
• Your legal right of entry e.g. to carry out repairs
• Who is responsible for payment of utilities and taxes
If you’re renting on a long-term basis you can decide whether to offer furnished or non-furnished. If furnished, prepare an inventory that lists all of the items in the property. A photographic catalogue will ensure you keep an accurate record of the evidence, which should be co-signed by the tenant and appended to the rental agreement. Also ensure that your tenant is legally obliged to leave the property in a suitable state at the end of their rental agreement. If you’re renting out your holiday home the property will need to be fully furnished but you can’t expect them to sign an inventory. General wear and tear has to expected, but talk to the holiday lettings company about insurance arrangements for significant damage or loss.
By requesting a deposit from your tenant you will protect yourself from non-payment of rent and damage to the property. Clearly stipulate the circumstances under which the deposit will be forfeited and how the deposit will be held in the rental agreement. This will help avoid any confusion between both parties.
If you decide to rent your property out for a longer period, you may decide to increase the rent during that period. This will be possible if you have already stipulated in the rental agreement the circumstances under which it may be reviewed and the amount it may be increased. There are strict rules, however, under Cyprus’s Rent Control Law (1983), that limit you to raising the rent by no more than 14%, and that only after two years from the original agreement.
Think about tax before you rent. A savvy landlord will take advantage of any tax provisions designed to benefit them. For example, the rental income of preserved buildings is exempt from income tax – subject to certain conditions.
The Global Property Guide records that the Cypriot legal system tends to favour tenants. Apart from the rent control laws it is difficult to evict tenants, taking up to a year. With all this in mind, we can’t stress enough just how important it is to follow the law and keep adequate paperwork. If you can do all that, renting out your property in Cyprus could make perfect sense, with long-term rental yields of 4 to 5%, according to research by the Global Property Guide.
So all the talk is of buying overseas is finally over and you’re actually ready to head out to Cyprus for a viewing trip to find a holiday home with rental potential. Find out how to make the most of your visit by downloading our free guide to planning a viewing trip.
The Cyprus Buying Guide covers every stage of the property buying process, sharing our experience and knowledge to ensure a safe and successful property purchase. The guide will help you to: