British retirees eyeing a retirement home in Cyprus may need to rethink their plans as changes proposed by the government to non-EU residence permits raise the bar for new retirees by €130,000.
Amid a surge in demand from UK, Israeli and German retirees, coastal real estate stakeholders are concerned that the government’s plans will prematurely spark a mini-boom in the sector.
The Home Office confirmed that the cabinet had approved amendments to the rules governing the issuance of immigration permits to foreign nationals.
The draft law on amendments has already been prepared, rechecked by legal services and submitted to Parliament.
While the ministry declined to disclose the details of the changes, arguing that they are subject to amendments by MPs, sources say the news is not good news for expats who want to live to retire in Cyprus.
While this admittedly makes life easier for self-employed and skilled workers from third countries, retirees will need almost twice as much money to invest in a home and four times as much money in the bank.
According to information from parliamentary sources, as a result of the changes, those who are going to live in the republic will pay tens of thousands more.
Currently, British expats and other retirees wishing to make the island their home must purchase suitable private housing in the Republic for at least €150,000.
Sources confirm that the authorities insist that the minimum amount of investment in residential real estate is at least 250,000 euros.
This means that pensioners will need another €100,000 from the start.
In addition, the changes provide that anyone who intends to reside in the Republic without engaging in any work or other economic activity must have an annual income of at least 40,000 euros plus 10,000 euros for each additional family member.
Currently, pensioners only need an annual income of €10,000 to be accepted as candidates for a residence permit.
“This could jeopardize the boom in demand that we have seen in recent months for property in coastal areas, especially in Paphos,” said Esme Palace, attorney, partner at Michael Kyprianou and Co LLC Paphos.
She said that after the news about the government’s intentions to tighten the requirements for people intending to live in Cyprus without engaging in any economic activity, a flood of requests from British citizens.
“They are concerned that many of these people rely on the sale of property they own in the UK and on their pension,” Palace said.
As she explained, the changes will exclude a large number of British retirees, which threatens the property market.
Real estate agents in Limassol and Paphos are reporting the highest demand from foreign buyers and Cypriots for homes since 2020, when the government ended the disgraced citizenship-by-investment scheme.
The boom comes amid a global crisis, a raging war in Ukraine and sanctions hitting Russian investors, who were the number one buyers of property in Limassol and Paphos.
Palace said the influx of demand is being driven mainly by British expats looking for a nursing home , Israelis and Germans looking to relocate.
“Sales in Paphos are growing. This is the biggest traffic we have seen in recent years as our clientele is growing rapidly as more foreigners are looking for a home on the island.
“This is the biggest move we have seen in the local market since the end of the citizenship by investment scheme, coinciding with two years of inactivity due to COVID restrictions.”
Palace said that for the first time, stakeholders are noticing the keen interest of British retirees in new property.
Indeed, in Paphos, sales to foreigners grew by 113% in the first five months compared to last year, as 746 sales documents were filed with the Land Registry.
Of the 746 properties sold, 415 were bought by non-EU citizens and non-EU citizens bought 186 in the first five months of 2021.
Although the Interior Ministry refuses to officially confirm the newspaper’s information about the proposed changes, the philosophy of the amendments is to bring the living pattern in line with “reality on the ground.”
Eleni Averkiou, real estate consultant for Danos/BNPRE Group, said the changes, as reported, may not necessarily be a bad thing for the real estate sector.
“Taking it for granted that the government intends to increase the minimum cost of housing that a retiree needs to purchase, this could be in favor of the real estate and construction sector,” Averkiu said.
A real estate consultant said that keeping the minimum to buy at a low level of 150,000 euros could discourage foreigners from looking for new property.
“By raising the minimum, foreigners will be encouraged in some way to find new property, stimulating the local housing industry.”
She further explained that encouraging the construction of new houses would also mean an increase in supply in the presence of strong demand from the Cypriots.
“This could bring some stability to the sector in an era when everything is fluid due to the war in Ukraine, possible outbreaks of new conflicts in other regions of the world and, of course, inflation.”