Cyprus to limit property sales to foreign buyers under new law

Lawmakers on the House Interior Committee on Thursday urged that a legislative proposal regulating the purchase of real estate by foreigners be brought to the plenary for a vote before parliament dissolves ahead of the elections.

Committee chairman Aristos Damianou (Akel) said his party had prepared a comprehensive bill to address property acquisitions by third-country nationals and companies with foreign interests, warning that the current framework had allowed excessive concentration of land in foreign hands.

“It is a given that a large part of our homeland has been sold to foreign hands and this is dangerous for the semi-occupied Cyprus,” he said.

At the same time, he added, property prices “have taken off through a real estate ‘bubble’ as a result of the purchase of large areas or high-value real estate, especially in urban centers”.

Damianou said there was broad acceptance of the core proposals by the majority of involved bodies, including the Interior Ministry, creating scope for consensus.

He noted that similar initiatives had been tabled by MPs from other parties and that he had undertaken to consolidate the various texts into a single proposal.

Meetings had already been held with the ministry, he said, so that the final draft could also secure government backing and avoid the risk of referrals.

“We are at a good point,” he added, estimating that within 15 days a unified text would be ready, allowing for the adoption of “a modernized framework for the purchase of real estate by foreigners” before parliament’s self-dissolution.

Explaining the substance of the proposal, Damianou said the original law on the acquisition of real estate set specific criteria, including limits on area, but these had gradually been diluted through cabinet decisions.

“As a result, today they are buying everything from beaches to hotels, this must stop,” he said, noting that separate legislation already governs large developments.

Under the proposed changes, third-country nationals would be allowed to acquire property only up to a specified maximum area, rather than extensive plots as is currently possible.

Acquisitions in agricultural and rural zones would be prohibited, as would purchases near critical infrastructure, including military camps, ports, airports and beaches.

By contrast, purchases of homes, shops and similar properties would remain permitted.

He added that the ministry had proposed further conditions, including an obligation to retain the property for at least five years and to remain in the Republic for at least five years.

The aim, he said, was “precisely to address the phenomenon that occurred with the ‘golden’ passports, where ‘straw men’ bought large areas of land”.

“Therefore, it is a set of criteria that will not completely prohibit, but will limit in terms of rationality the ability of foreigners to buy in Cyprus,” he said.

Asked whether Cyprus could instead adopt a model under which land is leased rather than sold, Damianou said this would require a radical overhaul of the legal framework and would therefore be particularly complex.

He also said the bill would extend to assignment contracts, describing them as “a large category of transactions that are carried out with less transparency”.

Updated data on the total extent of land acquired by foreigners had been requested from the land registry, and were expected next week, he added.

For his part, Diko MP George Papanastasiou said his party supported revising and modernising the framework to prevent the use of Cypriot companies as intermediaries for foreign buyers and to safeguard agricultural land and the broader public interest.

“Such mechanisms and criteria must be introduced for effective control, who the foreigner is, where he comes from and why he should acquire and for what purpose he will acquire that property in Cyprus,” he said.

It was clarified before the committee that transactions already completed or filed with the Land Registry would not be affected, as the proposed legislation would not have retroactive effect.

Separately, Fiscal Council president Michalis Persianis warned that maximising foreign capital inflows should not be the sole objective.

“Foreign capital is indeed a blessing for the economy, but when there is no goal and strategy, we are led to inequalities and to phenomena of bloodletting of certain industries,” Persianis concluded.