Irregularities harm the residency visa scheme

In order to obtain a permanent residence visa one needs to purchase a housing unit with a minimum value of €300,000.

However, I have been informed that, in some cases, real estate agents, intermediaries, development entrepreneurs and others tell prospective applicants that it is not the amount of the purchase that is relevant, but how much the property is worth.

A client in Larnaca was told by a real estate agent that by buying an apartment for an agreed price of €170,000, he could obtain a residence visa because the value of the apartment is at least €300.000.

This is a racket. The state will not accept such a thing, and if clients are lured by such assurances, they will find themselves having paid large amounts of money for properties, plus lawyers and other expenses, but not being entitled to a visa.

This is a dangerous development that can, along with others, damage this very successful measure for attracting foreign investors. The Ministry of Interior should issue a directive on this matter, clarifying its stance on value versus purchase price and so on.

It seems the various intermediaries and sellers, attempt to convince applicants that the lower price means lower transfer fees, to their benefit, without telling them that in the case of resale, the capital gains tax will be higher.

Another issue is that visa applications for new properties take six months to be processed, while for resales then the applicant may wait a year. This puts sellers on a different footing, when everyone is meant to be equal. The idea is to encourage development, but caution is needed.

Another example of fraud is the overcharging by lawyers and accountants who undertake the process of obtaining visas. A client in Paralimni was quoted a fee of €7,500 by an advocate a visa procedure. We recommended that he turn them down and he got the same service from a large law firm for €2,500.

At the same time, real estate agents ask for a commission of around 20 per cent. In one case in Larnaca, a seller agreed with a Chinese real estate agent to sell his seaside home for €1,800,000, with the agent collecting €800,000.

I wonder if the authorities in Cyprus accept such a high commission and if not, then the seller would pay tax on the entire amount of €1,8 million.

This measure has brought many billions to the Cypriot economy in recent years, but due to the dishonest, greedy behaviour of certain local and foreign players it is in jeopardy.

Antonis Loizou & Associates EPE – Real Estate Appraisers & Development Project Managers, www.aloizou.com.cy, antonis.loizou@aloizou.com.cy