We have just learnt that the EU does not intend to grant Cyprus a further postponement regarding the introduction of VAT on land sales. As a consequence, the purchase of plots will be subject to 15% VAT from 1st January 2009.
The news comes as a blow to the economy and the Cyprus property market, which has already been reported as being in a crisis.
Lakis Tofarides, the Chairman of the Pancyprian Land Developers Association, is reported as saying that the increase in the cost of land is the main reason for the huge increase in the cost for the first-time buyer and that the imposition of 15% VAT on properties will push the costs up even further.
The Cyprus Government has already introduced a housing grant in the form of a VAT refund scheme to help lower income first-time home buyers.
We will publish more information as the details emerge.