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Cyprus property exchange schemes target UK homeowners

There’s a very real possibility that you could end up buying a property being blissfully unaware that it’s mortgaged; you’ll only discover this later, when you come to sell the property or when the bank comes knocking on the door to repossess it because the developer has not repaid the loan.

SCHEMES where property developers offer part-exchange deals are commonplace in the UK. They enable those wishing to move house to sell their present home to a developer in return for a discount on the price of the new home they wish to buy.

These schemes offer those wishing to move a number of benefits:

  • A guaranteed buyer for their existing home
  • No estate agent or advertising fees to pay
  • No chains or last minute hitches

There are also benefits for the property developer as it enables them to sell new property much quicker than would otherwise be the case.

But there can be downsides to these schemes. The main issue will probably be financial because the person wishing to move will be unhappy with what the developer offers for their present home.

UK to Cyprus property exchange schemes

The Cyprus Property Magazine has learnt that a number of developers in Cyprus are offering overseas property exchange deals.

They are focussing their marketing efforts onto UK homeowners and those in other countries who wish to move to Cyprus but who cannot sell their present home because of the depressed market conditions.

Wealth Warning

We urge anyone considering these schemes to proceed with extreme caution:

  • You may end up part-exchanging the equity tied up in your UK home for a mountain of debt tied up in the one you’re getting in Cyprus.
  • You may find that the property you’re receiving in part-exchange has been built illegally; without the required planning and building permission permits.
  • You may also find that the property you are getting is overpriced compared to similar properties in the same area.

Advice

It is absolutely essential that you take independent legal advice; i.e. from a lawyer in Cyprus who is totally independent and not connected in any way to the developer, their agents, or anyone else connected with the company selling the property.

The British High Commission in Nicosia maintains a list of English-speaking lawyers who may be able to assist. You can view and download that list by clicking here.

Under absolutely no circumstances should you sign any papers or hand over any money until you’ve taken independent legal advice. This is very, very important; particularly if any contract you are asked to sign contains a clause; “The present Agreement will be governed by the legislation of the Republic of Cyprus“. The property laws in Cyprus are NOT pro-buyer.

The property laws in Cyprus are totally different to those in the UK. For example:

  • In Cyprus, there is no requirement for the person selling a property to pay off any mortgage they have on it before you pay for it. So there’s a very real possibility that you could end up buying a property being blissfully unaware that it’s mortgaged; you’ll only discover this later, when you come to sell the property or when the bank comes knocking on the door to repossess it because the developer has not repaid the loan.
  • There is also no requirement on a lawyer acting on behalf of a buyer to carry out various searches as there are in the UK. So it is essential that you instruct the lawyer acting on your behalf properly – and get a written estimate of their fees.

Make sure you do your homework properly. Do not rely on the word of the developer or any of their employees or agents. Do your own independent research – visit the island to see precisely what’s on offer and the price of comparable properties in the same area.

Do your sums! In addition to the costs associated with moving from the UK to Cyprus and refurnishing your new home, you’ll need to budget for legal fees, stamp duty, application to the Council of Ministers (non-EU citizens only), mortgage fees, value added tax, agency fees, property transfer fees, local property taxes.

Don’t forget to factor in exchange rate fluctuations. We have received many letters from victims of the current financial crisis who have been hit by the fall in the Sterling/Euro exchange rate.

Visit the Cyprus section of the UK Foreign & Commonwealth Office website and take particular note of the ‘Purchasing property’ advice in the General section.

Finally, remember that acting on impulse can seriously damage your wealth!

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