Many foreigners let their properties illegally, whether through ignorance or in defiance of the law, and few are prosecuted. Nevertheless, there are ways you can let your property legally.

Cypriot law is clear on the subject of property letting: non-residents aren’t permitted to let property on a short-term basis to holidaymakers, although they can let long-term to Cypriot residents.

The restriction is connected to the fact that, non-resident foreigners (even EU citizens) must obtain permission to buy property in Cyprus. (Since the country’s accession to the EU in May 2004, Cypriot law has distinguished between residents and non-residents, as opposed to Cypriots and foreigners.)

Unless you’re a Cypriot or an EU citizen resident in Cyprus, you must apply to the Council of Ministers for permission to buy a property. Although this is almost always a formality, permission is granted on condition that the property won’t be used for commercial purposes or will be let only on a long-term basis to residents of Cyprus.

Letting a property on a short-term basis to holidaymakers is illegal unless you apply to the Cyprus Tourism Organisation (CTO) to have the property certified for holiday letting. This is permitted only on detached properties, and certification can be a long and complicated procedure. There are many estate agents and developers who can help with this, but make sure you get independent legal advice before you commit yourself financially. The CTO will then inspect your property in the same way that it inspects any tourist accommodation and will charge you 3 per cent of the expected income from the property annually. You must pay this charge even if you don’t receive the estimated projected income (or any income at all!).

If you’re planning to let property on a community development, you must also check whether there are any community rules that prohibit or restrict letting, aside from the legal restrictions. You may also be required to notify your insurance company.

SURVIVAL TIP: If aren’t a resident of Cyprus and you’re planning to buy property to let, you must take professional legal advice before commiting yourself.

If you let a property in Cyprus, you’re required by law to pay tax on your rental income in Cyprus even if the income is received in another country.

Many people illegally let their properties privately to families and friends on a short-term basis and many agents and developers offer a buy-to-let service to this purpose. Although the law is clear, it isn’t policied vigorously, as the Cypriot government realises that the increased investment in the island and increased tourist revenue resulting from such lets are boosting the economy; they don’t want to discourage property buyers or potential investors, who will be paying taxes, nor tourists, who will be spending money in Cyprus.

Since joining the EU in May 2004, Cyprus is going through a period of change and adaptation, and legal experts agree that the letting laws may change in the near future. Nevertheless, if you plan to buy to let, you must obtain advice on your legal position from a qualified professional.

Contracts

Most people who do holiday letting draw up a simple agreement that includes a description of the property, the names of the clients, and the dates of arrival and departure. However, if you do regular letting you may wish to check with a lawyer that your agreement is legal and contains all the necessary safeguards. If you use an agent, he will usually provide a standard contract.