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After David Cameron messed up on the matter of Brexit, we follow closely the reactions of businesses and individuals regarding whether Cyprus will possibly benefit or lose from such an event regarding the real estate market.
It is most unfortunate that the U.K. will leave the E.U. and we feel that we are losing a friend for life. For those who have studied or worked in the U.K., the whole situation saddens us, and we wish for the Brexit result to be revised (unlikely).
We note that a number of British nationals (including those of Cypriot origin) are applying for a Cyprus passport in order to bypass the restrictions that the British might have regarding the acquisition of real estate, the Cyprus capital gains tax situation, the inheritance tax and other taxes on income etc. For those British nationals of Cypriot origin, this might be straightforward, but for those who are not, it gets complicated.
In order to get a Cypriot passport with the new regulations that apply (buying a house for at least €500,000) or for permanent residency (it must cost a minimum €300,000), it is no easy goal, notwithstanding that we hope our Government will come up with “something” to ease this situation for the British.
At this point of time, as we have said, we note a trend of increased interest also by UK-based companies (most welcomed) and we expect that this trend will continue at an even higher rate nearer the exit date. With a focus turned specially toward shipping companies and with the efforts of the new deputy Minister of Shipping (for which we greatly respect her capabilities) we expect that Cyprus will gain “something” out of Brexit. But the main beneficiaries will be the other large European countries, such as Germany, France and others. Our low tax system with benefits to the managers is an advantage (a most clever idea since the managers decide where a company should locate).
Benefits apart, we have to look at the possible fluctuations on the exchange rate, the tourist numbers (expected to be reduced) and other consequences in order to ascertain at the end whether Cyprus will be on the plus or minus side. So far international reports stipulate that Cyprus will be a loser (as well as Malta and Spain) and this is not good.
The British market, regarding real estate for houses (mainly restricted to holiday homes), is now very limited and at low budgets. Interest is directed mainly towards Paphos, as opposed to other areas where other nationalities are active.
The problem is that British nationals will be classed as non-EU or third-country nationals which implies by projection that they can buy only one house. There are other restrictions like buying land at a maximum extent of 4,000 sq.m., limitations on rentals, income, loss of tax benefits etc.
It is a mess and notwithstanding the overall economic reviews, we must focus now on the real estate market consequences, enter into discussion with British bodies and others and come up with some sort of a “solution” to ease the pressure on real estate which is tangible and coming soon.
