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. Therefore, 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 a formality, permission is granted on the 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.
To let on a short-term basis to holidaymakers you have to apply to the Cyprus Tourism Organization (CTO) to have the property certified for holiday lettings. 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% 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).
Although the law is clear, illegally letting properties privately to families and friends on a short-term basis is a common practice. Many agents and developers even offer a buy-to-let service for this purpose. The Cypriot government realises that the increased investment in the island and increased tourist revenue resulting from such lettings boosts the economy. For such reasons, 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.
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. It may also be mandatory to notify your insurance company. You are also required by law to pay tax on your rental income in Cyprus even if the income is received in another country.
Contracts
The common practice when renting as a holiday let is to draw up a simple agreement that describes 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 safeguards. If you use an agent, he will usually provide a standard contract. This brings us to the next point, there is always the possibility of hiring a letting agent to ease the whole process for you.
Using a letting agent
If you have little spare time, you’re better off using an agent who will take care of everything and save you the time and expense of advertising and finding clients. They can organise a range of services to suit your needs including cleaning and maintenance, administration and advertising, periodic checks when a property is empty to ensure that it’s secure and everything is in order, advising guests on the use of equipment if necessary and providing them with information and assistance (24 hours a day in the case of emergencies).
Independent letting
It could be the case that you do have spare time to invest in this matter, or that you prefer not to spend money on an agent. Alternatively, there is always the possibility of carrying out the process yourself. In fact, the best way to get a high volume of lettings is usually to do it yourself, although many owners use a letting agency besides doing their own marketing from their home country.
Rental rates and deposits
Add a returnable deposit (e.g. €250 to €850 depending on the rent) as security against loss (e.g. of keys) and breakages. This is returnable minus any necessary deductions. A booking deposit is usually refundable up to six weeks before a booking, after which it is forfeited to the host.
Advertising
A personalised website or renting website such as Trivago or Booking , where you pay for the advertisement and handle the bookings yourself, is the best option nowadays. It also pays to work with other local people in the same business and send surplus guests to competitors as they will usually reciprocate the offer.
Letting rates
An average apartment or townhouse with two bedrooms is on average between €700 and €1000 per month depending on the area of the island. For three bedroom apartments the price goes up to €1300 on average. In the case of houses or villas the price is around €2000.
Most people who let all year round have low, mid and high season rates. The high season usually includes the months of June, July and August and possibly the first two weeks of September. Mid season usually comprises of late September and October, and Easter, Christmas and New Year holiday periods, when rentals are around 25% lower than the high season. The rest of the year is classed as the low season. During the low season which may extend from October to May, rates are usually up to 50% lower than the high season.
Note that rates usually include linen, gas and electricity, although electricity and heating are usually charged separately for long lets in winter.
Increasing Rental Income
Rental income can be increased outside high season by offering special interest or package holidays. These can be organised with local businesses or tour operators to broaden the appeal and cater for larger parties. These may include activity holidays like cycling or hiking, gastronomy and wine tasting tours as well as arts and crafts.
This article is adapted from Buying a Home in Cyprus from Survival Books.