Cyprus may tighten control over real estate transactions involving foreign citizens

A special report by the Cyprus Audit Office, “Control of Real Estate Acquisition by Foreigners,” revealed serious gaps in the legislation and oversight system for such transactions.

According to the report, in 2024 foreigners were involved in 27.35% of all real estate transactions in Cyprus. However, auditors emphasize that this figure is actually underestimated, as it does not include purchases made through companies with foreign control or interests.

The country’s legislation allows foreigners to acquire property only for certain purposes — residential, commercial, or industrial use — with restrictions on type and number of properties. However, since 2011, after the legislation was adapted to EU law, these restrictions do not apply to companies registered in EU countries, even if they are effectively controlled by foreign capital. An additional factor was the 2013 directive, which gave investment character to real estate transactions, further enhancing their commercial use. The report emphasizes that introducing such rules without legislative changes raises legal concerns.

The Audit Office identified a number of serious problems:

• There are no objective criteria for assessing the financial condition of buyers;
• The verification of the source of funds is superficial;
• The registry system called “Foreigners” has significant technical deficiencies and requires modernization;
• There is no control over the further use of property and compliance with declared acquisition purposes.

Auditors note that current restrictions are formal in nature and are easily circumvented through companies registered in the EU or through external financing schemes. As a result, the state lacks reliable data on the actual volume of property controlled by foreigners.

In its report, the Audit Office recommends developing a new regulatory strategy considering the country’s economic, geopolitical, and strategic interests. It also proposes updating legislation to align with EU norms, while introducing stricter control and transparency mechanisms both at the acquisition stage and during subsequent property use.

It is also emphasized that in many EU countries there are already restrictions on property acquisition by foreigners for reasons of national security, public order, and protection of societal interests. Cyprus currently has no such measures, which creates additional risks for market oversight.