Pros and Cons: Renting vs. Buying Property in Cyprus

by | Nov 2, 2023

The debate between renting and buying a property is a tricky decision especially for expats, and the choice is far from one-size-fits-all as it hinges on a multitude of factors ranging from lifestyle preferences to financial stability. To understand the intricacies of the Cyprus property market such as the pros and cons of renting versus buying, current trends, rules for foreign buyers and the differences between major cities, Headliner met up with real estate consultant Marianna Lordou from award-winning agency M. Residence. The agency is known for its creative approach to real estate and whether supporting first-time homebuyers or seasoned investors Marianna’s dedication shows in every transaction. Proof of its strong performance, the agency has been awarded membership of the ‘Leading Real Estate Companies of the World’ – a prestigious global community of real estate brokerages renowned for rigorous standards – and has won accolades in Cyprus for its tech innovation and in setting new trends in the sector.

Q: What factors are most important to consider when deciding between renting and buying a property?

A: It’s essential to weigh these factors based on individual or family priorities, financial circumstances, and long-term plans. Every situation is unique, and what works for one person might not work for another. Buying a property often shines as the preferable choice. It offers both a tangible investment and an emotional reward. Through homeownership, individuals build savings over time, contrasting the temporary nature of renting. Owning a home fosters a sense of belonging and financial security. While it’s crucial to assess current market conditions, the appreciation potential in Cyprus’ real estate market underscores the appeal of buying. Renting, though providing short-term flexibility, misses out on the enduring benefits and deep-rooted connection of homeownership. In essence, purchasing property is more than just an acquisition, it’s an investment in a lifelong legacy.

Q: What are the current market trends in Cyprus, and how do they impact the decision to rent or buy a home?

A: The Cypriot housing market is currently characterised by high interest rates, making home loans more burdensome for young couples. The new VAT law, targeting houses larger than 130m2, impacts the purchasing of new homes, though resales remain unaffected. Additionally, a constrained supply exists as current homeowners are hesitant to sell, uncertain about their next move. These factors, combined, present challenges for both potential renters and buyers, tilting the balance toward renting for some, especially younger families or those wary of the new VAT law.

Q: How does the local rental market compare to the real estate market in terms of affordability and availability? And are there key differences between for example Nicosia, Limassol and Larnaca?

A: Across all regions, from Nicosia to Limassol and Larnaca, there’s a noticeable dip in property that is readily available and resales. At the same time, prices for both renting and buying have gone up. While specific variations exist among these cities due to localised demand and development factors, the overall trend leans towards a pricier and less available housing market. Buyers willing to wait from 12-18 months will have an easier time purchasing properties, as there are many that are currently being developed.

Q: What are the financial advantages of renting versus buying a home, and vice versa?

A: Renting offers flexibility, minimal upfront costs, and the freedom from maintenance expenses. However, the money spent doesn’t build equity. In contrast, buying has the advantage of property appreciation, equity accumulation, and the potential for rental income. Although buying requires a more significant initial investment, it leads to long-term financial gains.

Q: Are there any restrictions on buying property in Cyprus for other EU nationals and non-EU nationals?

A: For EU nationals, there are no restrictions on property purchases in Cyprus. Non-EU nationals, however, are limited to owning up to two units personally. However, there is no legal restriction in buying through a company, regardless of who is the owner. Of course, I always recommend to non-EU nationals to have a property lawyer to help guide them through the process.

Q: What are the key responsibilities and costs associated with homeownership in Cyprus that clients should be aware of when making their decision?

A: Homeowners in Cyprus must be prepared for costs like property taxes, maintenance expenses, insurance, and potential homeowner association (HOA) fees. Additionally, there’s the responsibility of regular upkeep and addressing any property-related issues, from minor repairs to significant renovations.

Q: What are some common misconceptions or myths you encounter when clients are debating between renting and buying? How do you address these misconceptions?

A: A frequent misconception I hear is, “I will start with renting and when I find a good deal, I’ll buy.” In the current Cypriot market, such opportunities are rare, almost non-existent. Many clients find themselves trapped in a cycle where both buying and renting prices surge, making future purchases unattainable. It’s vital for clients to understand that today’s market doesn’t offer much room for negotiation, so waiting for that ‘perfect deal’ might not be the best strategy.

BIO

Marianna Lordou is a real estate consultant with award-winning agency M.Residence Ltd, which is also a member of the ‘Leading Real Estate Companies of the World’ – a prestigious global community of real estate companies awarded membership based on rigorous standards for service and performance. Marianna has solid experience in residential and commercial property in Nicosia, Limassol, Larnaca and Protaras, and is well known for matching clients to properties that fit their needs. With her knowledge of the local real estate market, personal touch and professionalism, she supports buyers and sellers to navigate the complexities of closing a transaction.

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