Leasehold in Cyprus

by Chris Michael

Updated: April 08, 2024

Leasehold in Cyprus is a property ownership arrangement (tenancy or rent agreement) where one owns the building or structure but not the land on which it stands. This type of ownership is for a specified term, after which the property reverts to the landowner. Leasehold is less common in Cyprus and is typically seen in commercial real estate.

The person who holds the leasehold is called the lessee, while the landowner is called the lessor. Such leaseholds can be registered at the Department of Lands and Surveys (DLS) and be passed to the lessee’s heirs or sold at public auction. The lessee has a right to the property (possession and enjoyment) for a set period and does not own the land.

Conversely, the owner of the freehold estate owns the land and the property outright in perpetuity.

Legislation

The relevant legislation is the Immovable Property (Tenure, Registration and Valuation), chapter 224 of the laws. See also the Citizen’s Charter of the DLS (PDF, 2.5 MB, EN).

Registration and transfer of the lease

There are specific requirements that make the leasehold registrable. These include, among others:

The time remaining for the lease to expire is at least 15 years.
The lease agreement is valid in contract law (i.e., it is a valid contract) and contains a term allowing it to be registered.
The start and expiration dates for the lease are clearly stated.
The property under the lease is registered in the lessor’s name, with exceptions for state land and some Turkish Cypriot property.
The lease is registered under the lessor’s name.

The registration of the lease is done at the DLS using form N. 304 and must be accompanied by the following documents:

A copy of the lease agreement.
The certificate of property registration, with exceptions for state land and some Turkish Cypriot property.
A copy of the cadastral plan.
Any other documents the Director of the DLS may request.

If the lease agreement allows it, transferring the lease (subleasing) for a period exceeding 15 years is possible. If the agreement prohibits this, the lessor’s consent must be obtained, or the court must issue an order allowing the transfer of the lease.

Extending the lease

Changing the terms of the original lease agreement is possible, provided the amended lease is registered. However, the DLS prohibits changing the lease period. Therefore, the only way to extend the lease is to sign and register a new lease agreement.

Cancelling the lease

Cancelling the lease can be done with the written agreement of all parties or by court order.

Expiration

When the lease expires, the Director of the DLS may delete it and inform all interested parties.

Importance

Leasehold properties in Cyprus are typically leased for extensive periods, sometimes even decades (the minimum duration is 15 years). Leasing instead of buying is common in the commercial and business communities. Leaseholds tend to be cheaper than buying the freehold, but the lease value depreciates with time.

Leaseholds are also subject to significant restrictions. Because they are governed by contract law, it is crucial to understand the limits placed by the DLS on the one hand and the precise terms of the leasehold agreement on the other.

FAQs

How much does it cost to renew a leasehold?

Changing the leasehold period is not allowed in Cyprus. You must sign a new leasehold agreement, which is stamped according to value, like other types of contract.

Is a leasehold agreement risky?

Not really, because it is governed by contract law and monitored by the DLS (Ministry of the Interior). For example, it is not allowed to change the essential conditions of a leasehold agreement, such as the period and the rent.

Is it difficult to sell a leasehold property?

According to the Department of Lands and Surveys (DLS), it must be done by public auction.

What are the disadvantages of buying leasehold property?

Buying a leasehold has various restrictions that apply in general when you rent rather than buy. You will also have a continuing, contractual relationship with a landlord, to whom the property will return at the end of the lease period. This gives you limited control over the property. Additionally, the lease is an asset that depreciates with time. The shorter the remaining period, the less the leasehold property is worth. Selling the lease can be a challenge, especially if the time left is short.

What does it mean to buy a leasehold?

It means you can enjoy and possess the property for the time covered by the lease (the minimum leasehold period is 15 years in Cyprus). You can pass the leasehold such as it is to your heirs.

What does tenure leasehold mean?

The word “tenure” is similar in meaning to land ownership or “holding” a property. Leasehold tenure is the type of ownership that comes with leaseholds.

Why would anyone buy a leasehold property?

Leasehold property is more affordable than buying the freehold. Moreover, essential terms (like the lease period, the premises and rent) cannot change.