Payment Terms

With virtually all new build properties, you will be able to make staged payments throughout the building period. The amount and frequency of payments are going to depend largely on the time it takes to build your property, but within this timeframe there will still be room for negotiation. The only exception is where a property is either completed, or only a month or so away from completion, but even in such cases the developer will almost certainly accept an agreed sum as a deposit on signing the contract, followed by the balance on handover of the property.

Whilst every case will be different, the following guidelines will give you a good idea of what to expect.

Apartments

At the outset, the developer will give you his anticipated completion date for the project. At one extreme, the project might still be in the planning stages, building has not even commenced, and the anticipated completion date may be, say, 18 months away. This is known as ‘buying off plan’. In most cases you will be asked to pay a deposit of 30% of the purchase price within 30 days of signing the contract, after having paid a ‘holding sum’ of CY£1-2000 immediately on signing the contract, to show that you mean business. This amount is deducted from the 30% payment due in 30 days. The 30% is not an arbitrary figure - as your lawyer will tell you, it is the amount required to register your contract with the Land Registry Office to ensure that the title deed will pass to you on completion.

Thereafter, the remaining 70% will be divided into stages spread more or less equally over the building period, but with 10% (sometimes 5%) reserved as the final payment after you have inspected the completed property and received the keys. Using our 18-month project as an example, the stages would be something like a further 30% after 6 months, another 30% after 12 months, and 10% on completion. Or, possibly, 3 payments of 20% at 5-month intervals with a final 10% on completion.

With projects like apartment buildings, the stages agreed in the contracts may well be date specific, because the developer knows he has to keep to a fairly precise schedule because he can’t hand over individual apartments until the whole project is finished. However, you need the assurance that the building is progressing on schedule, so your lawyer will also build in a proviso that the payments will only be made on the scheduled dates if the agreed building works have been completed.

Detached Villas

All of the above still applies, but you may be able to achieve a greater amount of flexibility, especially if you want your house to be completed as quickly as possible. Unlike apartments with communal areas, individual villas can be completed and handed over even if other houses on the same development are not completed. You may, therefore, be able to negotiate an overall maximum completion date, but with the stage payments being made on the completion of various works. The incentive for the developer is therefore to commit more resources to your house if you have agreed to pay on completion.

‘One-Off’ ‘Design & Build’ Villas

Again, the same general principles apply, but with one important difference. Unlike apartments or planned villa projects where the designs have already been submitted for building permission, with individual ‘Design and Build’ projects this is not the case. Once you have found your ideal plot (with our help, of course!) and agreed on the house design, specification and price, the builder then has to submit the plans for approval. Whilst this will be a formality, he cannot start work until the building permit has been issued, which can take several months. This means, therefore, that he cannot be tied to a precise timescale because the building permit approval is out of his hands. 

What generally happens in such cases is that you pay the 30% with the contract, which enables to lawyer to register it with the Land Registry, thus assuring you of the title deeds, and the ownership of the land in the meantime. The stage payments (as percentages of the total) will also be agreed, payable on completion of the various stages of building work. Then, when the building schedule is known, the lawyer draws up a separate date specific agreement. Many buyers do not bother to do this, because they know that it’s in the builder’s interests to progress the job anyway, and it may be that the later stage payments are dependent on other investments etc., so they are happy just to let things take their course.

Flexibility

Although most developers will have a ‘standard’ schedule of stage payments, please do not feel that you cannot change these by negotiation. Of course, the seller wants as much money as possible ‘up front’, and the buyer wants the opposite, but everything is negotiable!

Your personal circumstances may be such that you are waiting for some funds that may be due in several months, and this may not coincide exactly with the staged payments schedule. You will find that most developers will be very accommodating if you simply explain the situation.

If, however, you are tempted to try and negotiate more stages and lesser amounts each time, please bear in mind the possible extra cost in transferring funds. It may also be the case that, if you offer a larger amount in the early stages, the developer may reward you with a special deal on some of the ’extras’ like air conditioning – if you don’t ask, you don’t get!

Penalty Clauses

It is quite common in all contracts for your lawyer to insert a penalty clause, so that you are compensated for late completion of your property. (In the case of late completion of the various stages of building if you have a date specific contract, the solution is simple – the lawyer does not release the stage payment!). The penalty will be over and above the final ‘handover’ payment, which you are obviously not going to pay either! It will normally take the form of an agreed monthly sum that represents the rent you would have to pay for alternative accommodation if you are committed to moving to Cyprus by a particular date. (Although, in truth, few buyers cut it so fine).

Some of the larger developers also have holiday rental properties, and rather than agree to a cash sum, they will guarantee alternative free accommodation.

In all cases, however, the developer will be allowed a month’s grace after the agreed completion date because this is deemed to be reasonable. This may be further extended by factors outside the control of the builder (e.g. shipments of supplies from overseas) or ‘force majeure’, including inclement weather. This is particularly the case with ‘Design and Build’ projects where the builder cannot predict when he is going to start work.

‘Snagging’ Retention

Your lawyer might also suggest that a small sum is retained for a period of time (usually 6 months) after the handover, in case of minor defects which need correcting, e.g. adjustments to door hinges, defective light switches etc. The amount will depend on the type and size of the property, but will be about CY£1000 for a villa.

Important Note

The information on this website is based on our interpretation of the current regulations in Cyprus. Whilst we make every endeavour to provide accurate information, we cannot accept liability for any loss incurred due to inaccuracies or omissions on this website. Prospective buyers are strongly recommended to take independent legal advice before entering into any agreements or parting with any money.