We are considering making an offer for a 1 bed apartment which is within a complex. As we intend to rent out to holiday makers this seems like an ideal situation. However I would very much appreciate any advice regarding how to go about renting the property out. At the moment the complex is owned by a large developer who has decided to sell off individual apartments, but decided to keep a proportion themselves as they also currently rent out. Could I approach the developer to see if they would be willing to manage the property and if so what percentage in commision would be reasonable. There is an annual maintenance charge what is this likely to include, also being within a complex would this be a problem if we should decide to sell in the near future.Any comments would be appreciated.
Regards Charlie
Purchasing an apartment in complex.
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Purchasing an apartment in complex.
by charliechoice » Sun Feb 19, 2006 9:22 pm
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by dolmadis » Sun Feb 19, 2006 10:42 pm
Legally you can only rent to Cypriot Nationals on longer term fixtures without a licence.
You need permission from the CTO to rent to holiday makers (and you will not get a licence for less than five properties) then I would try to throw in your lot with the developer who no doubt has a CTO licence.
The commissions payable won't be small, at least 30% and might be 40%, but at least it will be legal and your property will be in good hands for the minor repairs and re-decorating each year to keep things up to standard for the holiday companies.
And you need to register for Cyprus Tax - taxed over over cyp10,000. And don't forget to declare your foreign income for taxation in the UK anyway.
When you get down to it will you get an occupancy guarantee on rental usage by the developer or will his come first?
To be profitable you will most likely need 60% occupancy but you will need to take into account interest you pay on your mortgage, the usual shared community property charges for the complex,local authority taxes, water, electricity for the aircons,commission on lettings, cleaning if not in commission,repairs and replacements (furniture and beds every 3 years), redecorating and Cyprus and UK Tax.
It might not seem worth it when you have done all the sums and when do you expect to use the property at the 60% occupancy - Winter !!
You need permission from the CTO to rent to holiday makers (and you will not get a licence for less than five properties) then I would try to throw in your lot with the developer who no doubt has a CTO licence.
The commissions payable won't be small, at least 30% and might be 40%, but at least it will be legal and your property will be in good hands for the minor repairs and re-decorating each year to keep things up to standard for the holiday companies.
And you need to register for Cyprus Tax - taxed over over cyp10,000. And don't forget to declare your foreign income for taxation in the UK anyway.
When you get down to it will you get an occupancy guarantee on rental usage by the developer or will his come first?
To be profitable you will most likely need 60% occupancy but you will need to take into account interest you pay on your mortgage, the usual shared community property charges for the complex,local authority taxes, water, electricity for the aircons,commission on lettings, cleaning if not in commission,repairs and replacements (furniture and beds every 3 years), redecorating and Cyprus and UK Tax.
It might not seem worth it when you have done all the sums and when do you expect to use the property at the 60% occupancy - Winter !!
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by charliechoice » Wed Feb 22, 2006 8:45 am
Dolmadis,
many thanks for your reply, and whilst I don't doubt what you say to be true I am a little confused as to not being able to rent out unless I possess 5 apartments. I have done quite a lot of searching for properties in Cyprus and not once has this been mentioned in fact when enquiring about various apartments I am often told whether it has good or not so good rental potential.
Regards Charlie
many thanks for your reply, and whilst I don't doubt what you say to be true I am a little confused as to not being able to rent out unless I possess 5 apartments. I have done quite a lot of searching for properties in Cyprus and not once has this been mentioned in fact when enquiring about various apartments I am often told whether it has good or not so good rental potential.
Regards Charlie
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by dolmadis » Wed Feb 22, 2006 10:02 am
Charlie
Perhaps it is not mentioned by the estate agents/sellers because it would put you off buying?
It's quite true. I discussed an investment business with a number of developers and this was a consistent basis. One showed me their CTO Licence that they had to run their holiday rental business.
The CTO also require to inspect the property for standards. (So do the holiday companies and they de-list any property that is not in tip top condition.)
Some people say that they have contacted the CTO and they are not bothered. If you contact them and ask them to inspect a single property they will not simply because you need to apply for a licence which means min 5.
I have never heard personally of anyone who rents out without a licence being contacted or prosecuted by the CTO but the Hotel Industry is calling out for this to happen because of the fall off in hotel occupancy.
The other problem you will have is getting insurance that will cover your property and your holiday renters. Look out for the clause that requires you to have obtained all necessary permissions and licences. So your insurance will be invalid and public liability claims can be in seven figures.
The Inland Revenue in the UK (HMRC) are using data mining to locate UK Residents who do not declare foreign income.
(How do you know that you have not just rented to an HMRC employee?)
My advice is do it legally through your developer who has the licence and expertise.
Perhaps it is not mentioned by the estate agents/sellers because it would put you off buying?
It's quite true. I discussed an investment business with a number of developers and this was a consistent basis. One showed me their CTO Licence that they had to run their holiday rental business.
The CTO also require to inspect the property for standards. (So do the holiday companies and they de-list any property that is not in tip top condition.)
Some people say that they have contacted the CTO and they are not bothered. If you contact them and ask them to inspect a single property they will not simply because you need to apply for a licence which means min 5.
I have never heard personally of anyone who rents out without a licence being contacted or prosecuted by the CTO but the Hotel Industry is calling out for this to happen because of the fall off in hotel occupancy.
The other problem you will have is getting insurance that will cover your property and your holiday renters. Look out for the clause that requires you to have obtained all necessary permissions and licences. So your insurance will be invalid and public liability claims can be in seven figures.
The Inland Revenue in the UK (HMRC) are using data mining to locate UK Residents who do not declare foreign income.
(How do you know that you have not just rented to an HMRC employee?)
My advice is do it legally through your developer who has the licence and expertise.
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- Joined: Tue Jan 10, 2006 11:55 pm
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