Retiring in style: Cyprus

Sunday October 1st 2006

Alexander Garrett

Thanks to low property prices, low taxes and good year-round weather, the island of Aphrodite is a retirement hotspot. Property prices remain low compared with the UK, although they have been rising fast. There is a great deal of development along the south coast of the divided island, with prices starting from as little as 30,000 to 40,000 for a small apartment and 100,000 for a small villa.

Ayia Napa on the eastern side is largely known as a youth magnet; older properties tend to be in Larnaca in the south-east and Limassol, while the focus of more recent and upmarket development has been in the south-west around Paphos. Few venture inland to the Trodos mountains.

One of the biggest attractions of Cyprus is that if you become resident in Cyprus for tax purposes, you pay income tax at just 5%, after the first 2,000 Cyprus pounds (CYP) ? making this one of the friendliest tax regimes in the whole of Europe. However, there is an annual property tax for properties valued at over CYP100,000 (82,000), which ranges from 2.5% to 4%.

Cyprus is proving particularly popular with Brits, with around 80% of incomers to the island from the UK. The country has strong links with the UK, is a former British colony and the UK still has military bases on the island. What?s more, this is one of the few countries where you can drive on the left-hand side of the road. English is widely spoken and even the legal system is based on the British system, which means the process of buying is more familiar.

On the minus side, you are a little further from the UK than Spain, France or Portugal ? the flight to Paphos or Larnaca is around four and a half hours from the UK. There are also some question marks over the island?s future, because of the long-running dispute with Turkey, although this affects mainly the northern half of Cyprus. And the reputation of Cyprus as an inexpensive place to live is not unchallenged: a survey by Prudential last year found it was the most expensive of 10 popular retirement destinations to buy a basket of groceries.

The most high-profile development in Cyprus is Aphrodite Hills near Paphos, a large-scale development with golf course, spa and a variety of high-quality facilities, where prices in the next phase of properties to be built range from CYP201,000 to CYP547,000. Purpose-built retirement developments ? if they exist ? are few and far between, but it is fair to say that Cyprus is relatively safe, with a crime rate averaging around one-sixth of that in the UK, and good medical facilities ? although you are urged to take out private health insurance.


Money Observer
www.moneyobserver.com


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