Before 2011 if you had purchased a property without a separate title deed you had little choice, but to pay a hefty “cancellation fee” to the developer to cancel your contract and sign a new sale’s contract with your new buyer. Fees of up to 10% of the sale’s price where not unheard of as developers simply held the first buyers to ransom.

Then the law has changed allowing the first buyer to assign their rights to the property under original contract directly to a new buyer and the “extortion” by developers stopped. However, the assignment procedure didn’t just solve the “developers” problem, but opened up a new opportunity for the first buyers. 

In cases where the title deeds were available to buy, but had not been purchased by the first buyers the Land Registry would often end up receiving two sets of transfer fees as deeds moved from the developer to the original purchasers and then to the new buyers. Now many property owners wishing to sell did not make the transfer of their title from the developer. Instead they assigned their rights to the property directly to the new buyer, thus avoiding payment of transfer fee. Great news for the first purchaser. As for the second buyers, they simply took the title deed from the developer and paid the transfer fee as normal. And so the assignments are currently used not only for the originally designed sales without deeds, but also for sales of properties where title deeds haven’t been purchased by the first buyers.  

Some time after the law on assignment procedure was passed the Cypriot government who, if you remember, would have two separate lots of transfer fee realized that they were missing out on taxes. In order to compensate for the lost revenue the government introduced a charge of 0.5% of the highest value contract (either first or second purchaser). This assignment fee is payable when the contract is lodged at the Land Registry office.

But here comes the tricky part. To transfer the title deed in their names the new buyers pay a transfer fee, which although has been reduced by 50 % still is a hefty sum. The assignment costs of 0.5% of what is inevitably the 1st buyers’ contract is also paid by the buyers’ lawyer. Leaving the frankly absurd scenario where the second buyers pay extra to help the first buyers save on Tax! 

To balance out the unreasonable legislation on assignment fee we normally suggest the following arrangements between the first buyers (sellers) and the new purchasers. Where title deeds exist, but have never been purchased by the 1st buyers, the costs of assignment should be covered by the sellers. It is the sellers who are making a substantial saving after all. Buyers will pay transfer fees as normal and will not be subjected to additional tax. If title deeds are not available yet then the costs should be split 50/50 between both parties. 

When title deeds are already in the name of the original owners – it’s a straightforward sale where the buyers only pay their transfer fees and that’s that. 

CHANGES - In summer 2017 interpretation of current legislation by Land Registry officials has changed. The new policy of Land Registry became not to charge the assignment fee on the sales where the transfer of title deed is done at the completion of procedure.