The government on Thursday conceded that the legislation granting non-EU foreign nationals the right to purchase immovable property is riddled with loopholes, promising to repeal the current law and replace it with an updated one.

Interior Minister Constantinos Ioannou confirmed intentions to change the law, following a formal query submitted to him by a Disy MP.

In his question, Disy MP for Famagusta Nikos Georgiou drew the minister’s attention to the Acquisition of Immovable Property (Aliens) Law, Chapter 109.

The law regulates the purchase of property by non-Cypriots (foreigners). It generally requires non-EU citizens to obtain a permit from the cabinet before acquiring immovable property, while EU citizens generally do not face such restrictions. This law also places limitations on the size and use of the land that can be acquired.

Foreign nationals may acquire two types of property – residential and commercial. They may also acquire land of an area up to 4,000 square metres, provided it is for building a unit for owner-occupied housing.

The MP said the law as it stands is extremely restricted and outdated. In all, it consists of just three clauses that take up one-and-a-half pages –in other words, far from comprehensive and full of ‘blind spots’.

Citing land registry data, Georgiou spoke of a steep rise in property acquisitions by non-EU nationals in recent years.

At the same time, non-recorded property transactions likely exceed the recorded ones. Georgiou said that many properties have come into the possession of foreign nationals through assignment/transfer contracts.

These allow the transfer of the rights and obligations deriving from a property sale contract, from the initial buyer (the assignor) to a third party (the assignee), without requiring the consent of the person or entity selling the property.

An assignor is a party who transfers contractual rights or property to another party, known as the assignee.

News outlet Stockwatch noted that, as a result, both the central government and local authorities were losing property tax revenue.

Disy’s Georgiou said that if the government drags its feet on repealing and replacing the current law, MPs would proceed with a relevant bill they’ve already tabled to parliament.

One such legislative proposal, introduced at the House audit committee, would place restrictions on the sale of property to non-EU individuals or legal entities, restricting such acquisitions to the purchase of one apartment or house of up to 200 square metres.

Land registry data show that non-EU nationals own nearly 10 per cent of immovable property in the Paphos district, and 7 per cent in the Larnaca and Famagusta districts.

The most prolific buyers are Israelis, Brits, Russians, Greeks and Lebanese.