Property Investment Glossary

Glossary

A–Z of property investment terms.

Acquisition permit: Permission required for non-EU buyers to acquire immovable property in Cyprus. Granted by the Council of Ministers; usually a formality but can take 3–6 months.
Amortisation: The schedule by which a mortgage principal is repaid over time. Most Cyprus loans use a standard repayment (amortising) schedule rather than interest-only.
ARV: After-repair value: the projected market value of a property once renovations or refurbishment are complete.
Asking price: The price the seller publicly lists. The achieved (sale) price in Cyprus typically lands 3–7% below asking.

Bridging loan: A short-term loan (6–24 months) used to bridge the gap between buying a new property and selling an existing one.
Buildable area (Σ.Δ.): Συντελεστής Δόμησης — the maximum total floor area allowed on a plot, expressed as a ratio of plot size. Set by the local Town Planning Zone.

Cap rate: Net operating income divided by purchase price. A static snapshot of yield at year 1.
Cash-on-cash return: Annual pre-tax cashflow divided by the actual cash invested (deposit + fees). The truest measure of leveraged returns.
Category F permit: A Cyprus immigration category granting permanent residency to financially independent non-EU citizens, often paired with a property purchase.
Closing: The final step of a sale — signing the contract, paying the balance, and lodging the contract at the Land Registry.
Common expenses: Monthly fees paid by owners in a complex or building to cover shared costs: cleaning, lifts, pool, gardens, building insurance.
Comparable (comp): A recently sold property similar in location, size and condition, used as a benchmark to value the subject property.
Contract of sale: The binding agreement between buyer and seller. Once lodged at the Land Registry under Specific Performance, it protects the buyer's claim to the property.
Conveyancing: The legal process of transferring ownership from seller to buyer. In Cyprus, handled by a licensed lawyer rather than a notary.
Coverage ratio (Κ.Δ.): Συντελεστής Κάλυψης — the maximum footprint a building can occupy on its plot, expressed as a percentage of plot area.
Covered area: The enclosed, roofed floor area of a property. Excludes verandas, balconies and uncovered terraces, which are usually counted separately.

Days on market: Number of days a listing has been publicly advertised. Long DOM (>180 days) often signals overpricing or title-deed issues.
Deposit: An initial payment (typically 10% of the purchase price) made on signing the reservation or contract of sale.
DSCR: Debt-service coverage ratio: net operating income divided by annual mortgage payments. Lenders typically want ≥1.25.
Due diligence: Legal and technical checks before purchase: title verification, encumbrances, planning permits, structural condition.

Encumbrance: Any claim, mortgage, memo or restriction registered against a title at the Land Registry. Must be cleared before transfer.
Energy class: Mandatory EPC rating from A (most efficient) to G (least). New builds in Cyprus must meet at least class A.
Equity multiple: Total cash returned to the investor divided by total cash invested. A 2.0x multiple over 7 years means doubling your money.
Escrow: Funds held by a neutral third party (usually a lawyer's client account in Cyprus) and released only when contract conditions are met.

Fixed rate: A mortgage rate locked for a defined period (typically 3–10 years in Cyprus) before reverting to a variable rate.
Freehold: Outright ownership of land and building in perpetuity. Standard tenure for almost all residential property in Cyprus.

Gearing: The ratio of debt to equity in a property investment. Higher gearing amplifies both returns and risk.
Gross rent: Total rental income before deducting any costs, taxes or vacancy.
Gross yield: Annual rent divided by purchase price, before any costs.

Holding period: The length of time an investor plans to own an asset before selling. Cyprus residential investors typically model 7–10 years.
Hurdle rate: The minimum acceptable rate of return for an investment, used to filter opportunities.

Immovable Property Tax: Annual property tax in Cyprus — abolished at national level in 2017, but municipal property tax (€55–€185) still applies.
Interest-only: A loan structure where monthly payments cover only interest, with the full principal due at the end of the term. Rare in Cyprus residential lending.
IRR: Internal rate of return: the annualised return that makes NPV of all cashflows zero.

Land Registry (DLS): Department of Lands and Surveys — the Cyprus government body that records ownership, mortgages and encumbrances.
Leasehold: Ownership of a property for a fixed term under a lease, with the underlying land held by another party. Uncommon in Cyprus.
Long-let: A residential lease of 6 months or more, governed by Cyprus rent legislation. Lower yield than short-let but far less operational work.
LTV: Loan-to-value ratio: mortgage size as a percentage of the property's value.

Market value: The price a willing buyer would pay a willing seller in an arm's-length transaction, with both parties acting prudently and informed.
Memo: A notice of charge registered against a title at the Land Registry — typically by a creditor — that blocks transfer until resolved.
Mortgage: A loan secured against the property. Cyprus banks typically lend up to 70% LTV to residents, 60% to non-residents.

Net rent: Rent received after deducting management fees, maintenance, insurance, taxes and vacancy allowances.
Net yield: Annual rent minus running costs, divided by purchase price plus acquisition costs.
NOI: Net operating income: gross rent minus all operating costs, before mortgage payments and tax.
NPV: Net present value: the sum of all future cashflows discounted to today's value, minus the initial investment.

Occupancy: Percentage of available nights or months that the unit is actually rented.
Off-plan: Buying a property before construction is complete, based on architectural plans. Lower entry price but exposure to developer risk.

Payback period: The number of years of net cashflow needed to recover the initial cash invested.
Permission to acquire: The Council of Ministers' approval required for non-EU buyers. Limited to one property per household, generally up to 4,014 m² of land.
Plot ratio: The relationship between buildable floor area and plot size, set by the local zoning regulations.
Power of Attorney: A legal document authorising a lawyer or representative to sign contracts and complete a Cyprus purchase on the buyer's behalf.
Price per m²: Purchase price divided by covered area. The fastest cross-listing comparison metric.
Property management fee: Charged by an agent to handle a let. Typically 8–12% of rent for long-let, 18–25% for short-let in Cyprus.

Refinancing: Replacing an existing mortgage with a new one — usually to lower the rate, extend the term, or release equity.
Rental yield: Annual rent as a percentage of property value. Quoted gross (before costs) or net (after costs).
Resale: A property sold by an existing owner rather than direct from the developer. Usually has issued title deeds and is ready to occupy.
Reservation agreement: A short pre-contract agreement that takes a property off the market in exchange for a small deposit (typically €2,000–€10,000).
ROI: Return on investment: total profit divided by total cash invested, expressed as a percentage.

Service charge: Periodic fee paid by owners for the upkeep of shared facilities in a complex. Sometimes used interchangeably with common expenses.
Short-let licence: Mandatory registration with the Cyprus Deputy Ministry of Tourism to operate a property on Airbnb, Booking.com or similar platforms.
Snagging: The process of identifying and rectifying minor defects in a newly built property before final acceptance.
Specific performance: A Cyprus legal protection: lodging the contract of sale at the Land Registry within 6 months gives the buyer a registrable right to the property.
SPV: Special-purpose vehicle: a company set up to hold a single asset, often used in fractional structures.
Stamp duty: A one-off tax on the contract of sale in Cyprus: 0.15% on the first €170,860 of value, 0.20% above.
Stress test: Modelling how an investment performs under adverse scenarios: rate hikes, vacancy spikes, rent declines.

Tenant turnover: The frequency at which tenants vacate and need to be replaced. High turnover erodes net yield through voids and re-letting costs.
Title deed: Cyprus government document proving ownership. Required to legally sell or short-let.
Town Planning Zone: The zoning category assigned to a plot, defining permitted use, buildable area and coverage ratio.
Transfer fees: One-off fee paid to the Land Registry on title transfer. Progressive 3–8% of value, halved if VAT was paid on the purchase.

Under construction: A property being built but not yet complete. Sits between off-plan and resale on the risk spectrum.

Vacancy rate: The percentage of time a rental unit sits empty over a year. Typical Cyprus long-let vacancy: 4–8%.
Variable rate: A mortgage rate that moves with a benchmark (usually Euribor + a margin). Lower than fixed initially but exposes the borrower to rate risk.
VAT: Value-added tax on new builds in Cyprus: standard 19%, reduced to 5% on the first 130 m² of a primary residence (subject to conditions).
Voids: Periods between tenancies when the property generates no rent but still incurs costs.

Yield-on-cost: Net operating income divided by total project cost (purchase + renovation + fees). Used to assess value-add deals.