The purchase of a new flat is an important investment and I must embark on a serious study before I go ahead.
I would start with a visit to my bank to get an idea of the loan I could secure and determine whether I’m in a position to repay it. Depending on the financial status of its client, the bank usually demands the client’s contribution in the region of 20%-30%. It is also important to know what loan securities and guarantees the bank demands so I can let the developer selling the flat know. Upon leaving, I would then know how much money I can afford to pay for the flat and the securities the bank demands to be in place.
I would then do a market research to determine how reliable the developer is. I would study the developer’s historical record, similar projects he has completed, the construction quality, whether he has issued title deeds for his constructions, etc. I have to point out that issuing title deeds for new flats can take up to 2-3 years after completion, meaning that I must be sure that after being paid in full, the developer will pursue the procedure of obtaining title deeds. I must also be certain that the developer is in a position to offer the bank the coverage it seeks.
Now would be a good time for an on-site visit to the flats I’ve chosen. If I’m buying before completion I have an even tougher task ahead as I will need to be checking on the quality of materials used and the specifications which should apply. Every buyer focuses on the characteristics of interest and his preferred lifestyle, (modern/classic style), internal space surface areas, etc. We have to be careful of the surface of the various areas of a flat, (internal covered areas, covered/uncovered verandas, roof garden, storage rooms, parking spaces, etc) and be in a position to compare these between similar flats constructed by different developers.
How do we attach value to the various areas we’ve mentioned? This is where we’ll need the advice of an experienced real estate consultant.
A suggestion about internal spaces areas, especially that of a bedroom, is to count internal dimensions rather than total area. If the net area, (not counting the space taken up by cupboards), of a bedroom is 3m x 3.30m it can easily accommodate a wider bed and a small seating furniture, whereas a 2.9m x 3m room will not accommodate it.
When comparing prices one must take into account that in a 3-bedroom flat the cost of under-floor heating and the heat pump is around €12,000, good external blinds for all windows about €4,000 and A/C units around €2,500. Equally vital are the costs for finishes, (flooring, kitchen covers and cupboards, bedrooms, bathroom fixtures). The prices of all these are essential to know so that to be in a position to compare flat prices.
Also consider the fact that VAT will apply to the final price, either 5% if main residence or 19% if an investment, under some conditions. As VAT applies there are no transfer fees at the time of title deed transfer at the land registry (in 2-3 years).
There are specifications to be adhered to before completion because they are bound to pose a big problem if not followed.
Sound-proofing between floors and between flats, piping specifications and quality, (for irrigation or drainage purposes), is also important. These must be clearly stated in the purchase agreement as they can prove serious problems to tackle after the flat is handed over. Trying to solve issues of this nature after completion of construction can be an arduous and a traumatic experience.
Energy efficiency of a flat is yet another determining factor when deciding between properties. New buildings must be Category A. If the building permit was issued before July 2020 they can be Category B. Energy costs between the two categories can be substantial and worth investigating.
It is also preferred that the building has the correct number of flats. It is advisable that each floor hosts only two flats, without sharing common walls. The number of flats on the building must be 10-14. If less, common expenses can be on the high side, while higher noise levels could prove unbearable.
Summing up, it takes specialised knowledge for someone to be able to buy the right flat at the right price. Seeking the advice of a real estate agent with daily and long-time experience on the subject, be it on technical or legal matters, as well as on prices, might be useful or even a must.
Director FOX Smart Estate Agency
Chairman Cyprus Association of Property Owners (ΚΣΙΑ)
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