Becoming a landlord is a risky and expensive venture. It’s even more challenging if you do it abroad. Cyprus’ new Renovate-Rent scheme may be the lifeline you need to get started investing in an overseas rental property.
The initial costs of setting up as a landlord are significant. Acquiring and renovating a property is a big outlay, and, once you’ve found a tenant, the taxes can eat away at your income. Renovate-Rent softens all those startup costs.
Designed to combat the country’s rising rent prices, Renovate-Rent offers incentives to landlords to restore old properties and let them below the market rate. Those who meet the criteria will pay no income tax, corporation tax or defence contributions on their rental income.
There are two parts to the scheme and they’re right there in the name.
Renovate a vacant property
The first is a grant for landlords who renovate a vacant property. Any property that has been vacant for 12 months prior to 24 October 2023 is eligible.
- €15,000 for one-bedroom properties
- €25,000 for two-bedroom properties
- €35,000 for three-bedroom properties
If you’re already looking to buy a property in Cyprus, consider telling your estate agent to specifically seek out properties that would qualify for Renovate Rent. It could save you a considerable amount of money in redecorating and updating an older property.
For a property to be defined as vacant it needs to have been connected to Cyprus’ national grid and have an annual usage of less than 200 kilowatt-hours in the months leading up to the start of the scheme.
Rent below the market
The second part of the scheme requires landlords to let their property for 30% less than the average market rate.
In the coming year, the government plans to publish a detailed list of the market rate in different municipalities so you know how much you will be able to charge.
A range of incentives
Recognising this is a significant ask, the government is offering some hefty financial incentives.
You will charge less rent, but receive a larger proportion of that income
Any landlord who is part of the scheme will pay not income tax, corporation tax or defence contributions on their rental income for three years. This means, even though you will be charging less rent, you will be receiving a larger proportion of that income.
The government is also raising capital allowance rates, allowing you to write down more of your expenses. For buildings, it is increasing from 3% to 5%. For machinery and equipment, it is increasing from 10% to 15%.
If you continue to let your property below the market rate, you can also qualify for a maintenance grant of up to €5,000 to cover repairs to the property.
It’s a great time to invest in Cyprus
If you plan to invest in a rental portfolio in Cyprus, Renovate-Rent provides a good opportunity to reduce the initial expenses of becoming a landlord. You would receive a grant to renovate the property, pay less tax on its purchase and its income and any equipment you need to purchase.
Applications for the scheme are already open and will run until 31 December 2025. You can find more details about the Renovate-Rent Scheme on the government website. Also, talk to your estate agent and property lawyer to see if you could benefit from the scheme.
