Reservation (Holding) Deposit in Cyprus

Reservation (Holding) Deposit in Cyprus

Looking to buy or rent an apartment in Cyprus? If yes, then you’ll most likely need to hold the property down with a deposit. Properties are in high demand in Cyprus and to show the owner/landlord that you are serious about the purchase or rental, you have to make a financial commitment before the sale/rent agreement is finalized. With regards to rentals in Cyprus, the amount paid in advance by renters of units in a building complex to the agent or property owner is known as a holding deposit and it is usually the first month of the rent. When it comes to purchasing a property usually the amount is €1,000 - €2,000 for apartments and can go up to 10% of the worth of the property.

What are holding deposits

Holding deposits are financial commitments requested by property owners from a potential buyer/tenant to take the property off the market and dissuade other buyers/renters from purchasing/renting the apartment. The purpose behind the holding deposit is to reserve the property or apartment unit for the buyer/tenant until all the necessary contracts have been signed and all the checks have been cleared. Simply put, it is a way of assuring the landlord that the tenant is serious about the property.

What happens if a prospective tenant fails to go through with the purchase or rental? 

There are cases where buyers/tenants who like an apartment unit enough to make a deposit, fail to go through with the purchase/rental. In cases like this, the prospective buyer/tenant may expose him/herself to certain charges. If you are purchasing/renting a property in Cyprus, the owner or the landlord has legal rights to deny you of some or all of the amounts deposited. However, this will depend on the term of the holding agreement. Sometimes, the owner/landlord would most likely retain a large portion of the holding deposit and refund a small portion back to the tenant.

What happens when a landlord fails to go through with the sale/rental?

Any financial commitment to an owner/landlord or a legal representative as a holding deposit for a Cypriot property will be refunded in full if the owner/landlord fails to honor the agreement. Owners/Landlords are not permitted to take multiple holding deposits on the same property. But in some cases, multiple advertisements of a property in different locals may result in a double booking. Therefore, we recommend that you check the person/company you are purchasing/letting from. If its an estate agent make sure that they are registered and licensed before making any financial commitments.

For Rentals - Are holding deposits the same as security deposits?

Holding deposits are not the same as security deposits. Although, in some cases, landlords hold on to the deposits, even after the contracts have been signed as insurance for damages caused by the tenant on their property. The holding deposit will be refunded when the tenant has satisfied the proprietor of the building complex that there is no damage to the property. If not, the withheld deposit will be used to cater to the damages caused by the tenant.

 

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