Sixty-two years after the end of British rule, Cyprus has taken another step out of the shadow of its colonial past with a deal that ushers in the biggest change in land use on the island since independence.

Describing the accord as groundbreaking, the president of the Republic of Cyprus, Nicos Anastasiades, said it would enable thousands of Cypriots to develop properties in the “sovereign base areas” that Britain has long held on to in the Mediterranean country. That, he said, would not only yield “multiple benefits”, but correct “distortions and imbalances” in the lives of residents living in villages incorporated in the facilities.

“This is a truly historic agreement,” the leader told officials gathered in Nicosia’s presidential palace on Monday. “[It] is expected to not only have important development prospects for those who reside, or who have properties, on the bases, but for the economy and society more generally at an especially difficult time following Russia’s invasion of Ukraine.”

The sovereign base areas – which include military bases, but also farms and residential land – account for 3% of the island’s total landmass, or 98 sq miles. Although the accord was reached in 2014 under Britain’s then prime minister, David Cameron, it required years of complex negotiations underscored by the peculiar nature of territory that, while home to about 12,000 Cypriots, remained in the possession of the country’s former colonial power.

On 16 May, when the deal comes into effect, owners will be able to submit planning applications to develop properties much as they can elsewhere on the island. Until now, non-military development of base areas, with the exception of agricultural land, has been tightly controlled, eliciting disquiet among local people, who have complained of being penalised in a country already divided since the 1974 Turkish invasion.

Calling the accord “a memorable moment” in ties between the two nations, Britain’s high commissioner to Cyprus, Stephen Lillie, predicted that it would contribute greatly to the quality of life for those living on the military bases.

“Our agreement means that, as far as possible, residents in the bases will now enjoy the same rights as Cypriots living in the republic to sell and develop their land and property and all the benefits that brings,” Lillie said. “I take pride in the fact that we have worked together to deliver a change that will have a real and positive impact on people’s lives.”

Restrictions have meant that much of the territory has remained unspoiled in contrast to otherwise heavily developed coastline in the rest of the island’s south. As of next week, planning zones and policies in force elsewhere will come into effect, but the commander of British Forces Cyprus, Maj Gen Rob Thomson, insisted that development would also be subject to environmental and security controls.

The installations are viewed as huge strategic assets by the UK, with RAF Akrotiri used as a forward mounting base for multiple operations across the region. Post-Brexit and in the wake of Russia’s invasion of Ukraine, the facilities’ strategic advantage has intensified. In a first visit to the island by a chief of general staff in almost a decade, Gen Sir Mark Carleton-Smith highlighted Cyprus’ significance to the British military.

“The UK is fortunate to enjoy a close bilateral partnership with the Republic of Cyprus and we retain sovereign bases here and have for many decades,” he said. “They offer a military platform for us to base troops in the eastern Mediterranean but also to use it as a springboard to shorten our response times across the region. It’s a region with a degree of strategic volatility and it’s to our military advantage to acclimatise, train and prepare troops here in Cyprus.”