The Turkish Republic of Northern Cyprus (TRNC) is based upon the English legal system which will make it more approachable for those familiar with property transactions there. Despite this fact, however, you will unquestionably need the services of an adept local lawyer when buying property in North Cyprus as verification of ownership is somewhat more complex. It is highly advisable that you involve a lawyer from the very first stage of searching for a property and certainly by the stage that a preliminary Contract to Buy is ready to be signed as you will need them to search for title deeds as well as apply for permission to buy in the country from the Council of Ministers. Searching for title deeds is a more complex process than you may be used to in the TRNC and you will need to be familiar with the different types of title deeds. The less common Internationally Recognised Title Deed is either ‘Turkish Title pre 1974’ or ‘Foreign Title pre 1974’ and applies to deeds that were held before the division of the island. For titles that are ‘Foreign Titles pre 1974’, foreign nationals are not restricted in how much land they can own, where as with Turkish title deeds they cannot own more than one donum, which is approximately a third of an acre, per person (or married couple).
There also exists property in North Cyprus which fails to fall into either of these two categories and is deemed to have ‘Greek Cypriot pre 1974 Title’. Although fairly rare, these properties can appear to be attractive investments when they emerge on the market owing to their low cost but should be avoided due to the high potential for land disputes that may arise. Other properties may be classed as ‘cases pending’ with regard to their title deeds and, once again, these should be treated with extreme caution and a lawyer consulted.
Property in North Cyprus is predominantly available for sale freehold although, as mentioned earlier, foreign investors are restricted to one donum of land per person. This leaves two routes for the purchase of more land which are; either by buying land or property with a foreign title pre 1974 or by purchasing through a local limited company structure. In order to do the latter, you will be required to have a Turkish Cypriot partner who is the majority shareholder. This is relatively easy to do and from here you would need to remove the voting powers of the majority shareholder with which a local lawyer would be able to assist you.
When you have found the property in which you wish to invest, it is common practice to sign a preliminary contract and pay a small deposit. You should have your lawyer assist you with this as he will need to check the title need and ensure there are no outstanding liabilities. You should make sure, too, that the contract is conditional upon certain criteria being fulfilled (such as a satisfactory structural survey being completed for example).
In North Cyprus, escrow account structures are not used so all payments go directly to the vendor. It’s important, therefore, that you are satisfied that everything is in order with your chosen property before you complete the transaction. You will now be ready to sign the final contract and, depending on the type of property you are buying, all or some of the payment will be due. For completed real estate, then, the full amount will be required on the day the final contract is signed where as for off-plan property a payment plan will usually be incorporated into the contract. It isn’t uncommon for foreign buyers to sign only one conditional contract for purchase which serves as both the preliminary contract and the final contract. In these circumstances, if any of the conditions in the contract aren’t met within a specified timeframe then the contract is terminated and all monies returned to the buyer. If all conditions are fulfilled, however, then the contract becomes final. Whilst it is mandatory for all foreign nationals to be granted approval by the Council of Ministers in North Cyprus when wishing to buy real estate, in practice this is a formality and will not delay your purchase. The hire of a lawyer for your purchase in North Cyprus will cost somewhere between GBP 750 and GBP 1,500 and it is best if you agree exactly what you will be charged at the offset. Additional costs will include Stamp Duty which is levied at 0.5% and it is important that you pay this within a month of signing the contract otherwise it will increase incrementally up to 1.5% after 6 months.
In North Cyprus, capital gains tax is payable by the vendor at 3.5%. If the vendor sells more than 3 properties in a year, however, they will be classed as a ‘professional vendor’ and required to pay the full capital gains tax of 6.25%. VAT is charged at a rate of 5% of the purchase price and a transfer tax is charged at 3% of the rateable value of the property and 6% for any other properties. You will also be required to pay a municipal tax of 1% to 3%.
The Turkish Republic of Northern Cyprus (TRNC), commonly referred to as North Cyprus, is a de facto independent democratic republic. The president is head of state and the prime minister is head of government and exercises executive power. Legislative power is vested in both the government and the Assembly of the Republic. North Cyprus is only recognised diplomatically by Turkey – the rest of the international community, including the UN and EU, recognise the sovereignty of The Republic of Cyprus over the entire island. The politics of North Cyprus, therefore, still centre very much around the division of Cyprus although it is hoped that, with Turkey’s plans to join the EU, reunification could be a reality in the near future.
North Cyprus adopts the New Turkish Lira as its currency and so is linked to the Turkish economy in this way. Although lack of international diplomatic recognition has led to some restraints being placed on North Cyprus (an on-going embargo for instance), its economy has shown impressive growth in recent years. Since its introduction in 2005 the New Turkish Lira has looked impressive, even outperforming the US Dollar and the Euro.
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