GUIDE TO PURCHASING PROPERTIES IN THE TURKISH REPUBLIC OF NORTHERN CYPRUS
The current property laws in Northern Cyprus dictate that Non-TRNC citizens are entitled to take title to only one property or parcel of land up to a maximum area of one donum (3rd of an acre) per person (per person refers to, husband, wife and any unmarried children over the age of 18).
Before the title deeds to your North Cyprus property can be registered in your name, you will need to have permission from the TRNC Council of Ministers. This is explained in more detail below. If you wish to take title to more than one Northern Cyprus property, or a property in North Cyprus with over one donum in area, we can give you advice on using trustees or setting up a TRNC Company to hold the title to the properties for you.
The conveyance procedure followed by the many law firms are as follows;
an initial meeting with you to obtain information about the North Cyprus property you have chosen and any informal agreements you have made with the vendor regarding price, payment schedule and included items. This stage may also involve giving a power of attorney from you to the lawyer to ensure they can act on your behalf to sign documents if you are away from Northern Cyprus for long periods of time; the preparation of Contract of Northern Cyprus Property Sale to ensure your interests are safeguarded. The Contract of sale will include all important terms such as plot number, plot size, price, payment schedule and completion date with penalty clauses for late completion. Attached to the contract will be floor plans, specifications and selling Agent's advertising material to ensure that the Vendor is bound to carry out the construction work/sale of the property in accordance with these. At this stage they will conduct the necessary land registry searches on your behalf to ensure that the vendor is the registered freehold owner of the property and that there are no mortgages/charges, injunctions or other encumbrances on the property. They will also check that the building permission for the construction has been obtained if you’re buying off plan or a brand new property. The contract will be sent to both the vendor and the purchaser for review. When both parties are happy the contract will be signed; payment of stamp duty: Under new regulations, the North Cyprus Tax office are requesting to see a copy of the North Cyprus Property Sale Contract prior to transfer of title with all stamp duty paid up. North Cyprus Stamp duty is payable at 0.5%of the contract price if paid within 21 days of the contract date. If it is not paid within this time it increases to 1.5%. You will have the option to pay upfront or pay on transfer of title at the higher rate. We would strongly advise you pay this on signing of contracts to avoid complications later; application for Permission to Purchase: Every foreign purchaser must go through the ‘North Cyprus permission to buy’ process. This is a lot simpler than it sounds but can take around 18 months to complete. It is worth noting at this stage that the permission process does not prevent you from moving into your North Cyprus property or leasing the property for a rental income or even selling the property on. A new law was passed in Northern Cyprus at the beginning of 2008 whereby signed and stamped sales contracts are now lodged at the District Lands Office in order to protect the purchaser from the title owner borrowing or selling the property to another party. In short the purchaser is 100% protected until title deeds have been registered into their names;
Note: It is now necessary for all foreign nationals to apply for a police clearance report before permission to purchase can be applied for. This can take a few weeks but it is best to be prepared before you arrive in North Cyprus. The following link will provide you with instructions and download www.disclosurescotland.co.uk/disclosureinformation/index.htm
Whilst processing your purchase permit application, the Council of Ministers will check with the military and the immigration authorities and provided that these are positive i.e. the property is not overlooking a military installation and you are not a convicted criminal on the run; the permission will be granted. In the unlikely event that your application is refused, you will be able to nominate any other person to take title to the property on your behalf and hold it on trust for you; once your purchase permission has been granted your lawyer will fill out the necessary North Cyprus Land Registry Valuation Forms, work out and notify you of taxes payable and finally transfer the property into your name/s. The taxes are calculated based on the Northern Cyprus Land Registry Valuation and are currently at the following rates:
Land Registry Transfer Fee – 6% (however, every purchaser has a once in a lifetime option to reduce this fee from 6% to 3%. At the time of transfer you will be asked whether you wish to use your option and if so you only pay 3%)
VAT – 5% (This is only payable if the vendor is classed as a professional i.e. developer, construction company or private individual that has sold more than three properties). At this point its worth noting that unless you are buying a property that is already registered in a foreign nationals name then and only then is it unlikely you will pay VAT.
Stamp Duty – 0.5% rising to 1.5% if not paid within 21 days from the date of your Property Sales Contract.
The taxes will be paid and the title deeds will be registered in your name. If you have left your lawyer a power of attorney all of this can be dealt with without you being required to travel to the TRNC. Your lawyer or Agent will then collect and keep the title deeds for you until you are ready to collect them.
English Speaking Lawyers Naomi Mehmet LL.B. (Hons) Advocate Muharremoglu Apt No 1, Sariyer Sokak, Girne, Mersin 10 Turkey Tel: (009) 0392 816 0440 Fax: (009) 0392 815 0702 Email: [email protected]