Real Estate Investments in Cyprus
Read the latest developments on real estate in the TRNC for those looking to invest in property in Northern Cyprus.
Can foreign nationals buy real estate in North Cyprus?
The legal system in Northern Cyprus is the same as in England and the property acquisition process is relatively simple. Legal documents are in English and there is an abundance of lawyers in Northern Cyprus who speak both English and Turkish. Once the type of property to be purchased has been decided on, the buyer must follow all the necessary procedures. The buying process is completed in about 3-6 months, however, it is possible to rent and sell the purchased property during this period while awaiting the approval of transactions.
Non-TRNC citizens must obtain a "Real Estate Purchase Permit" from the TRNC State to buy real estate in Northern Cyprus. Title deed transfers cannot be made without the "Real Estate Purchase Permit". Once the property to be purchased has been decided on and its price has been established, a lawyer facilitates the signing of a sales contract between the buyer and seller, which includes the price, timing of payment instalments, and delivery conditions for the title deeds, and property details. The sale takes place when both parties sign.
Current legislations state that the sales contract approved by the Tax Office must be registered at the Land Registry Office within 21 days by paying Stamp Duty, which is 0.5% of the contract price. The completion of these transactions legitimizes the buyer’s ownership of all property rights. The seller must also register a ‘letter of undertaking’ with the Land Registry Office, stating that the real estate sold will in no way be passed on to third parties.
Once the payment has been settled and a purchase permit has been issued, the real estate title deeds can be transferred to the name of the buyer. After the buyer and seller fulfil their obligations in the sales contract, the seller must transfer ownership of the property to the buyer at the Regional Land Registry Office depending on the property’s location. The buyer must pay the ‘Title Deed Transfer Fee’, which is a fee paid to the North Cyprus Land Registry Office when a transfer of ownership of a property’s title deed is in order. If this is the buyer's first property, a transfer fee of 3% of the discounted property sales price is paid. To register financially legal immovable property in the name of a foreign national, an application for a buying permit must be made to and obtained from the TRNC Council of Ministers.
Foreign nationals without companies registered in North Cyprus can buy 1 house with up to 5 decares of land per person or a maximum of 1 decare of land in North Cyprus. Married couples are considered as a single person, but may be able to buy 2 separate properties if they have different surnames. If they wish to purchase more than 1 immovable property or property larger than 1 decare, they must apply for the escrow agreement or start a company in the TRNC. A construction permit should be obtained for any incomplete structure and/or house on the immovable property, and there should be no mortgage and/or restrictive measures on the immovable property in question. The seller must be the real owner. Once permits have been obtained, a pre-determined annual fee must be paid to the Tax Office based on the area (per m2) of the purchased property. This annual fee applies to every property registered to the owner’s name, however, procedures vary for foreign companies.
- Passport: required to start the buying process.
- Criminal Record: Foreign nationals must submit a criminal record document obtained from the judicial authorities of their country to the state offices in North Cyprus. The documents can be submitted in English or Turkish.
- Stamp Duty: 5% of the sales contract price is paid by the buyer within 21 days of purchasing a property, legitimizing the sales contract and making it financially legal.
- Immovable Property Transfer Fee: Normally %6 and paid to the Land Registry Office, this is reduced to 3% if it is a foreign national’s first property. Payment can be made a couple of months after the deeds and keys to the property have been handed over to the buyer. The fee is based on the value of the property which is determined by the government and below the sales price, not on the sales price.
- Value Added Tax: %5 paid by the buyer. If buying from a private seller, no VAT is paid.
- Stoppage: Paid by the seller to the Tax Office. For-profit sellers (contractors) pay %4 whereas non-profit sellers (owners) pay 8%.
Unfortunately, permit procedures in Northern Cyprus can start only when you obtain a certificate of ownership.
If the purchase permission has been rejected or revoked, your closest relatives can handle all transactions related to buying property, given that you grant them custody.
Legally, there is only one title deed in the TRNC, but in terms of the origin of land and property, the deeds are divided into three different categories:
- Turkish Title Deeds:Properties owned by Turkish Cypriots or Greek/foreign citizens before 20 July 1974. These are considered legal by international states and the Greek Cypriot Administration.
- Exchange Title Deeds: Greek-owned properties prior to 1974 awarded to Turkish Cypriots who migrated from the south after 1974 in exchange for their properties in the south with equivalent points. These titles are deemed valid according to international laws depending on various conditions.
- TRNC Title Deeds: Properties owned by Greeks until 1974, after which the TRNC first rented and later handed over new title deeds to 3rd parties.
- Fixed-Interest Housing Loan: The interest rate is determined at the time of the loan does not change until its maturity date. The payment plan determined at the start remains valid throughout the term. Fixed-rate mortgage loans are given up to 120 months, but some banks may offer maturity options up to 180 or even 240 months. Some banks lend the entire loan amount requested. Generally, credit usage rates are between 70-75% of the price of the house to be purchased.
- Floating Interest Rate Housing Loan: The initial interest rate starts off the same as the fixed-rate, but the interest rate is changes on a monthly, quarterly, bi-annually or yearly basis in line with inflation and other economic developments, provided that it is determined according to the bank's option at the start of the loan. There are subcategories of the Floating Interest Loan such as Falling/Declining Interest or Floating Interest Rate mortgage loan. For this option, the bank charges a service fee which is a single one-off payment. On the other hand, some banks will announce interest rates for each year in advance and can pre-determine instalments for each year according to the maturity the consumer desires.
Although not mandatory, hiring a lawyer is highly recommended to ensure the validity and follow-up of financial and official transactions. For a fee, lawyers follow all the proceedings in local government institutions. At the same time, lawyers review and revise sales contracts to ensure their legality and validity.
In Cyprus, lawyers usually charge between £1,000 and £1,300 for drawing up a sales contract and £300 for the permit. This includes the fee for all applications required to live in North Cyprus. However, lawyers also guarantee the validity and legality of these transactions.
Discover the advantages of investing in Northern Cyprus on the "Advantages of Investing in Cyprus" page.
Before investing in real estate, you might want to consider all factors influencing real estate prices. One of these factors is location, or to be more precise, the city centre. A property located in the city centre is always going to be more advantageous due to its time-saving quality and proximity to public offices and social activities. A second factor is ‘basic human psychology’ and certain trends. It has been clearly observed that cities are growing and modernizing westward, and the preferences of younger generations confirm this trend. In other words, westward growth and proximity to the city centre is a key factor in determining price. Thus, by keeping this in mind, you can profit by investing in these ‘trending’ regions.
There are two peak seasons for buying and selling real estate in the TRNC:
- Between Spring-Summer: Starting in March until mid-July is the time when young couples are busy with wedding preparations and finding a new home. Newlyweds-to-be start searching for their new home, villa, or flat approximately 2.5-3 months before their wedding day and look for properties where they can build a family. Turkish Cypriots living in the UK also tend to show a lot of interest in property around this time due to summer holidays. There is also high demand for land in Northern Cyprus.
- Between September-December: There is an increase in real estate purchases starting with the new school term in September until mid-December leading up to the New Year. The demand for all types of real estate such as flats, houses, villas and land as well as rental properties soar, especially in the districts of Kyrenia, Famagusta and Nicosia. Likewise, a peak of interest in foreign investors can also be observed.
Foreign investors looking to buy real estate should gather information on the proximity of their desired property to military zones and whether permit procedures will be allowed. Apart from this, a criminal record of the buyer needs to be obtained from the judicial authorities proving that the buyer has no criminal charges in their name.