Investment in Cyprus

CONDITIONS FOR FOREIGNERS TO OBTAIN IMMOVABLE PROPERTY IN NORTHERN CYPRUS

There are essential issues that foreign national real or legal persons should be aware of and take actions within the framework of the Law when purchasing land or housing from the TRNC or making long-term rental transactions to avoid any grievances.Our institution underlines some critical issues, which are summarized below, to guide people who want to invest in our island.

LEGAL BASIS

Within the framework of the Law No. 52/2008 on the “Acquisition of Immovable Property and Long Term Rental (Foreigners)” adopted by the TRNC Republic Assembly on November 10, 2008, foreign national real or legal persons, provided that official transactions and legal applications are made, can purchase or long-term lease of immovable property from our country, depending on the approval of Council of Ministers.

Foreigners who are going to purchase or lease immovable property in the TRNC must apply to the Ministry of Interior to purchase immovable property and be legally entitled to that property and must obtain the approval of the Council of Ministers as a result of the investigations to be made by the Ministry. The approval process varies according to the nature of the application and is usually lasts 3 to 6 months.

It is obligatory to apply for the contracts made with foreigners who buy or lease immovable property in the TRNC within 30 days at the latest, to be recorded in the Registry in the Land Registry and Cadastre Office of the district where the immovable property is located.

TRNC laws do not allow foreigners to buy or rent immovable property in certain regions (e.g., military zones) for security reasons. The legal distance valid for obtaining this right is 300 (three hundred) meters, provided that the buyers also meet other legal requirements. Therefore, we highly recommend that the relevant persons investigate the location of the immovable property before making any commitment or signing a contract.

Per our laws, the Council of Ministers has the authority to set limits on foreigners’ acquisition of immovable property in exceptional cases. Again, per our laws, the conditions stated below regarding the acquisition or long-term lease of immovable property from our country by foreign nationals are not valid in partnership with a company owner whose 51% shares are TRNC citizens. In such collaboration, they are exempt from these restrictions and practices.

LEGAL LIMITATIONS

Real or legal persons of foreign nationality may own real estate or rent it for a long time, provided that they comply with the legal limits and fulfill the necessary legal procedures according to Articles 8 and 9 of the relevant Law. Information on the current legal practice is as follows;

In long-term rental;

• The lease term can be at least 10 (ten) years, maximum of 99 (ninety-nine) years,
• If there is construction on the immovable property to be acquired by foreign nationals through a long-term lease, the conditions regarding construction must be included in the long-term lease agreement with all its details.
• If the immovable property leased is vacant, the land area cannot exceed 1 (one) decare (14,400 square feet or 1,338 square meters). If there is 1 (one) residence or 1 (one) apartment flat in the land to be rented, the surface area of the land cannot be more than 5 (five) acres (6,692 meters of land), and a second residence cannot be built on the land to be rented.

In purchasing;

• A foreign national can purchase up to 1 (one) acre (14,400 square feet or 1,338 square meters) of land, provided that the land is vacant.
• If there is a house in the land to be purchased, they can buy up to 5 (five) decares of land, provided that there is 1 (one) house. If 1 (one) residence to be purchased is in a Complex, there is no area limitation for the land in question.
• While a foreign national has the right to buy only 1 (one) house or apartment under normal conditions, under the Law No. 52/2008, this right has been increased to 3 (three) by the Decree with the Force of Law published in 2018 (until a second amendment). With the current practice, a foreign national can use his right to purchase immovable property in the form of a second and third “flat.” Husband and wife with the same surname are considered as 1 (one) person by the Law. Children do not have any additional rights other than those of their parents.
• A foreign national has only one right to buy a house in vacant detached land, a detached land with a residence or a complex-style settlement, and no right to build or buy another house/flat.
• A foreigner may transfer the property registered in his/her name or lease to persons with first and second-degree blood and kinship ties, with the approval of the Ministry, and may sell or mortgage to another foreigner.

OTHER IMPORTANT MATTERS TO BE CONSIDERED

We highly recommend that foreign nationals should be careful about the following issues in order not to experience any unjust treatment;

• First, it is recommended to learn all the technical specifications and details of the project related to the immovable property to be purchased and sign a contract. It should not be forgotten that the project is binding on both parties after the contract is signed.
• The property’s ownership status should be learned, and it should be known in advance whether the immovable property is a detached or joint/shared property.
• Issues such as whether there is a restriction on the immovable property to be purchased, such as a mortgage, lien, or whether there is any personal statement or situation that prevents the sale of the immovable, must be checked from the relevant Land Registry and Cadastre Office.
• Working with people or companies not registered in the sector or with the relevant authorities is not recommended. It is recommended that the buildings built by contractors registered with the KTİMB and Construction Committee should be preferred.
• It is recommended that the contract be certified at a registered Notary Public. A legal opinion also must be obtained from a lawyer before signing the contract to protect the legal rights regarding the matters included in the contract to be made between the owner and the buyer.
• Suppose the immovable property to be purchased is still in the construction phase. In that case, it is recommended to find out whether the contractor firm has obtained the Construction License permits related to the project.
• If the immovable property to be purchased is ‘completed land,’ it should be learned whether it is a shared or detached property and the transfer conditions. Suppose the immovable property is still like a ‘parceling project.’ In that case, it should be ensured that the construction permits of the contractor company regarding the project have been obtained.
• In the event of a dispute between the parties regarding the immovable property, the situation can be transferred to the judicial authorities under legal conditions, and the buyer will not suffer any grievances, but only with a correct, comprehensive, and legally concluded contract.
• It should be well understood what is included in the total sales price of the immovable property purchased. All applications and figures should be clearly stated in the contract to be made between the parties. Everything promised to the buyer must be included in the contract. An official application must be made to the Land Registry and Cadastre Office within 30 days by paying all the fees related to the agreement.

TAXES AND FEES

Regardless of whether the buyer is a foreign investor or TRNC citizen;

• The buyer pays 0.5% stamp duty on the sales contract.
• In residences up to 140m² and if the person buys immovable property for the first time, the Immovable Property Transfer/Deed Fee, which is 1% of the immovable property value, is paid by the buyer.
• Immovable Property Transfer/Deed Fee, which is 3% of the immovable property value, is paid by the buyer if the person does not purchase immovable property for the first time and is larger than 140m².
• If the immovable property is a field or land, the Immovable Property Transfer/Deed Fee, which is 4% of the immovable property value, is paid by the buyer.
• In addition, the buyer pays the VAT amount, which is 5% of the sales value of the real estate. On the other hand, the seller pays the Withholding Tax, which is 4% for for-profit sellers (contractor) and is 3.5% for non-profit (for sale from the owner) sellers.

The suggestions, conditions, and practices stated above are guiding information and are not binding on behalf of Yırtıcı Construction. Please apply to TRNC Ministry of Interior or Land Registry and Cadastre Office for detailed information.