Purchasing real property in a foreign country is a challenging and potentially risky enterprise. At the same time, Northern Cyprus offers a wonderful climate and unbelievably low property prices. This makes the opportunity of buying a villa or an apartment in a modern residential complex highly attractive. What does the process of purchasing property in Northern Cyprus look like? What documents do you have to supply? What fees and duties do you have to pay in addition to the price of the villa or the apartment? We discuss these and other similar questions below.
Purchasing property in Northern Cyprus: the main elements of the procedure
We have to note from the outset that the procedure of buying off-plan property is a bit different from the procedure of buying a house or an apartment that has already been lived in. We will focus on the first of these opportunities because this is what most foreign buyers of property choose to do. When you have chosen the piece of property in Northern Cyprus that you want to buy, all you need at the first stage is your passport.
The first payment that you have to make is going to be small – usually between 2,000 and 5,000 pounds. You have to make it when signing a provisional sales contact. Let us suppose that you are buying an apartment in a residential complex under construction. The provisional contract will carry the name of the residential complex, the floor where your apartment is located, its area, and its number. Please bear in mind that most property is purchased on installment plans in Northern Cyprus so the payment schedule is also going to be described in the provisional contract.
After three or four weeks, a full-fledged sales contract is going to be drawn up in Turkish and your native language (English in most cases). You have to read the contract carefully for the following simple reason: if you are not happy with a certain article or a certain condition, the developer may well make a concession and agree to change the article or the condition.
At this stage, you have to make the first payment for the apartment. As a rule, it’s 30% or 50% of the full price. After that, the document has to be registered with the Land Cadaster within 21 days.
While the developer is preparing the contract, we recommend that you obtain a police clearance from your home country. This is the only additional document that is required when purchasing property in Northern Cyprus. The police clearance has to be apostilled and translated into Turkish or English if necessary. The Council of Ministers of Northern Cyprus needs the police clearance to approve your purchase of real estate in the jurisdiction. This is how things work there.
You also have to bear in mind that acquiring the approval may take from two to six months (depending on the region and the amount of property on sale there). This is why it would be a good idea to apply for purchase approval right after signing the sales contract. Please don’t take us wrongly: a foreign property owner who does not have an approval from the Council of Ministers is free to do whatever he/ she wants with the property: live there, rent it out, or sell it. The approval is required only if you are planning to apply for legal residence in Northern Cyprus, which is quite possible.
Theoretically, you could look for a piece of property in the secondary housing market but foreign investors rarely do so. The matter is that much more scrutiny is required in this case. You would have to check the property for incumbencies and hidden defects. You would have to ascertain the status of the property and make sure that the person who says he/ she is the property owner is indeed the property owner. You would have to sign new agreements with utility companies. Besides, some issues with the land title may arise.
If you choose this option, you will have to involve a lawyer by all means, which entails additional costs. Would you be able to save some money if you bought an existing house or apartment? We doubt that: off-plan property sells at amazingly low prices in Northern Cyprus.
Who can fail to obtain property purchase approval in Northern Cyprus?
You won’t be able to obtain an approval if you have been convicted for a serious crime in your home country or if the Interpol are after you. The crime rate is extremely low in Northern Cyprus and the authorities want to keep it that way. In addition, you can’t get a property purchase approval in Northern Cyprus if you hold a Greek passport or you have relatives in Greece.
How are purchase deals finalized in Northern Cyprus?
When you have made the initial payment, signed the sales contract, registered the deal with the authorities, and obtained a property purchase approval, you don’t have to sign any other documents. Simply make the scheduled payments on time and watch the building grow higher and higher.
When the construction process is complete, the developer will invite you to your apartment and give you the key. You will have to ascertain that the building conforms to the development plan in every detail. If you find any defects, you have to point them out to the developers and they will remedy the defects.
After that, you will have to sign a contract with a property management company. Sometimes such a company is assigned to the building even before the construction work begins. At other times, the developer signs a contract with a management company when the building is already completed. It would be wise of you to inquire about the arrangements with a property management company at an early stage of the process of purchasing an apartment in Northern Cyprus.
Taxes and fees to pay when buying property in Northern Cyprus
To be frank, there are quite a number of taxes and fees that you have to pay when purchasing property in Northern Cyprus and some rates are rather high. To begin with, you have to pay a 0.5% property tax at the moment of signing the sales contract. Then there is a tax on land title transfer. The rate is 6% for citizens of Northern Cyprus and Turkey and it is 12% for all other nationalities. On top of that, you have to pay a 5% VAT when the land title is transferred to you. Some other fees are payable as well.
We have some good news for you however. The developers in the jurisdiction know of a way to make life a bit easier for property buyers. They use the following trick to help the buyer pay less in taxes. Suppose the price of the apartment that you are buying is 200,000 pounds. The sales contract is going to say that the price is 100,000 pounds and an attachment to the contract is going to say that the prices of ‘additional services’ (painting, wallpapering, air conditioning, furnishing, installing kitchen equipment, and so on) is another 100,000 pounds. In this way, you can pay twice as little in property tax.
