Buying a property in the Turkish Republic of Northern Cyprus (TRNC)
Buying a property in the TRNC can be a complicated and strenuous for those who are not familiar with the law and legal procedure. At E.B Sener Law & Conveyancing Fırm and Hugh Jones LLP we pride ourselves with the benefit of many years of experience in the conveyancing procedure for the sale and purchase of residential and commercial property in North Cyprus.
Purchasing a property from the UK in the TRNC is much easier…
In May 2007 E.B Sener Law & Conveyancing Firm and Hugh Jones LLP in London, UK entered into an association which aims to offer clients who wish to acquire property in the TRNC the services of a UK based legal firm and vice versa for Cypriot clients.
The association gives us the flexibility to provide clients with the ability to instruct us as well as Hugh Jones LLP to handle, inter alia, any transaction they may have pending in the TRNC. This would then provide the client with the convenience of attending Hugh Jones LLP offices in London, if they wish, to sign documentation, rather than having to finance several trips to the TRNC during the course of the transaction. At the clients discretion all communication can also be conducted through Hugh Jones LLP offİces in London.
What type of title does the property have?
After the division of the island, in 1974, North Cyprus has developed its own rules and regulations and a different legal system has been constituted by the Turkish Cypriots in relation to conveyancing procedures. The first and foremost issue which should be clarified is the various types of title deeds that exist in the TRNC today. The various Title Deeds are as follows:
Taxes in relation to property purchase
There are four main taxes involved in any property sale and purchase transaction these taxes are:
Capital Gains Tax
Capital Gains Tax (Stopaj) which is payable to the Tax Office is generally payable by the Vendor although this can always be varied by the parties by an express clause in the Contract of Sale.
The Tax Office requires a copy of the Contract of Sale to be presented prior to transfer of title. It will then calculate the Capital Gains Tax based on the basis of the assessed value of the property and is currently 4%.
The Tax Office requires a copy of the Contract of Sale to be presented prior to transfer of title. It will then calculate the VAT based on the Contract value of the property and is currently 5% .
The payment of VAT depends on whether or not the transaction is subject to VAT.
This depends on whether the Vendor (the person who has title to the property not simply contractual ownership or possession of the property) is deemed by the Tax Office to be a ‘Professional Vendor’ (i.e. whether the transaction is of a commercial nature or for profit). If the Vendor is deemed to be a Professional Vendor, the transaction will be subject to VAT. If the Vendor is a private individual, not a Professional Vendor, the transaction will not be subject to VAT.
Transfer Fees payable to the Land Registry Office just before transfer of title takes place is usually paid by the purchaser and has currently been reduced from 6% to 3% (A once in a life time use) of the property assessed value.
The Land Registry will view the Contract of Sale before transfer of title to assess the value of the property and will calculate the Transfer Fee on the basis of the assessed value.
Stamp duty which is payable to the Tax Office and is calculated on the contract value of the property. Generally Stamp Duty is payable by the Purchaser, although this can always be varied by the parties by an express clause in the Contract of Sale.
All Contracts of Sale must be registered at the District Lands Office within 21 days of being signed and it is now compulsory for the Stamp Duty to be paid at the rate of 0.5% before registration can take place.
How we can help?
At E.B Sener Law & Conveyancing Firm and Hugh Jones LLP our English speaking lawyers offer independent and professional services to our clients wishing to purchase immovable property and assist and facilitate secure and efficient transactions from preliminary stages to post completion.
At the initial meeting we will obtain the particulars of the property you have chosen to purchase and look at any informal agreements you have made with the vendor regarding the purchase price, payment schedule and any items included within the sale. We will explain the procedure that you will need to follow including the taxes and fees you will need to pay and may be involved in investigations on your behalf to ensure the transactions are carried out securely and efficiently. This stage may also involve taking a power of attorney from you to ensure that we can act on your behalf to sign documents if you are away from Northern Cyprus for long periods of time.
As a result of recent legislation we are also required to establish your identity prior to undertaking work on your behalf. Identity required are as follows:-
Please also note that further documentation might be required in compliance with the current Money Laundering Regulations.
The general principles of our Conveyancing services are outlined below:-
The obtainıng of permission to purchase is a protracted procedure and can take up to two years or longer but this does not mean that you will be unable to take possession of your new property once contracts have been exchanged. At E.B Sener Law & Conveyancing Firm and Hugh Jones LLP our staff will always be available to deal with any queries you may have and we will assist you at every stage of the process to ensure that you have the satisfaction of enjoying your property without having to worry about the legal procedures.
Buying Property in the TRC – Frequently asked Questions
I am not a citizen of the TRNC, but I want to purchase two properties in the TRNC? How can I do this?
You can sign the contract of sale for the two properties in your own name; however, you can
only apply for purchase permission for and take title to one property. Therefore, you will need
to find a nominee (this person should be a friend or relative or someone you know and trust)
to take title to the property and hold the property on trust for you or you will need to set up a
TRNC company. Please ask us for more detailed advice on trusts and companies.
Can my spouse and I purchase one property each?
No. Husband and wife are counted as one household and the current property restrictions are one property per household.
How long will the purchase permission process take and what does it involve?
This process takes between 6-12 months. During this period the registration of your contract of sale at the land registry protects your property ownership. The process involves searches being taken from the Land Registry, the Immigration and the Military. Please note that in order to apply for a permission to purchase you will need to produce a Criminal Record Bureau Disclosure Report from the UK.
Do I need to wait for my purchase permission before I can move into my property?
No. Once your property is complete, you will be able to take possession of your property and
move in. Once the contracts are exchanged between the partied and registered at the Land Registry you will then acquire beneficial interest and contractal rights of the property. Registering the contract ensures that you are protected from the property being sold or transferred to a third party and from any subsequent liens being placed on the property.
Can I sell my property before I obtain my purchase permission?
This depends on the terms of your contract of sale. We will however always try to negotiate with the vendor to insert a clause allowing you to sell the property before taking title. We would then simply prepare an assignment of contract to be signed between you, the vendor and the new purchasers assigning all of your rights and obligations under the contract to the new purchasers.
What taxes are payable on the purchase and when are these payable?
Taxes, apart from stamp duty which is payable within 21 days of the date of the Contract, are usually payable right at the end of the transaction after your purchase permit has been granted and the title deeds are being transferred into your name. However, some vendors require VAT to be paid on the sale price at the date of delivery of possession of the property.
The rates of tax are as follows:
Residency in the Turkish Republic of Northern Cyprus
As laws and regulations of the European Union are not applied in the TRNC, European Union citizens still have to follow the residency procedure in the same way as other nationals. There is no automatic right to reside and work in the TRNC for EU citizens.
Whenever a person enters the TRNC, their passport is stamped at the port of entry and this entitles that person to remain in the TRNC for the period of time stated on the tourist visa (usually three months) without working. On the expiry of this period, that person must leave the TRNC or face heavy fines for exceeding the visa period. It is possible for a person to leave the TRNC and return the following day, for example by flying to Turkey, thereby obtaining a further tourist visa. For those people who wish to stay in the TRNC for longer than the period of the tourist visa, a residency permit must be obtained. To obtain this, the first port of call is the local police station’s immigration department . You will need to produce to the police the following documents:
The police will then refer you to the Lefkosa State Hospital, or now there are certain clinics which are licensed to carry out this work, for a health test. The test will check for infectious diseases such as HIV, hepatitis and TB. After you have had the health test, you will collect the results and take them unopened to the immigration office in Lefkosa for the residency permit to be stamped in your passport. The immigration office is called the ‘Muhaceret Dairesi’ in Turkish.
It is important to note that the residency permit only entitles you to live in the TRNC. It does not entitle you to work or to set up a business in the TRNC. To do these things you will need either a work permit or a permit to set up a business. The residency permit is valid for a period of 1 year. It must be renewed every year by following the same procedure (except for the hospital check).
Please note that children under the age of 18 years do not require residency permits. This is only applicable to adults. Therefore, families moving to the TRNC only need to apply for residency for the adult members of the family. Non-citizens who give birth to a child in the TRNC, will need to notify the embassy or consulate of their country of origin of the birth of the child and once this has been done and a letter to this effect has been obtained from the embassy or consulate, they will need to apply to the District Office (Kaymakamlik) in the area in which the they live to register the child’s birth.
Becoming a citizen of the TRNC is more complex. Citizenship is granted to all persons whose mother or father is a Turkish Cypriot or to those married to a Turkish Cypriot. At the moment, here is a new law in Parliament to allow foreign nationals to become citizens of the TRNC after 10 years of residence in the TRNC.
This guide is intended for general information purposes only and does not constitute legal or professional advice. The information provided is on the basis of current law at the time of writing. Please contact Sener Law Firm and Hugh Jones LLP for specific advice and further updates and changes in law.