written by Linnea Kempe Baştaş, Eviqe Estates

9 Steps Guide for Buying Process in North Cyprus

Deciding to buy a property in Northern Cyprus (TRNC) is an exciting and life changing decision. Whilst there are some differences from buying a property in other countries, it is not too complicated once you understand the process.

Once you have thoroughly researched the marketplace, you will become ready to make a decision to buy. Here are the steps you need to know about purchasing, register and get full ownership of your property in Northern Cyprus.

 

1. Book an inspection trip

If you have become interested in finding out more about the property market in Northern Cyprus, the first step you should do is to book yourself on an inspection trip, with one estate agency that you trust, where you can experience the country and look at a selection of properties that might suit your desires. Most estate agencies offer free inspection trips which is a great way of see a selected range of the best investment projects in Northern Cyprus based on your wishes. You can visit and compare different areas, get to know the island and receive property and legal consultation while in Northern Cyprus.

2. Property viewings

When you have booked your inspection trip and come to Northern Cyprus, you will be able to see several properties and attend the scheduled viewings that has been arranged by your estate agency. In this way you can learn all about the projects, prices and finance terms with the selected property owners on the island and you can ask all the questions that you have while in Northern Cyprus.

3. Meet a legal representative

When you make a decision to buy a property in Northern Cyprus you will be in need of a lawyer during the purchasing process to make sure all paperwork is fine and that the necessary payments and registration of your contract will be done properly. The Northern Cyprus legal system is based on the British legal system and it is important to understand the full procedure, and what additional costs and taxes you will have to pay, before signing the final contract to avoid any unnecessary headache in the future.

During your inspection trip you should be connected with a trustworthy lawyer that will share with you the full purchase process from the beginning to the end based on the local laws and where you will have a chance to ask your questions directly to the lawyer. A this stage most clients also leave a power of attorney (POA) with the lawyer so that he/she can act on your behalf if you are not resident in Northern Cyprus.

It is important to make sure that you get the right legal advice when buying a property in Northern Cyprus and that you have been given a choice of legal representatives who have the right qualifications and experience in the industry. You should not be forced to use a specific lawyer and the property owner should not push you to use their lawyer, even if it is for free, as they will not be working fully in your interest.

4. Negotiation

When you have found your new property, you will sit down together with the property owner to negotiate the best price and terms. After terms are agreed on price, make sure to secure a written list of any extras and the specification and ensure that the contract and specification thoroughly cover the full terms and any extras agreed with the owner. A professional estate agency will accompany you in this meeting and even do the negotiation on your behalf.

5. Reservation agreement

When you have negotiated the price and terms with the property owner, you reserve the property and pay a first deposit. When you buy a property directly from the developer you also sign a reservation agreement. This payment is usually made when you are in Northern Cyprus directly to the property owner to make sure that you secure the property. If you are not certain yet, then a transfer will be made into your lawyer’s client account when back home. When the payment has been done, the property is off the market and your lawyer starts with the due diligence to make sure everything is in order with your new property.

6. Purchase contract

If everything is in order with the property, it is time to sign the sales contract. This is usually done within 14 days after the reservation has been done. The sales contract will include all important terms such as title deed and detailed site plans, floor plans, specifications, inventory (if any), price, payment schedule, end date, late completion/delivery clauses. All relevant paperwork will be attached and part of your contract. The draft contract is sent to both the seller and you/the buyer and the final version will be signed according to the instructions received.

When both property owner and buyer sign the sales contract, another deposit of the agreed price of the property (minus the reservation cost) is transferred to the lawyer’s client account, and the lawyer confirms the transfer to the property owner. This amount is usually between 30-50% of the agreed price for the property. The agreed date of access is written in the purchase contract. Once the contract is signed it is registered at the Land Registry Office by the lawyer (the law allows 21 days from enforcement) and your/the buyer's interests are protected until the transfer of the title deed. At this time stamp duty of 0,5% of the sales price is paid.

7. Application for permission to buy

A buyer who is not a citizen will first need to get permission to buy from the TRNC Council of Ministers before it is legal to have the title of the property registered in his/her name. Your lawyer will therefore submit your application for a permit to the Ministry of the Interior and follow it until it has been approved by the Council of Ministers. To be able to do this he/she needs an original criminal record from the police in English language. Obtaining a purchase permit then usually takes about 4 months up to a year.

8. Key handover

When the property is ready, you can take possession and enjoy your property even if your permit has not yet been granted. At this stage your lawyer will request any balance of fund and later on notify you when your permit has been granted and inform you of the title deed transfer taxes/fees to be paid.

9. Title deed transfer fee/tax

The title deed transfer fee/tax is paid upon transfer of the title deed. If you decide to sell your property before you get your title deed, you lawyer can help you in that situation as well. You usually pay no taxes other than VAT if you sell before you get the title deed.
 
Legal fees, taxes and related costs that you should be aware of:

 

• Stamp Duty: 0.5% of the sales price.
• VAT: 5% of the sales price. Usually not included in the price and paid on the sales price by the buyer. Upon delivery of the property possession.
• Land Registry Transfer Fee: 6%. However, each person has an exemption once in a lifetime to pay this tax at a tax rate of 3%. Note that during 2021 it has been deducted to 1%. It is recommended that you use this exception if you have no intention of buying another and more expensive property in the near future.
• Capital Gains Tax: Varies between 2.8%-4%, depending on the status of the seller, this tax is usually paid by the seller.
• Legal Fees: £1,200-1,600 including power of attorney (POA), registration of contract and applying for permission.
• Transformation Contribution: £1,500-£2,500 which is the cost of electricity and water connection (when buying a new house) and approximately £1,000 for the transfer of the electricity to your name (when buying a resale property).
• Property Tax: 1,5TL per sqm/year.

Important to note:

• According to the law of Northern Cyprus, non-TRNC citizens currently have the right to own one property.
• You are still the contract owner of the property even if you do not own the title deed in your name after the contract has been duly signed and registered.
• If you wish to sell at any stage after receiving the title deed, no VAT will be paid by you (the first time).
• Every sale of a second property incurs 2.8% VAT.

Good luck with your property purchase and your new home in Northern Cyprus!