Conditions for Foreign Nationals to Acquire Immovable Property in the TRNC

In order to avoid any mistakes and prevent any consequent hardships, there are important issues to take into consideration within the framework of the law when real or legal persons of foreign nationality intend to purchase land and/or house and/or long-term lease in the TRNC.

Our institution, as the legal representative of the construction sector, highlights some important issues, which are summarized below, in order to guide those who want to invest in this regard in our country.

Legal Basis

Under the framework of Property Acquisition and Long-Term Lease (Aliens) Law 52/2008, which was adopted at the 10 November 2008 TRNC Republican Assembly Meeting, real or legal persons of foreign nationality shall be entitled to purchase immovable property or long-term lease in our country upon the approval of Council of Ministers provided that official procedures have been followed and legal applications have been completed.

Foreign nationals who are going to purchase or lease immovable property in the TRNC must apply to the Ministry of Interior in order to purchase any immovable property and be legally entitled to that property, and must obtain the approval of the Council of Ministers as an outcome of the investigations to be made by the Ministry. The approval process varies according to the nature of the application and is usually completed within 3 to 6 months.

Legal Limitations

Real or legal persons of foreign nationality may own immovable property or purchase a long-term lease, provided that they comply with the legal requirements and fulfil the necessary legal procedures, in accordance with Articles 8 and 9 of the relevant law. In addition, with the Statutory Decree published by the Council of Ministers Decision dated 29 August 2018, some of the limitations specified in the said law have been relaxed until a second amendment. Information on the current legal practice is as follows;

For long term leasing;

• The lease period can vary between a minimum of 10 (ten) and a maximum of 99 (ninety-nine) years;
• In the case that there will be a building construction on the immovable property to be acquired through long-term lease, the relevant conditions must be included in the long-term lease contract with all the details,
• If the immovable property to be leased is a vacant land, its surface measure cannot be more than 1 (one) dönüm (14,400 square feet or 1,338 square meters). If there is going to be 1 (one) property (dwelling or an apartment flat) built on the leased land, the surface measure of the land cannot be more than 5 (five) dönüms and a second dwelling cannot be built.

For purchase;

• A foreign national is entitled to purchase land not exceeding 1 (one) donum (14,400 square feet or 1338 square metres) provided that the land is vacant.
• They are entitled to purchase one property up to a maximum area of 5 dönüms providing that the property only consists of one dwelling. If the 1 (one) property to be purchased is in a building complex, there is no surface 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, in accordance with the Law No. 52/2008, this right has been increased to 3 (three) with the Statutory Decree published in 2018 (until a second amendment). With the current practice, a foreign national can use his/her right to buy real estate in the form of a second and third “flat”. Husband and wife with the same surname are treated as 1 (one) person. Children do not have any additional rights other than those of their parents.
• A foreign national is entitled to purchase only one private vacant land, land with a property or property within a building complex, and do not have the right to build or purchase another property/flat.
• By obtaining the approval of the Ministry after the Ministry’s investigations, and with the Ministry’s knowledge, a foreign national may transfer a property registered in his/her name or leased by him/her to persons with first- and second-degree blood and kinship relations, or, may sell or mortgage the property to another foreign national.

Foreign nationals who intend to purchase or lease immovable property in the TRNC must apply to the Ministry of the Interior in order to purchase an immovable property, or to be legally rightful owner of the property, and obtain the approval of the Council of Ministers following the investigations made by the Ministry.

For the contracts made by foreign nationals who buy or lease immovable property in the TRNC; in order to have the contract recorded in the Registry at the Land Registry and Cadastre Office of the district where the immovable property is located, it is obligatory to apply and register it within 30 days at the latest.

TRNC legislation does not allow foreign nationals to buy or lease immovable property in certain areas (eg military territories) for security reasons. The legally acceptable distance for obtaining this right is 300 (three hundred) meters, provided that other legal requirements are also in compliance. It is therefore recommended that interested parties investigate the location of the immovable property before making any commitment and/or signing a contract.

In accordance with the Law, the Council of Ministers has the authority to limit the acquisition of immovable property by foreign nationals in special circumstances.

Again, in accordance with the law, the above-mentioned conditions regarding the acquisition or long-term lease of immovable property by our foreign nationals are not applicable when they are in a legal partnership with a TRNC citizen who owns the %51 share of the company and they will also be exempt from pertinent restrictions and practices.

Important Issues to Consider

It is recommended that foreign nationals be careful about the following issues in order not to experience any grievance;

• The ownership status of the property to be purchased must be established and it should be known in advance whether the immovable property is under an individual or a joint share ownership.
• The issues such as whether there is a restriction on the immovable property like a mortgage, levy etc. or whether there is any personal statement or circumstance obstructing the sale of the immovable property should be checked with the relevant Deed and Cadastre Office.
• It is not recommended to either work with people who are not reliable or are not specialists and nor with companies that are not registered within the related sector they are affiliated with. It is recommended that the dwellings built by contractors registered with the Turkish Cypriot Contractors Association (CTBCA) and certified by the Construction Commission should be preferred.
• It is advised that the contract should be certified in a registered Notary office and legal opinion should be obtained from a lawyer’s office before signing the contract. This is so that the legal rights of the persons involved in the contract between the property owner and the buyer would be protected.
• It is recommended that prior to signing the contract, all technical specifications and details of the project related to the immovable property to be purchased is established and understood. It should be noted that the contract is binding on both parties after the contract is signed.
• If the immovable property to be purchased is still in the construction phase, it is recommended that the purchaser finds out whether the Contractor has the construction license permits for the project.
• If the immovable property to be purchased is a ‘completed land’ property, whether the property is a self-contained property or not as well as the pertinent transfer conditions should be established. If the immovable property is still a ‘parcelling project’, it should be ensured that the contracting firm has the construction license permits for the project.
• It should not be forgotten that in case of disputes between the parties regarding an immovable property, only if a contract is made in an accurate, comprehensive form and is legally sound, that the situation can be handed over to the judicial authorities on a legal and reliable footing. This is in order to prevent the buyer from becoming a victim.
• What is included in the total sale price of the immovable to be purchased should be understood clearly, and all implementations and figures should be clearly stated in the agreement to be made between the parties. Everything promised to the buyer must be included in the contract and all fees related to the contract must be paid and the official application must be made within 30 days to the Deed and Cadastre Office.

Taxes and Fees

Regardless of being a foreign investor or a TRNC citizen;

• 0.5% stamp duty cost according to the sales contract (payable by the buyer).
• a) 1% Immovable Property Transfer/Deed Fee on the value of the immovable property for residences up to 140m² and in case the person buys immovable property for the first time (payable by the buyer).

b) Immovable Property Transfer/Deed Fee of 3% over the value of the immovable property (payable by the buyer), in case the person does not purchase immovable property for the first time and the property is larger than 140m².

c) If the immovable property is a field or a plot, 4% of the immovable property value (payable by the buyer).

• 5% VAT according to the immovable property value. (If the seller is a professional, VAT is paid by the buyer. VAT is not paid if the seller is not a professional).
• If the seller is a professional, 4% withholding tax on the value of the immovable property, and 2.8% if the seller is not a professional (payable by the seller).

The above suggestions, conditions and practices are indicative information and there they are not binding on Dream Coast Estates. Please contact the TRNC Ministry of Interior and/or the Deed and Cadastral Office for detailed and most current information.