The Turkish Republic of Northern Cyprus has recently adopted a major amendment to its laws governing foreign investment in real estate, specifically regarding the acquisition and long-term lease of real estate by foreigners. Published in the Official Gazette on 21 May 2024, the law marks a significant evolution in the legal framework.
Summary of the new rules:
1. Registration requirements and conditions for taxes and fees payment.
Everyone who had made the contract of sale before 21 May 2024 must register their contract of sale with the District Lands Office and apply for permission to purchase within 6 months. Foreigner and foreign legal entities who obtained permission to purchase immovable property before the 21 May 2024, and the vendor who sold immovable property to them, must complete the transfer of the title deed within 6 months from 21 May 2024. If at the time the foreigner and foreign legal entity is granted the permission to purchase, the final approval of the immovable property has not been received and/or its division has not been completed and/or its separate title deeds have not been issued before 21 May 2024, the vendor and the purchaser must pay all taxes and fees (i.e. remaining transfer fee, VAT (if applicable) and stoppage tax) within 60 business days. Trustee purchases: Attorney trust agreements entered into after 21 May 2024 are void and current trusts must be registered within 75 business days. If the above rules are not complied with, the decision of the Council of Ministers to grant permission to purchase will become invalid and the registration of the contract of sale will be automatically deleted and deemed invalid.
2. Requirements concerning title deeds
– Title deeds: All properties must have full or partial title deeds. Contracts without title deeds will not be accepted.
– Shared title deeds: Sales of shared title deed properties are prohibited, even to locals.
3. Temporary concessions
– Sales under a contract with planning permissions are allowed for up to one year under pressure from builders.
4. Restrictions on foreign buyers
– Foreigners except citizens of countries that recognize Northern Cyprus (currently this is only Turkey) have the right to purchase one of types of real estate: 1 private house or 1 apartment or 1 plot of land measuring 1 denium (1,338 m2) or 1 private house on a plot of up to 3,300 m2. However, 1 property can be registered with shared participation by 3 foreigners. Foreigners - citizens of countries that recognize Northern Cyprus (for now it is Turkey) have the right to purchase 3 apartments (not private houses).
– The sale of agricultural lands and forests to foreigners is now prohibited.
– The total area of immovable property available for sale to foreigners within any district is limited to 7% of that district’s total area and 3% of the total national area. Any registrations that exceed these limits will be deemed invalid.
– The Council of Ministers is authorized to designate specific regions where foreign acquisition of immovable property is restricted, except through inheritance, to safeguard national security, public interest, or public order.
– No residential complex can have more than 80% foreign buyers and no more than 51% from one country.
5. Investments
– For investment, foreign citizens can purchase real estate in the following sectors: healthcare, industry, education, tourism, agriculture, construction and sales are excluded. At the same time, deposit at least 20 million euros into an account in a local bank, use the capital within 2 years and sell such an investment no earlier than 5 years.
6. Fines
– For failure to comply with the established rules, a fine ranges from minimum amounts to 500 minimum wages.