What are the main changes in the new real estate law of Northern Cyprus?

The new law, enacted on May 21, 2024, introduced stricter regulations for foreign buyers, aiming to ensure tax compliance and transparency in the real estate market. It also provides better protection for buyers by requiring developers to obtain the 'kat irtifak koçan' (preliminary property division certificate) during construction, which guarantees property ownership rights after completion.

What types of property can foreigners buy in Northern Cyprus under the new law?

Foreigners can purchase 1 private house, 1 apartment, or 1 plot of land (up to 1,338 m²), or 1 private house on a plot of up to 3,300 m². Additionally, 3 foreigners can co-own a property together. Citizens of countries recognizing Northern Cyprus (currently only Turkey) can purchase up to 3 apartments.

Are there any restrictions on the types of land that foreigners can purchase?

Yes, foreigners are prohibited from purchasing agricultural and forestry land, as well as land with shared titles.

How many properties can be sold to foreigners in one project?

Up to 80% of properties in a project can be sold to foreigners. However, no more than 50% of those properties can be sold to citizens from the same country or their first-degree relatives.

What are the investment requirements for foreigners in Northern Cyprus?

Foreigners can invest in sectors such as healthcare, industry, education, and tourism, but they must deposit at least €20 million in a local bank and retain the capital for a minimum of 5 years. The invested capital must be used within 2 years.

What are the additional costs associated with the new law for foreign buyers?

Foreign buyers must pay a fee for the application to obtain permission to purchase real estate, which is half the minimum wage (17,035 TL). If reapplying, the fee doubles to one minimum wage (34,070 TL). Standard taxes remain unchanged, including 6% for registration, 0.5% stamp duty, and 6% for title transfer, in addition to a one-time payment of 5% VAT and transformer tax for first-time buyers.

What penalties are there for non-compliance with the new law?

Failure to comply with the new regulations can result in fines ranging from the minimum wage to 500 times the minimum wage. Additionally, attorney trust agreements entered into after May 21, 2024, are void unless registered within 75 working days.

What happens if a foreign buyer doesn't transfer the title within six months of obtaining the permit?

If the title is not transferred within six months, the permit will be canceled, and the buyer will need to reapply, paying double the application fee. A person cannot apply for permission more than twice.

New Real Estate Law for Foreigners in Northern Cyprus

Overview of Changes

On May 21, 2024, the real estate law in Northern Cyprus underwent significant amendments, particularly affecting foreign buyers. These modifications aim to close existing legal gaps, promote transparency, protect buyers from unlawful actions, and ensure tax compliance across the market.

Key Highlights of the Law

Foreigners (from countries like Germany, the USA, the UK, Russia, etc.) can now purchase one property: a house, an apartment, or land (up to 1,338 m²). They are also allowed to co-own property with up to three individuals.
Citizens from countries recognizing Northern Cyprus (currently only Turkey) are allowed to purchase up to three apartments.
Foreigners cannot acquire agricultural or forestry land or properties with shared titles.
In any project, 80% of units can be sold to foreigners, with restrictions on how many can be sold to citizens of the same country.
For investment, foreigners can buy properties in sectors like healthcare and tourism but must invest €20 million in a local bank and retain the investment for at least five years (please make an appointment with us for investment consultation below this threshold).
Developers are required to obtain a "kat irtifak koçan" (preliminary building division certificate) during the construction stage, providing extra protection for foreign buyers.

Taxation and Fees

All taxes and fees must be settled within 60 days after the permit is issued. Foreign buyers must pay 6% for registration, 0.5% stamp duty, and 6% for the title transfer, in addition to VAT and transformer fee for first-time buyers.

        Additional Payment: A fee is required to apply with the Ministry to get permission to purchase real estate, costing 0.5 times the minimum wage (currently 17,035 TL, October 2024). Reapplication will double the fee.
    

Legal Compliance and Penalties

If foreign buyers fail to comply with the law, they may face fines starting from a minimum of 500 times the minimum wage. Attorney trust agreements made after May 21, 2024, will be invalid unless registered within 75 working days.

Clarifications for Buyers

For those who already purchased real estate before May 2024, the law provides a six-month window to register existing contracts. Foreigners with more than one property must notify the Council of Ministers and pay 1% tax of the sales price; otherwise, the fine increases to 3% after the six months.

Important: If a buyer fails to transfer the title within six months of obtaining permission, the permit will be canceled, and reapplication will double the fee.

Final Thoughts

The recent amendments aim to create a more structured and transparent real estate market in Northern Cyprus. Taxes have not increased, but foreign buyers must now adhere to stricter regulations, particularly around ownership rights and permissions. Ensuring legal compliance protects both the buyer and the seller, making the process smoother for all involved.

For more detailed advice or assistance, it is recommended to consult a professional real estate agency or legal professionals familiar with Northern Cyprus real estate law.

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