Frequently Asked Questions
Investing in another country for the first time can be daunting. At C & T Construction & Estates we are here to guide you through the buying process to ensure that you find the right investment in the right place and are supported by the right people. Below is a list of the questions we are most often asked, with our answers, and we hope you find them helpful.
- Why should I invest in North Cyprus?
- Is this the right time to be investing in North Cyprus?
- Why is the ‘Property Issue’ so complex in North Cyprus?
- Who or what is Eupro?
- What about North Cyprus and the EU?
- What are the differences in the title deeds for the property?
- What is an international mortgage?
- How is land measured?
- How many properties can I purchase?
- How can I purchase two properties in North Cyprus if I am not a citizen of TRNC?
- Can my spouse and I purchase one property each?
- How long will the purchase permission process take and what does it involve?
- Do I need to wait for my purchase permission before I can move into my property?
- Can I sell my property before I obtain my purchase permission?
- When do I start to pay taxes?
- Will I have to pay capital gains on my purchase?
- Will I have to pay capital gains tax on the sale of my property? If so, how much will this be?
- What if I sell my property before taking title? Will I still have to pay capital gains tax?
- What are the costs involved in buying a property?
Why should I invest in North Cyprus?
Making an investment today for your future can be an uncertain prospect, with fluctuating markets and pensions yielding little or nothing in return. Property is no longer considered an ‘alternative investment’ but a way of reaching excellent returns on capital. Investment in overseas property is gaining momentum, risk is minimal providing you take professional and expert advice, and returns can be significant.
The table below shows the relative costs of building a three bedroom property in North Cyprus, beginning in November 2005, compared with building a similar property in South Cyprus.
Comparing North and South Cyprus
| North Cyprus | South Cyprus | |
|---|---|---|
| Location | Famagusta | Paphos |
| Specification | Three bedrooms 110m² | Three bedrooms 110m² |
| White goods | No white goods | |
| Two A/C units | No A/C units | |
| Gymnasium | No Gymnasium | |
| Swimming and children’s pool | No Swimming and children’s pool | |
| Price | £54,950 GBP | £140,000 – £150,000 GBP |
| Expected value growth for next three years | 40% – 60% | 10% – 15% |
| Capital Gains Tax | None | 20% |
| VAT | 5% | 15% |
| Pension Tax | None | 20% |
| Transfer fee based on £100,000 GBP | 0% | 8% |
| Mortgage | No status | Subject to status and restrictions |
| All nationalities | ||
| 5% fixed rate | Rates and loan to value variable | |
| Initial deposit | Invest £19,232.50 Do not pay for another three years! |
£45,000 + legal costs Based on 30% deposit |
North Cyprus has become known as an area of massive growth potential with prices well below other Mediterranean destinations currently known as ’the investment hotspot‘ because:
- As housing prices in the UK slow down, and mortgage applications decrease, property investors are increasingly investing in property overseas.
- Foreign investment is actively encouraged by the government of North Cyprus and has led to numerous incentives to help foreign nationals, including tax exemptions on import duties, income tax and corporation tax, sometimes for up to 10 years. Tourism grants are readily awarded.
- Investors and property enthusiasts are looking to unspoilt and uncommercialised North Cyprus, having been disenchanted by major increases in tourism in Southern Cyprus.
- Choosing a location with a favourable inheritance tax law could save your family thousands.
- As a retirement option, overseas property not only provides potential capital gains and a regular source of rental income, but also somewhere to look forward to which boasts a better climate, and a cost of living substantially lower than most Mediterranean countries.
- Retired people only need a residency permit to live in North Cyprus. They can import a full household of furniture virtually tax free – normally between only 2% and 3%.
- It’s a healthy place to live and has excellent local cuisine with interesting markets and good restaurants.
- North Cyprus has miles and miles of fabulous beaches safe for swimming and water sports – always popular for families keen to rent property during the summer months.
- There are more than 300 days of sunshine with a winter average temperature of 15°C!
- North Cyprus has a rich and fascinating culture with wonderful historical places to visit.
- North Cyprus is only a few hours flight from your home country, your family or your work!
Is this the right time to be investing in North Cyprus?
North Cyprus is at the beginning of a real growth period and is already providing excellent returns over a very short period of time. Investors in North Cyprus can enjoy the investment potential of their property at the same time as receiving rental income. There are no other countries that currently offer this opportunity. The graph below demonstrates what your money will buy in major European investment areas.
GBP
Negative publicity about North Cyprus has actually created opportunities for the shrewd investor otherwise they would be looking at the same prices as in the south of the island. Currently the asking price for a five bedroom luxury villa in the South is up to £1 million and in the North £275,000. Investors will not only benefit from natural property growth but, when major political decisions are made in favour of the North, property prices will increase dramatically overnight creating huge property equity. Those willing to take the risk use local, professional and experienced advisors.
Plus
Investing in North Cyprus has become far more attractive due to rising interest rates, which have made UK properties more expensive, and exchange rates which allow UK investors to get more for their money.
- In the Kyrenia district expected returns have provided up to 30% or more in one year from plans to completion, with healthy holiday rental returns.
- The new up and coming area is East of Kyrenia, Esentepe, Bacheli and Tatlisu is currently attracting a lot of foreign investment. North Cyprus will soon have its first 18 hole international golf course, a shopping complex and a large marina.
- Aspiring first time buyers in the UK are considering using property in another country to get on the ‘buy to let’ property ladder.
- Whether a main residence or holiday home, property values are predicted to increase dramatically.
- In recent years a spate of TV programmes has shown an increasing number of British people are ready to up sticks and invest their money in overseas property, and people are more open to making significant life style changes.
Why is the ‘Property Issue’ so complex in North Cyprus?
The ‘property issue’ in Cyprus – North and South – is complex and highly sensitive. The international community recognises that a political settlement must be resolved and that this will involve compromise on both sides. Sadly, in 2004 the Turkish Cypriot North voted for the Annan Plan while the Greek-Cypriot South overwhelmingly rejected it.
With this level of political sensitivity it will come as no surprise to you that there are dedicated Greek–Cypriot political activists who have staged, or plan to stage, a series of legal claims against foreign property owners in the North. They believe that the TRNC cannot grant lawful titles on properties which belonged to Greek Cypriots before 1974. Further they think that as the South, the ‘Republic of Cyprus’, is now a member of the EU, court orders can be enforced in a member state even if they have no legal validity in the North. As there are 7,000 British residents in North Cyprus, all with EU rights, the activists are targeting the UK press, and making headlines, airing their views. They hope to frighten off potential investors and damage the North’s flourishing property market and developing economy. However, as Turkey continues to demonstrate its commitment to the EU, and with the backing of the USA and the UK, some of this initial impact is lessening.
For many years the Greek–Cypriots have been successful in influencing the International community, conveniently overlooking that what has happened in the North is what previously happened in the South to Turkish land. They see the ‘property issue’ not as a result of ‘Turkish intervention’ in 1974 but ‘Turkish invasion’. For many in the North the ‘intervention’ was a culmination of the oppression of the Turkish–Cypriots in the eleven years before that period — a period described by one diplomat as a time ‘the Turkish Cypriots cannot forget, and the Greek Cypriots cannot remember’. Many in the North see that thanks to the Turkish support no more lives were lost in the struggle between the two sides.
However, the International community is aware there are always at least two sides to every political discussion and there are on going discussions regarding improved international recognition and direct flights into North Cyprus – all encouraging and positive signs for would–be investors interested in business and tourism opportunities. Potential and existing investors are only too aware that prices remain low as a result of the ‘property issue’ and that North Cyprus remains the cheapest place to invest in property in the Mediterranean. The question you have to ask yourself is are you prepared to take that risk?
When buying in North Cyprus you need to understand the market, follow the basic criteria, be fully acquainted with political and economic issues and work with professionals whom you trust to minimise any risk and maximise investment potential. The title deeds C & T Construction sells are all registered freehold titles and guaranteed by the government of the TRNC. The lawyers they recommend are English speaking and offer impartial advice.
Who or what is Eupro?
Eupro (The European Property Association of Northern Cyprus) was set up as a limited company, incorporated in England, to counter Greek Cypriot propaganda on the property issue in Northern Cyprus and to combat legal challenges made by political activists in the South against those possessing homes in the North by virtue of TRNC titles. It is independent of government and has no association with any political party. Visit their website www.eupro.co.uk and learn more about their work, their views, useful links, membership etc
What about North Cyprus and the EU?
There are ongoing discussions regarding North Cyprus joining the EU and this has already resulted in a significant economic uplift, as well as higher demand for property. In February 2006 the EU invested £92m in North Cyprus.
The following issues are currently under discussion with the EU:
- Opening of the sea ports of Turkey to Greek Cypriot vessels for trade in accordance with the EC–Turkey customs union.
- Allowing Greek Cypriot air carriers to use Turkish air space for flying and permission to land at Turkish airports in accordance with international rules and procedures.
- Opening of ports in North Cyprus, including Famagusta, Kyrenia, and Gemikonagi to international trade, people and services under Turkish Cypriot management.
- Special arrangements for the practical inclusion of North Cyprus, as an economic entity, into the EU customs union, with unhindered direct trade between both sides of the island and the rest of the world.
- Participation of the Turkish Cypriot side in international sports, cultural and other social activities.
What are the differences in the title deeds for the property?
There are four different deed types when you buy a property or land in North Cyprus:
- British or other foreign ownership pre – 1974
- Turkish Cypriot owned pre – 1974
- Post 1974 Turkish Cypriot Ownership (TRNC Title Deed): Given to Turkish Cypriots due to them as their lands left in South Cyprus (an exchange of land/property) or (awarded land/property) to Turkish Cypriots by the Turkish Republic of Northern Cyprus (TRNC) Government. Based on the 1983 TRNC Constitution, all the deeds rectified and named as TRNC deeds are freely transferable to foreigners
- Leasehold – owned by the TRNC Government who will grant long–term leases of 49 years
The title deeds that C & T sell are all registered freehold titles and guaranteed by the government of the TRNC and the lawyers we recommend are English-speaking who offer impartial advice.
What is an international mortgage?
Previously estate agents in North Cyprus marketed properties that required cash sales or staged payments where smaller constructors were looking for quick returns on their investments. This restricted investors who could not meet cash or staged payments. North Cyprus currently offers the best value investment in the Mediterranean and with our international mortgages, offering affordable terms to any nationality, you can achieve your investment goal.
C & T Construction & Estates can offer international mortgages on all our properties:
- Up to 70% with 20 years payment term
- Based on sterling UK pounds fixed rate based on 5%#037;
- No UK based security needed
- A guaranteed fixed rate international mortgage plus relative insurances
- Available to all nationalities
- Our mortgages and your mortgage will be secured on the property you purchase through C & T Construction & Estates
-
Lending criteria and eligibility
- Mortgages are only for residential property
- All mortgages are subject to status but proof of income not necessary
- No minimum loan amount
- No age restrictions and maximum term available is 20 years
- Eligibility to borrow - no criminal record in North Cyprus or money laundering charges in other EU countries
- Potential rental income and estimated value growth of the property can be taken into consideration.
How is land measured?
All land in the TRNC is measured in Donums &ndashl one donum is one third of an acre ie 1388m².
How many properties can I purchase?
A foreign individual is allowed to purchase one Donum in their own name. If you would like to purchase more than this then a locally incorporated limited company must be set up. This procedure is quite standard and we can guide you through the procedure if you require.
How can I purchase two properties in North Cyprus if I am not a citizen of TRNC?
You can sign the contract of sale for two properties in your own name, but you can only apply for purchase permission for and take title to one property. You will have 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. For more detailed advice on trusts and companies please contact info@ctcestates.com
Can my spouse and I purchase one property each?
No. A husband and wife are counted as one household and the current property restrictions in North Cyprus are one property per household.
How long will the purchase permission process take and what does it involve?
This process can take some time – current estimates are around two years. The process involves searches being taken from the Land Registry, the Immigration and the Military and is currently under review in North Cyprus.
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.
Can I sell my property before I obtain my purchase permission?
This depends on the terms of your contract of sale. Your lawyer will always try to negotiate with the vendor to insert a clause allowing you to sell the property before taking title. Selling before taking title also has tax advantages as taxes are only payable when a transfer of title takes place.
When do I start to pay taxes?
For cash purchasers and stage payment purchasers taxes are applicable once the mortgage is completed and the title deed is transferred – a maximum of 18 months.
Will I have to pay capital gains on my purchase?
Generally no. Capital Gains Tax is usually paid by the Vendor to the Tax Office, unless otherwise stipulated in your contract.
Will I have to pay capital gains tax on the sale of my property? If so, how much will this be?
This depends on whether you are a private individual or a professional vendor. Every private individual has a once in a lifetime tax free sale option (for a house and land not exceeding approximately one donum). If you use this option, you will not be liable to Capital Gains Tax on that sale. On all subsequent sales, Capital Gains Tax will be payable at 3.5%, provided you do not sell more than three properties in one year, making you a professional vendor. For professional vendors, there are no tax exemption rights and Capital Gains Tax is payable on every sale at a rate of 6.25%.
What if I sell my property before taking title? Will I still have to pay capital gains tax?
Capital Gains Tax is not payable if you sell the property before taking title by completing an assignment of contract.
What are the costs involved in buying a property?
In addition to the purchase price of a property bought for £54,950 an indication of costs would be:
Solicitor’s costs
£1,000.00 (approximately)
Including drawing up of contract, power of attorney, purchase permit application and seeing sale through to completion. We can recommend solicitors who we have dealt with on many properties.
Purchase tax payable on transfer of the title
£1,648.50 = 3% of valuation figure
The Purchase Tax is based on the Land Registry Valuation of the property – this is usually considerably less than the selling price as only bricks, mortar and size of land are taken into consideration, not fixtures and fittings.
Belediye (Local Council) Fees
£24.00 = 1% of the 3.
KDV (VAT)
£2,747.50 = 5% of valuation figure
Other legal Fees
£1,000.00
Inclusive of a search, preparation of Sales Agreement, application to buy from the Council of Ministers and transfer of title at District Lands Office.
Utility connection charges
£280.00
Water, electricity and telephone, (electricity – payable monthly – average figure is £25 summer, £50 winter/ Gas is bottled).
Total
£6,700.00
The above charges, apart from legal fees, are paid on the transfer of the title (approx 18–24 months later).
If you need any further information please contact us info@ctcestates.com