Profiting From Insider Knowledge In Northern Cyprus
Northern Cyprus is a land of boundless opportunity. It’s outside the box as far as ordinary investors are concerned. But here at Overseas Property Alert we aren’t ordinary investors…
We’re the first to enter new markets, and we have insider knowledge that gives us an edge. Watch this space. By the end of 2024, the stragglers will start promoting Northern Cyprus as the next big opportunity destination. By then, you could have cherry-picked the best deals for yourself.
One of the main reasons that property in Northern Cyprus is such great value is that uninformed investors mistakenly believe that property titles aren’t safe in Northern Cyprus. A myth that people from the Republic of Cyprus will turn up one day and confiscate your property persists. It’s simply not true…
This was the concern 30 years ago, but the angst never became a reality. Realtors in the Republic of Cyprus may tell you differently because they want to sell you property south of the border in the Republic.
History Of The Issue In A Nutshell
Cyprus got independence from the U.K. in 1960, and the two Cypriot ethnic groups (Greek Cypriots and Turkish Cypriots) agreed to run the island together. By 1964, tensions were rising. In 1974, the Greek Cypriots, with the backing of the Greek army, staged a coup to seize control. Turkey invaded to protect the Turkish Cypriot population, seizing the top 36% of the island and declaring it the Turkish Republic of Northern Cyprus (TRNC).
Today the island remains divided, but the issues from decades ago have abated, and the border is now open. The situation reminds me of The Troubles in Northern Ireland, but Cyprus’ troubles ended two decades before Northern Ireland’s Good Friday Agreement and peace treaty. Tensions have eased so much that the reunification of Cyprus is being discussed again. If Cyprus were to reunite, it would be a boon to the north, as it would mean EU membership and access to huge markets and capital funding.
The Title Fears
When the island was divided, Greek Cypriots in the north fled south, leaving their property behind, and Turkish Cypriots were forced north. For years, there was tension over the private property lost by both sides, but this began to change decades ago.
In 2005, Turkey instituted a fund called the Immovable Property Commission to resolve the issue. It was set up to pay the Greek Cypriots for any land they were forced to abandon in the north. This commission is approved and supported by the EU, removing any compensation liability from new owners of property in Northern Cyprus.
To date, most Cypriots have been compensated, and the remaining few will have their cases heard soon.
The deal is done. Property titles in Northern Cyprus are safe.
Types Of Title In Northern Cyprus
There are four forms of title in Northern Cyprus.
The details aren’t that important because any title issued since 1974 is now considered legitimate by the international community.
- Post-1974 Turkish Cypriot Titles.
- Pre-1974 Greek Cypriot Exchange Land. This is also called Esdeger Land. This is land that Greek Cypriots exchanged with Turkish Cypriots for their land in the south.
- Tahsis (TMD) Deed.
- Leasehold. This is property owned by the Northern Cypriot government, which grants a long-term lease for 49 years that’s renewable for an additional 49 years. These leasehold titles are fine, but be aware that it’s a lease, and the value of the lease falls with every year that passes.
All you need to do to be safe when buying property in Northern Cyprus is to retain a local lawyer to conduct the due diligence and handle the transfer, as you would in any other country in the world.
You should be aware that while foreigners can legally only own one property in Northern Cyprus, there are several ways that you can legally get around this, and some of these options can even save you money.
Where Is It Going?
Cyprus is the birthplace of Aphrodite, the crossroads of civilizations. It’s a low-cost island in the blissfully luxurious Mediterranean. If there ever was a destination on the path of progress, Northern Cyprus is it.
It’s got an amazing health care system, a world-class education system, and a solid economic development plan. But the real reason I love Northern Cyprus is because of the fantastic real estate opportunities. High-end property is still up to 66% cheaper in Northern Cyprus than just over the border in the Republic.
Other Things To Know About Northern Cyprus:
- Just like the Republic of Cyprus isn’t ruled by Greece, the Turkish Cypriot Republic of Cyprus isn’t controlled by Turkey. They’re both autonomous, though North Cyprus’ independence isn’t officially recognized by most other nations.
- Turkey and Northern Cyprus have a strong relationship, including a freshwater line from Turkey that supplies Northern Cyprus, favorable trade agreements, and Northern Cyprus uses the Turkish lira as currency (except in property transactions where it uses British pounds… go figure…)
- Reunification is probable, but it could be years or even decades before it happens.
Reasons To Invest In Northern Cyprus
- Fantastic weather and stunning scenery
- Low cost of living and excellent value real estate
- Relatively large expat population
- Owning real estate makes you eligible for residency
- Rental income is taxed at only 10% (called the stoppage tax)
- English is widely spoken
- Low pollution and low crime
- Will join the EU at reunification
- Mortgages are available for expats
- Low-tax country
- English Common Law-based legal system
Costs Of Buying A Property In Northern Cyprus
- Stamp duty: 0.5%
- VAT: 5% (VAT is a one-time payment. It only applies to the first buyer.)
- Title deed transfer fee: 3%. If you buy two or more properties this goes up to 6%. You can avoid this by registering the contract. I discuss registering contracts and all other Northern Cyprus property considerations with my friend Kat Kalashian, editor of In Focus: Europe. If you’re interested in hearing more about living or retiring in Europe, sign up for In Focus: Europe here.
- Infrastructure contribution and utility connections fee for first owners of a property range between 1,000 and 3,000 pounds.
- Home ownership tax is currently 3 Turkish lira per square meter, paid annually. This equates to around 16 U.S. cents per square meter, a laughably cheap figure.
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Editor, Overseas Property Alert