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HOLIDAY HOMES IN NORTHERN CYPRUS THAT EARN MONEY
Many people are using the equity in their UK home to buy a second home abroad,
following the big rises in UK property values in recent years. The benefits are
two-fold, as economist NAZIF AKPINAR explains.
An ICM survey of over 1,000 Britons, conducted on behalf of BBC2's Get A New
Life programme, showed that more than half of all Britons would consider
emigrating in search of a better life abroad. Many are seeking a home
[apartments, villas etc] abroad for their retirement. 200,000 Britons emigrated
last year according to the Office of National Statistics.
Affordable homes [apartments, villas etc], lower taxes and a sunnier climate
are what attract those moving abroad. As well as the Spanish Costas and France,
Australia, Canada, the United States and other English-speaking countries have
been the main locations so far attracting Britons, though Turkey is now
challenging these locations in popularity. Until recently, people looking for a
new life abroad, families buying a holiday home [flats, villas etc] or those
who retired dominated the overseas home market. But now the private investor is
arriving in force. Rather than invest in a British buy-to-let scheme, for many
people it makes sense to buy a holiday home [apartments, villas etc] overseas
and let it out.
NORTHERN CYPRUS
[Northern] Cyprus is becoming very popular as a second and/or investment home
[apartments, villas etc] location; 1.5% of the population is already British.
The north part of the island [Northern Cyprus] was disregarded by British
property buyers [of apartments, villas etc] for many years, but now rising
prices and the benefits of recent developments in the political area are
attracting buyers [of apartments, villas etc to Northern Cyprus].
There's a good reason for this. In the northern part of Cyprus [Northern
Cyprus], prices [of properties such as apartments, villas etc] are a lot
cheaper than the south. The standard of living is high but cost of living low;
the crime rate is practically zero; and, of course, the beaches [of Northern
Cyprus] are beautiful.
Best of all, estate agents [of Northern Cyprus located mainly in Kyrenia]
report prices [of properties such as apartments, villas etc] moving up, with
capital gains of as much as 30% expected next year.
Politically, the United Nation's plan is seen as the only practical basis for
any solution [between Northern and Southern Cyprus], and negotiations to end
the long-running dispute between north and south has already been accepted by
the Turkish Cypriots, by a 65% majority. The Turkish Cypriot vote for
reunification of the island in April 2004 won the support of both the European
Union and United Nations, which will surely lead to an end to its political
isolation.
This issue of Residence magazine went to press just prior to a general election
in the north on 20th February 2005. The outcome is expected to be a government
not much different to the former one - it is expected that a coalition
government will be in the office after the election [in Northern Cyprus].
At present flights to Northern Cyprus are via Turkey. Alternatively, it is
possible to fly to Larnaca Airport in the south of the island, and cross the
border to the north [Cyprus]. However, direct flights to Ercan airport in the
north [Cyprus] are very much on the agenda, and this will certainly boost
property [such as apartments, villas etc] values there. There are news reports
in the press in both London and Washington that there is movement towards
direct flights [to Northern Cyprus].
PROPERTY PRICES [IN NORTHERN CYPRUS]
Property [such as apartments, villas etc]prices in Northern Cyprus have been
very low for years, but as the island's [Northern Cyprus] planned membership of
the EU moves nearer (the Greek side joined the EU in 2004), a boom in British
buyers [of apartments, villas etc] has occurred; prices [of properties such as
apartments, villas etc] are moving steadily upwards.
Prices [of apartments, villas etc] start from £25,000 for one-bedroom apartment
to £180,000 for a large detached house with its own swimming pool and
landscaped garden in a new development [in Northern Cyprus]. VAT of 5% is
levied on the purchase of newly-built property [such as apartments, villas etc]
(a recent proposal by the government to increase the VAT to 15% is being
strongly contested).
For investors looking to buy-to-let [apartments, villas etc], Northern Cyprus'
growing tourist trade makes it a popular choice, with low capital outlays and
high rental yields. Existing tourist accommodation [in Northern Cyprus] is only
10% of that in the south; this makes hotel and hotel/apart development very
attractive for investors.
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THE BUYING PROCESS [IN NORTHERN CYPRUS]
When purchasing property [such as apartments, villas etc] in Northern Cyprus,
it is important to appoint a solicitor who will check and confirm the title
deeds, as these can vary in nature (see next page). The next stage is the
drawing up of a sale contract. This will define the payment terms and the
completion date. On the day of completion, the monies are paid to the vendor
and the Land Registry by your solicitors [in Northern Cyprus]. The new buyer's
[of apartments, villas etc] name will be entered into the Land Registry's
books, though it takes up to 12 months for a new title deed to be issued [in
Northern Cyprus].
COST OF BUYING [IN NORTHERN CYPRUS]
Solicitor's costs are in the region of £1000 when buying a property [such as
apartments, villas etc] in Northern Cyprus. Stamp duty is 6% of the property's
value. Where a new house is built [in Northern Cyprus], stamp duty is payable
on the cost of the land rather than the newly-built property. Sales and stamp
duty taxes are payable to the Land Registry office [in Northern Cyprus] when
permission to buy is granted and/or the property is completed; there also
nominal registry fees.
RENTING AND SELLING A HOUSE [IN NORTHERN CYPRUS]
A 3.5% tax is levied on the registered value of the property when a home is
soId in Northern Cyprus (6.25% for company-owned properties). Rental income is
taxed at 10%.
RESTRICTlONS ON A FOREIGN PERSON BUYING PROPERTY [IN NORTHERN
CYPRUS]
Foreigners are allowed to buy only one house [or apartment] or one donum (1,388
square metres) of land in Northern Cyprus. However, some foreign investors are
buying [such as apartments, villas etc] off-plan and selling before completion
for profit. Also, some non-Cypriots are setting up a local company to buy
property [such as apartments, villas etc]. There are no restrictions on letting
a property [in Northern Cyprus].
TlTLE DEEDS [IN NORTHERN CYPRUS]
There are different kinds of ownership under the Northern Cyprus legal system.
Anyone considering buying property [such as apartments, villas etc] must check
the property's title deeds with a local lawyer. There are four types of
property ownership documents [in Northern Cyprus]:
Freehold title: property [such as land, apartments, villas etc] in foreign or
British ownership pre-1974.
Freehold title: property [such as land, apartments, villas etc] that was
Turkish Cypriot- owned pre-1974.
TRNC title deed (Northern Cyprus absolute possession document): property [such
as land, apartments, villas etc] that was Greek Cypriot-owned pre-1974, but
subsequently given to Turkish Cypriots in lieu of land they had vacated in
Southern Cyprus, i.e. awarded to Turkish Cypriots by the Turkish Republic of
Cyprus (TRNC) government.
Leasehold: property [such as land, apartments, villas etc] owned by the
Northern Cyprus Government, who will grant leases of 49 years.
Those homes [land, apartments, villas etc] previously owned by Greek Cypriots
fetch nominal values, as there is risk involved. Also, some new properties
[apartments, villas etc] are being built in Northern Cyprus with lower asking
prices where a, compensation payment would be due to the original owner when a
settlement is made between the Turkish and Greek Cypriots according to the UN
plan.
In conclusion, I repeat what was written in our September 2004 edition:
"[Northern] Cyprus is currently experiencing the beginning of a property boom
as it becomes more and more popular with British buyers, in preference to Spain
and France". Readers who heeded this advice and bought property [such as
apartments etc] then are already seeing an increase in its value.
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