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Foreigners can legally purchase one North Cyprus property per person or a married couple who have the same surname, up to one donum of land which equates to 1338sqm or 14,400sqft.

When purchasing land, property or investing in North Cyprus it is advisable to employ the services of a local independent English speaking conveyancing Lawyer and your chosen Real Estate Agent can recommend one to you. The system in Northern Cyprus can appear complicated, after the division of the island in 1974, Turkish Cypriots formed their own legal system and as a result there are now five different types of title deed and all are freely transferable to foreigners.

Title to immovable property in Northern Cyprus

The issue of title to immovable property in Northern Cyprus is a complex issue and arises due to the nature of the political situation in Northern Cyprus. As a result of the troubles between the Turkish Cypriots and Greek Cypriots which occurred mainly in the 1960’s and which culminated in the Turkish military intervention in 1974, property on both sides of the island was left abandoned by its original owners.

In the Turkish Republic of Northern Cyprus, this abandoned property was administered by the government in two main ways:

Those Turkish Cypriots who had left land in the south were given points calculated on the value of the land which they had left behind. These points were then used by the Turkish Cypriot to acquire freehold title to a piece of the abandoned immovable property which should, theoretically, be of equivalent value to the land left in the south. Immovable property to which title was acquired in this way by a Turkish Cypriot is known as Exchanged title Land.

The Government also issued points to other people, not for property which was left behind in the south, but as a gift, usually in reward for military services. These points were then used to acquire freehold title to a piece of the abandoned immovable property. Immovable property to which title was acquired in this way is known as gift land or TMD.

Property which was not owned and abandoned by a Greek Cypriot during this period and which was owned immediately prior to the military intervention in 1974 by a Turkish Cypriot or a foreign national is known as Turkish Title or Pre-1974 title or Foreign Title.

How the different types of title will be dealt with in the event of a political solution in Cyprus and what consequences this will have for the current owners or users of such property is a complex and difficult question which cannot, at this moment, be definitely answered. Since the division of the island in 1974, there have been a number of attempts and plans to reunite the two sides. The most recent and most famous is the United Nations Comprehensive Settlement of the Cyprus Problem (the Annan Plan) which was put to referenda on both sides of the island in May 2004, but which , despite being accepted by the Turkish Cypriots, was overwhelmingly rejected by the Greek Cypriots. Although this plan does not have any real legal status or binding force and therefore cannot be taken as an authoritative answer to the property issue, many politicians and academics believe that if there were to be a settlement in Cyprus, the Annan Plan would still form the basis of such a settlement. For this reason, the Annan Plan continues to be used as a guide for providing legal opinions on the likely effects of a solution on property issues.

The provisions of the United Nations Comprehensive Settlement of the Cyprus Problem – The Annan Plan. The most recent version of the United Nations Plan which is dates 31st March 2004 provides as follows:

The plans for dealing with the settlement of property issues in the Annan Plan relate only to ‘affected properties’ which are defined in the Annan Plan as being ‘immovable property’ in Cyprus which the owner, being a natural or legal person, left or of which they lost use and control as a consequence of intercommunal strife, military action or the unresolved division of the island between December 1963 and entry into force of the agreement (the Annan Plan) and which has not since been reinstated to the owner. Therefore it is presumed that the Pre-1974 Turkish or Foreign Title is not in any way disputed.

It is also important to note at this stage that from a developer’s point of view, the plan refers always to the ‘current user’. Therefore, once a person has acquired a legal right to use or occupy that property, that person is the current user, even though they may not have title to the property. Ultimately therefore, any liability for compensation will fall with the end purchasers.

Exchange Title

Regarding exchange title property, the plan states that any disposed owner (i.e. a person who had a legal interest in an affected property) who is the current user of an affected property of similar current value to the property of which he/she was dispossessed and who has been using the affected property on a continuous basis for at least 10 years may apply to receive title to that property. The application will be granted if the current value of the affected property is no greater than 50% more than the current value of the affected property. ‘Current value’ means the value of the property at the time of dispossession plus an adjustement to reflect appreciation based on the average sale prices of properties in Cyprus in comparable locations. The plan stipulates that when assessing the ‘current value’ expert advice shall be obtained from specialists in property valuation and valuations should be based on the hypothesis that the events between 1963 – 1974 did not occur, so they should not take into account alteration in values due to these events. What this means is that when calculating the ‘Current Value’ the fact that property prices in the North are significantly lower than those in the South due to the events which took place between 1963-1974 will be ignored and values will be calculated by looking at property prices in comparable locations in the South.

The plan goes on to state that a purchaser or his/her successors in title of an affected property which was assigned to a disposed owner and which is of similar current value to a property of which the vendor was dispossessed shall have the same rights and obligations as the vendor would have.

In short therefore, a person who purchases ‘exchange’ title land or property which has been used continuously by that person and his predecessors in tile together for a period of at least 10 years and which has a current value, calculated by experts looking at the prices of property in comparable locations in the south, is not greater than 50% of the current value of the land left behind in the south by the original dispossessed owner will be entitled to receive title to their property.

Exchange title land which has not been used continuously for 10 years will be treated in the same way as TMD (see below). Exchange title which has a current value more than 50% greater of the current value of the land left behind in the south and where no amicable agreement can be reached between the two sides will be left to the discretion of the property court. At present there is no way of checking the relevant values.

Where title is granted to the current user and the current value of the affected property is more than the current value of the property of which the vendor was dispossessed she/he shall pay the difference to the Property Board. This is the compensation element of the exchange title land. Therefore, with exchange title which meets the requirements above and which is retained by the current user, compensation is only payable by the current user on the difference (if any) between the value of the property and the value of the property which was left behind in the south. Values are calculated as detailed above, ignoring the lower prices in the North.


Significant Improvements

Whether the type of title to the land is exchange or TMD, the owner of a ‘significant improvement’ to affected property (i.e. an improvement, including a new construction on vacant land the market value of which is greater than the value of the affected property in its original state and permission (visa stamp) for which was given prior to 31st December 2002) is entitled to apply for permission to obtain title to that property upon payment of compensation. It is noted that this date was set on the basis that the plan would be accepted in May 2004. Any subsequent plan would therefore presumably provide for a later date. The way in which compensation would be calculated, presumably would depend on whether the land fits into exchange title i.e. whether the value of the land left in the south can be set off from the current value of the land so that the compensation is payable only on the difference between the two or whether the land is TMD, in which case there is nothing to set off from the current value of the land and the whole ‘Current Value’ falls payable.

TMD

Any properties which do not meet the requirements of Exchange or significant improvement above, this would include TMD will be eligible to be reinstated to Greek Cypriots up to the ‘Reinstatement Entitlement’. The reinstatement entitlement is 1/3 of the land area of the aggregated affected property of a disposed owner. Therefore, the Greek Cypriot can choose from his/her affected properties to be reinstated into up to a maximum of 1/3 of the land area of the total of his affected properties. There are further restrictions on this: Agricultural land shall not be re-instated if it involves sub-division into plots of less than 5 donums or 2 donums for irrigable land. Buildings which have a single owner shall not be sub-divided for the purposes of re-instatement.

The owner of an improvement to an affected property with a market value of more than 10% of the current value of a property to be re-instated or 3000 Cypriot Pounds, whichever is the lower may apply for compensation for his interest in the property. The property can only be re-instated to the dispossessed owner if the market value of the improvement is paid to the property board. Therefore, even on a worse case scenario where property has to be re-instated to a Greek Cypriot, if a construction has been carried out on the property which does not meet the requirements of ‘Significant Improvement’ the current user would be entitled to compensation at the full market value of the construction.

Where the reinstatement entitlement does not allow the reinstatement of a dwelling or the minimum size of agricultural plots to the dispossessed owner, the dispossessed owner may sell his reinstatement entitlement to another dispossessed owner from the same village or municipality or may elect to receive compensation for it. Compensation again is based on the ‘Current Value’ as defined above.

Where a current user of such property is granted the right by the property board to retain title to such property, the current user would have to pay compensation to the Greek Cypriot based on the current value as defined above. As there is no corresponding land left in the south for this property, there will be, unlike with exchange title above, nothing to set off against the current value of the property and the whole current value will fall due.

Miscellaneous

In addition to the provisions above, generally any property belonging to the church or Evkaf which was used as a religious site in 1963 or 1974 will be reinstated. Any affected property which is being used for public benefit or which is required for military purposes will be transferred to the relevant constituent state in return for payment of the current value to the property board.

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