Navigating the Legal and Financial Process of Property Buying in Turkey and Cyprus

Legal Framework for Buying Property

Turkey

1. Eligibility
   • Foreign nationals can purchase residential and commercial properties in Turkey, but there are restrictions:
     • Ownership is limited to 30 hectares across the country.
     • Foreign buyers cannot purchase property in military zones or other restricted areas.
     • The property must align with municipal planning regulations.
2. Legal Due Diligence
   • Engage a Turkish lawyer to ensure the property:
     • Has a valid title deed.
     • Is free from debts or legal encumbrances.
     • Meets local zoning laws.
   • The lawyer will also verify that the seller is the rightful owner of the property.
3. The Purchase Contract
   • Once due diligence is complete, a sales contract is drafted, outlining:
     • Purchase price and payment terms.
     • Deadlines for completion.
     • Penalties for breaches by either party.
   • A deposit (usually 10-25% of the purchase price) is paid to secure the agreement.
4. Title Deed Transfer (Tapu)
   • Finalising the purchase requires transferring the Tapu at the local Land Registry Office.
   • Both buyer and seller must be present (or represented by a power of attorney).
   • This step completes the legal ownership transfer.

Cyprus

1. Eligibility
   • Non-EU nationals can purchase property in Cyprus but face some restrictions:
     • Purchases are typically limited to one property not exceeding 4,014 square meters.
     • Buyers must obtain permission from the Council of Ministers, which involves submitting a formal application.
   • EU nationals enjoy fewer restrictions, particularly when purchasing for residential purposes.
2. Legal Due Diligence
   • An independent lawyer will:
     • Confirm the property has a clean title.
     • Check for existing mortgages, debts, or legal disputes.
     • Verify compliance with local zoning regulations.
   • Legal due diligence also ensures that the property is free from future development risks that might affect its value.
3. Sales Agreement and Registration
   • Once satisfied with the checks, both parties sign a sales agreement, and the buyer pays a deposit (usually 10-20%).
   • The agreement is registered with the Department of Lands and Surveys to protect the buyer’s rights.
4. Title Deed Transfer
   • Once all conditions in the contract are met, the buyer applies for the title deed transfer.
   • The Land Registry Office issues the title deed, finalising ownership.

Financial Considerations

Turkey

1. Taxes and Fees
   • Property Purchase Tax:
     • 4% of the property’s assessed value, typically split between buyer and seller.
   • VAT (KDV):
     • Residential properties under 150 square meters: 1%.
     • Larger properties or commercial units: Up to 18%.
   • Stamp Duty:
     • 0.948% of the property’s declared value.
   • Notary and Registration Fees:
     • Approximately 1% of the property’s value.
2. Financing Options
   • Foreign buyers can apply for mortgages through Turkish banks.
   • Banks generally offer:
     • Loan-to-value ratios of up to 70%.
     • Terms ranging from 5 to 15 years.
     • Interest rates varying with market conditions.
3. Currency Considerations
   • Since the transaction is often conducted in Turkish Lira, fluctuations in the exchange rate can affect the overall cost. It’s advisable to monitor the currency markets.

Cyprus

1. Taxes and Fees
   • Transfer Fees:
     • Ranges from 3% to 8%, based on the property value.
   • Stamp Duty:
     • 0.15-0.2% of the purchase price.
   • VAT:
     • 5% for first-time residential buyers on properties under specific conditions.
   • Municipality Tax:
     • Typically 0.1-0.2% of the property value annually.
2. Financing Options
   • Cypriot banks offer attractive mortgage options for foreign buyers:
     • Loan-to-value ratios of up to 70%.
     • Fixed or variable interest rates.
     • Repayment periods up to 20 years.
   • Ensure you have a clear understanding of all terms and conditions before committing.
3. Additional Costs
   • Legal fees: 1-2% of the property price.
   • Insurance: Required for the property and often bundled with mortgage agreements.