With the new Property Acquisition and Long-Term Lease (Aliens) (Amendments) Law (“New Law”) published on 20 May 2024, crucially important limitations were implemented to property acquisition rules in relation to the foreign purchases in the Turkish Republic of Northern Cyprus (“Northern Cyprus”). One of the most striking aspects of the New Law is its ability to affect all the foreign property purchases retroactively, i.e. effecting the purchases which had taken place before the New Law was published.

Firstly, before the New Law foreigners used to be able to transfer the title to one property as well as they could purchase property rights to more than one property by registering the sale contracts in the relevant land registry. Under the New Law however, the foreigner may only conclude one sale contract in relation to purchase of one property and have the contract registered at the land registry. Those people who had registered more than one sale contracts regarding the multiple properties will now have to deregister their sale contracts and assign their contractual rights to third parties.

Moreover, foreigners could previously purchase a standalone house on up to 5 dönüms (approximately 6,665 square meters) of land. The new law reduces such limitation to 2.5 dönüms (approximately 3,333 square meters).

In addition, the foreign individuals from the same family and/or same nationality may not purchase more than 50% of the total properties in one project and in anyways at least 20% of the properties in the same project must be owned by Northern Cyprus citizens and/or the citizens of those countries which recognize the Northern Cyprus.

The land area allowed for foreign investors remains at 60 dönüms (approximately 80,000 square meters), nevertheless under the New Law the minimum investment amount required has been increased from 3 million Euros to 20 million Euros. Such investment must be in the industrial, education, or healthcare sectors, and the investor must complete the investment within two years. Failure to do so will result in the confiscation of the land.

On the other hand, foreigners used to be able to acquire unlimited land through companies or trusts. The new regulation classifies any company or trust with even a 1% foreign ownership as foreign entity; therefore, they will also be subject to the same restrictions as individual foreign buyers. The individuals who enter into a trust relationship in order to bypass such limitation prescribed in the New Law will be subject to administrative fine up to 500 times the gross monthly minimum wage.

If any, foreign nationals must register any unregistered sale contracts in relation to the properties purchased. Any second or third properties must be sold within two years, and all relevant contracts must be reported to the Land Registry within six months.

Violations of this regulation will result in administrative fines up to 500 times the gross monthly minimum wage.

This new amendment aims to regulate and control foreign ownership of real estate in the TRNC more strictly, ensuring that investments are beneficial to the local economy and society. It also seeks to prevent uncontrolled accumulation of property by foreigners, thereby addressing concerns over land and property use within the region. We believe that the most striking implication of the New Law will be more protection of the foreign buyers when they buy off-plan projects from the developers.

We, Mediterra Tax & Legal, are closely monitoring the recent developments in order to ensure to advice our clients in the best possible way.