Under the previous Immovable Property Acquisition and Long-Term Lease (Aliens) Law 52-2008, there were certain limitations for foreign purchasers in relation to the size and number of the property to be purchased. Foreign purchasers were entitled to take title to only one land up to a maximum area of 5 donums per person or one property providing that the property only consists of one dwelling. However foreign purchasers were able to by-pass such limitations by entering into trust relations with TRNC citizens or trust companies and be the ultimate beneficiary of the properties that they were initially not entitled to purchase.

However, with the recent changes that are enacted on 21st of May, the trust institution in relation to the foreign purchases has significantly been affected. Here are the five significant amendments (“Amendments”) that you should know:

• With the new amendments dated 21 May 2024 to the property acquisition law in relation to the foreign purchases, foreigners may now buy land up to a maximum area of 1338 square meters only. In addition, provided that the property is a single detached house, the total area may not exceed a total of 3300 square meters.
• The Amendments also prohibit the opportunity to bypass such limitations by entering into trust. The amendment indicate that it is prohibited to create a trust in order to acquire more property rights than a foreigner is entitled to have under the new law. In addition, in order to protect the buyers, the parties may not sign a sale contract in relation to a property of which the condominium easements (kat irtifaki) have not been obtained.
• From the date of the new legislation coming into force, non-citizens are no longer permitted to enter into trust agreements to purchase more properties than they are entitled to purchase under the law.
• Any trust agreements which were entered into before the date on which the new legislation came into force must be registered at the Land Registry within 150 business days of the new legislation coming into force. Any such agreements which are not registered within this period will be void.
• Even if a trustee is a legal or real TRNC person, they will no longer be a trustee for more than one property to be held on trust for a foreign beneficiary. For instance, in case a trust company holds a property on trust for a foreign beneficiary, it will be deemed as a foreign entity therefore it cannot be a trustee for any other foreign beneficiary or property.

In the light of these amendments, here are the five steps to follow in order to enter into a trust relationship:

• A trust deed is drawn up by the trustee and the beneficiary in relation to the property to be held on trust and signed between the parties,
• the trust funds are transferred to the trustee’s bank account by the beneficiary,
• the trust deed needs to be registered at the tax office and the relevant taxes should be paid,
• based on the powers of the trust, the trustee executes a sale contract with the seller and takes the title deed on its name using the beneficiary’s funds for the trust,
• the trust then becomes functional and the property is held on trust by the trustee.

Should you have any enquiries, please contact us