Northern Cyprus: How the other half lives
Prices are low and land rights are being addressed but is it safe to buy in Northern Cyprus? Asks Graham Norwood
Wednesday 02 July 2008
Cyprus has long been a favourite for British holiday home owners and now, after decades of uncertainty, the north of the island is becoming as popular as the south.
It is 34 years since the Turkish invasion of the northern third of the island. But today, people can easily move between the Turkish north and the Greek south, and there are relatively few signs of conflict – indeed, the line dividing the communities is itself a tourist attraction. Although the north remains less affluent than the south, all areas have seen major infrastructural improvements as their economies have grown in recent years.
Northern Cyprus covers 3,300 sq km and is widely regarded as less developed and more naturally beautiful than the south of the island, with a profusion of beaches and mountain tracks. It has a rich history, is well known for its flora and fauna and notably boasts 38 species of orchid.
Investors in the north have seen price increases of around 25 per cent over the past two years, yet purchase prices are still at least 30 per cent cheaper than comparable properties in the south. "There are a few properties available for only £50,000, but in many areas you can find a villa with its own private grounds, private swimming pool and three bedrooms for £150,000 or less. It's fantastic value and build quality is high," says Jeremy Muntus of Merryweathers International, a Yorkshire-based estate agency.
He has put his money where his mouth is, buying two properties in the north as investments. "I've fitted out my latest property with furniture from Ikea in the south – there's no problem with moving between the two areas and much of the island operates as one entity," he says.
In addition to this, his firm is selling two- and three-bedroom apartments in the new Emerald Bay scheme near Kyrenia. Each of them has marble flooring, some have private roof terraces, while all will have access to 10 acres of landscaped grounds, communal swimming pools, restaurant and a private beach cove. Prices start from £64,950 and the scheme is due to be completed later this year.
"As the north's popularity increases, so does investment potential. Tourism numbers are set to escalate following the reopening of the border at Nicosia," says James Gonzalez of Obelisk, another British estate agency selling homes in the north.
However, there are challenges.
The roads and public utilities are less sophisticated in the north than the south, creating a more rustic atmosphere. Access is also more difficult, as there are no direct flights from the UK to northern Cyprus. Visitors either go via the Turkish mainland, from which there are numerous connecting flights, or have to fly by budget airline into Paphos or Larnaca in the south and take a one-hour drive north.
There is also a much-publicised question mark over the legal ownership of some homes.
"Much of the land is actually legally owned by Cypriots now living in southern Cyprus, so people in the UK looking to buy a property in northern Cyprus could be buying land or property built on land they don't own," says Peter Ellis of Foreign Currency Direct, a firm that monitors international home sales.
But the Turkish authorities have attempted to set up a reconciliation process offering limited compensation to former Greek residents in a bid to end the uncertainty over land ownership. In addition, many new-build homes now have "clear title" – that is, they have been built after the 1974 invasion and are on undisputed land.
Certainly, there are more Britons finding their way around the problem, often by avoiding the older homes on disputed land and always by seeking good quality independent legal advice from a practice with experience of the Cypriot property market.
Martin Jones, 40, who lives near Rotherham, was blinded in an industrial accident in 1996 and used his compensation pay-out to invest in property abroad, including north Cyprus.
"At the time, I didn't think that my pay-out would last long enough to support me, so I put my money into property instead," he says. He ranks north Cyprus alongside Spain and Dubai as good investments.
Jones is in good company, as boxing champion Joe Calzaghe has just bought a property near Famagusta. Like many buyers, he cites the obvious attractions of 300 days of sunshine a year and the slower, gentler pace of life, as well as the promise of economic growth.
Gross domestic product in northern Cyprus grew 10.6 per cent in 2006, the latest figure available; golf courses and casinos are starting to appear. If the Turkish mainland eventually succeeds in joining the EU, then further substantial economic growth is expected to happen.
The challenge for northern Cyprus will be to grow without losing its extraordinary charm. With so much of Europe and the Mediterranean islands heavily developed and saturated with visitors, this part of Cyprus offers a real alternative – and, for now at least, at a bargain price.
Mortgages for foreigners buying in the north are extremely difficult to obtain, so most buyers make cash purchases. The processes of making an initial offer and instigating a survey are roughly similar to those in the UK, but independent legal advice and thorough searches are vital because of some disputes over land ownership.
Non-nationals require a purchase permit from the government in order to buy property in Northern Cyprus, and such permits may take four to 12 months to come through.
Taxes are usually payable at the end of the transaction after a purchase permit has been granted and title deeds transferred into your name. But some vendors require VAT to be paid on the sale price earlier in the process.
Land Registry Transfer Fee is 6 per cent of purchase price and VAT is 5 per cent. Stamp duty is payable at 0.5 per cent of the contract price if paid within a month of the contract date. If it is not paid within this time, it increases and may become 1.5 per cent of the contract price.
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