The New Law for Acquisition and Long Term Lease of Immovables (Aliens)

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
23/04/2009 09:46

I have just had time to have a quick look at the the new Law 52/2008 passed towards th end of 2008 and later published in the official gazette:

The Acquisition and Long Term Lease of Immovable Property (Aliens) Law.



The main features:

1. Lease from 10 to 99 years.

2. Must be registered with the Tapu within 30 days of agreement.

3. All conditions must be included included in the agreement i.e. building a villa on it etc.

4. No mention of PTP for Lease but same PTP as before applicable for acquisitions. (The old law repealed).

5. Regulations can be made to prohibit certain areas but all agreements registered wih the Tapu previously holds good.

6. Normal limit is one donum (14400 sq. feet) but up to 6 donums allowed provided only one dwelling on the land.

7. More than 6 donums allowed for lease or acquisition by permission of the Council of Ministers for large investments. 3 million Euros must be deposited in the bank and used for this purpose, otherwise the deal can be

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
23/04/2009 09:59

ctd.

otherwise the deal can be cancelled.

8. A document similar to a Kochan will be issued to lease holders.

9. Foreigners were not allowed to put a mortgage on land previously. Now mortgages are allowed by foreigners (subject to restricitions by the Council of Ministers if any) and also the leaseholds can be mortgaged.

10. The leaseholds can be further leased and also liable to execution of writs. It can be passed on to heirs.

11. Lease agreements must be prepared by an advocate and bear his signature and rubber stamp plus mut be signed by two wittnesses.





My comments:

1. It seems that this law is behind the reason for too many refusals for PTP. They want to push people into long term leases. The good thing is that "Aliens" do not need any PTP for a leasehold and the prohibited areas will be declared, otherwise not binding on purchaser.

2. As far as Lease agreement is concerned, the Specific Performance Law does not apply and no need for it really because you can have your Lease agreement registered with the Tapu straight away. The vendor can have it mortgaged but the buyer's right would not be affected.



ismet

joandjelly


Joined: 24/02/2008
Posts: 2953

Message Posted:
23/04/2009 10:59

Thanks for that Ismet. Do you think that those who have recently been refused PTP will now be offered a long term lease or is it something that they will have to push for themselves if they want to?

cronos


Joined: 26/10/2008
Posts: 2093

Message Posted:
23/04/2009 11:47

Ismet.....a good analysis and thanks for simplifying it for us.



I am in the position of having purchased Pre-74 Turkish title deed property,but have been waiting 3 years for PTP.

I've not been refused(yet)....just in limbo.



Although I would be most unhappy about having to go down this leasehold route...why should I ?....I bought a FREEHOLD property on "safe,internationally recognised title deeds".....it would at least be some sort of solution.



What I can't get my head around is...



1.WHO is the leaseholder....the builder?....the TRNC govt?

2.Should there be some element of recompense fore the loss of freehold?

3.How will the ground rent be calculated and could this be fixed for the length of the lease?

4.Who decides the length of the lease and on what grounds?Surely anyone who has bought what they considered to be freehold would want the MAXIMUM length of 99 years?



I would be interested to hear your opinion and anyone elses on the Board.



Thanks.

fire starter


Joined: 19/06/2008
Posts: 3401

Message Posted:
23/04/2009 12:02

cronos

are you near an army base? if no you should have nothing to worry about!



i wonder why the lease's are only a max of 99 yrs when in the uk you can get 999 years??

cronos


Joined: 26/10/2008
Posts: 2093

Message Posted:
23/04/2009 12:24

Firestarter....



No I'm nowhere near a miltary installation.....I made sure of this when purchasing.



I also do not have a criminal record and hopefully could not be considered as an "undesirable".



Unfortunately...although no official pronouncement has been made...it seems that just being a foreigner is an impediment to getting PTP on Pre-74 Turkish Title Deeds !



I admire your optimism,and wish I could share it , and I would be the first to come on here shouting about it if I get my PTP.....but my gut feeling after reading several articles is that trouble is afoot but no-one in power has the decency to admit it.

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
23/04/2009 12:32

A leashold agreement is a matter between the title holder of the land and the prospective lease holder. A leaseholder can transfer his leasehold to anyone he likes without the need for approval by the actual title holder. Tapu should accept to register the new holder subject to the original terms of the lease.



ismet

cronos


Joined: 26/10/2008
Posts: 2093

Message Posted:
23/04/2009 12:43

Ismet.....sorry for being thick...I was getting my title holder and leaseholder confused!



So...in theory...my builder would remain the title holder (even though I've paid him in full for freehold),and the terms of any leasehold agreement would be just a matter between him and me?

My builder is a TC and has been fantastic throughout the build and after completion.

He also feels very strongly that the PTP laws are unfair,and damage his own business, due to the uncertainty and negative publicity.

Could we then between us write whatever we wanted into our leasehold agreement?



Thanks.

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
23/04/2009 14:26

Cros asked:

"we then between us write whatever we wanted into our leasehold agreement?"

As long as its legal yes. If the agreement is say for 999 years it is not legal. What do you have in mind?

ismet

cronos


Joined: 26/10/2008
Posts: 2093

Message Posted:
23/04/2009 14:32

Ismet....I haven't thought about it much because I don't particularly want to go down this road.



However...maybe setting a peppercorn ground rent of 10TL per year ,and an absolute right to claim the freehold free of charge should the law change in future ?

ROBnJO


Joined: 30/06/2008
Posts: 1289

Message Posted:
23/04/2009 14:45

cronos



Internationally, peppercorn rents are usually only applied on very long leases, i.e. 999yrs. In which case the property is already theoretically 'Freehold'.



Rob

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
23/04/2009 14:56

Cronos,

Let us make it more legally sounding. No agreement is legally binding unless there is a "consideration" for it. There are exceptions to this rule but let us put that aside. How about "Hire-Purchase" type of agreement. Of course the title will say "Long term lease for 99 years" otherwise the Tapu Clerk will say it is not a lease agreement but something else and refuse to register. In the body you can say that at the end of 99 years, the lease holder will have the option to pay 100 TL and buy the freehold, the laws permitting at the time. You can also take out a hefty mortgage on the immovable as a further security. How about it? As good as if you have the freehold. You better hurry before the Council of Ministers bring in new rules and ban mortgages by "Aliens" on freeholds.

I will give up engineering and open shop as a legal adviser

ismet

halffull


Joined: 26/01/2009
Posts: 571

Message Posted:
23/04/2009 15:49

Thank you Ismet, as always you have given very sound advise.

ROBnJO


Joined: 30/06/2008
Posts: 1289

Message Posted:
23/04/2009 16:06

ismet



I wouldn't do that if I was you!



This new Law raises more questions than answers.



Does it apply retrospectively or to new purchases only?

Does it apply to all types of title, Pre74, Exchange ?

Does the Title Holder have the right to 'sell on' his 'Freehold' or Groundrent interest without Leaseholder aproval?

Does it allow Leaseholders the option of buying the Title (Freehold) from the Title Holder and setting their own Ground Rent & Service Charges?

Does it allow for Leaseholders to apply for extensions back up to 99 yrs later in the Lease period?







Does it allow for a potential 'resolution' of the 'Property' element during the current discussions? The timing of this Law would seem appropriate for that.



Could it allow former GC & TC 'owners' to receive Ground Rent, and possibly apply Service Charges, if their claims are upheld, in Lieu of Compensation or Reclamation of their land?



I'm sure I'll think of a lot more!



Rob

cronos


Joined: 26/10/2008
Posts: 2093

Message Posted:
23/04/2009 16:16

Rob....I'll give you a call to help me draw up my leasehold agreement with my builder.



You've obviously thought about it more than I have !

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
23/04/2009 16:57

C'on Rob, why not? Mind you, I decided to become an electrical engineer even before I went to primary school and never had second thoughts about it. I know its a shocking profession but I enjoy it. As you know, the law is a hobby for me.



Now to your questions:

Q: Does it apply retrospectively or to new purchases only?

A: What do you mean? Certainly it does not apply to the normal sale agreements. You will have to draw up a new lease agreement obviously



Q: Does it apply to all types of title, Pre74, Exchange ?

A: Yes



Q: Does the Title Holder have the right to 'sell on' his 'Freehold' or Groundrent interest without Leaseholder aproval?

A: Yes



Q: Does it allow Leaseholders the option of buying the Title (Freehold) from the Title Holder and setting their own Ground Rent & Service Charges?

A: No.



Q: Does it allow for Leaseholders to apply for extensions back up to 99 yrs later in the Lease period?

A: You cannot sign an agreement for more than 99 years. Thus an

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
23/04/2009 17:03

ctd.

agreement for an automatic renewal should be illegal. However you can renew it when the time comes if both sides agree to it when it expires. You can agree to terminate it earlier and then renew it for 99 years but think of costs each time.



Q: Does it allow for a potential 'resolution' of the 'Property' element during the current discussions? The timing of this Law would seem appropriate for that.

A: there is no such provision



Q: Could it allow former GC & TC 'owners' to receive Ground Rent, and possibly apply Service Charges, if their claims are upheld, in Lieu of Compensation or Reclamation of their land?

A: This is a possibility for future legistlation/agreement but does not involve/interest the lease holder.



You think up of new questions and I will come up with new answers

ismet

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
23/04/2009 18:37

There is one very important/pertinent question missing above. I will wait until somebody asks before I answer it

ismet

pilgrim



Joined: 11/05/2007
Posts: 1404

Message Posted:
23/04/2009 21:07

If they had made it at least 125years or better 150, I think many would consider it a tangible option if they are existing purchasers. It would have also boosted new sales. I personally would not consider 99 year lease when I have purchased freehold, but 150 perhaps.

rtddci


Joined: 29/12/2007
Posts: 842

Message Posted:
23/04/2009 21:22

Being in this position of being refused PTP, being near an army base & Turkish title, do I assume that should I try and go down this leasehold route, would I still be refused? If not why can I lease for 99 years but not own it?



If I enter into another contract with the builder using this leasehold route will I have to pay the .5% tax again?



Trouble with a 99 year lease, every year the value goes down.



Why on earth didn't the government just scrap this PTP nonsense?

pilgrim



Joined: 11/05/2007
Posts: 1404

Message Posted:
23/04/2009 21:48

Trevor, have you considered 6m's proposal register pre74 title in ROC

regards

p

tigger


Joined: 25/01/2009
Posts: 43

Message Posted:
23/04/2009 22:31

elko2

We bought a freehold apartment ,had ptp granted just before christmas 08 and are now waiting for transfer of deeds. Would i be right in thinking that this new law would now mean that it could possibly become leasehold or would we be unafected as contracts have been registered some time ago.

Tigger

rtddci


Joined: 29/12/2007
Posts: 842

Message Posted:
23/04/2009 22:41

tigger

You are fine, you have your PTP. I suggest you get your deeds transfer done asap whilst the reduction in taxes is still in. The new government might well put them back up. Details on the property taxes etc on http://www.hbpg-trnc.net website.

pinkchilli


Joined: 30/11/2008
Posts: 689

Message Posted:
24/04/2009 00:14

What "fees" would be payable?



1. Lawyers



2. KDV



3. Property Tax



4. 3% or 6% transfer tax (even though this has been temporarily reduced)



5. Stopaj Tax

fire starter


Joined: 19/06/2008
Posts: 3401

Message Posted:
24/04/2009 08:26

it doesn't sound like a lease as we know it in the uk.

does anyone know how many years need to be left on a lease in the uk for the banks to gave a mortgage on it??

i think it would have been good for them to have done a bit more research into the legal basis of leases before making a new law.

i'm still confused!

mayes


Joined: 24/04/2009
Posts: 1

Message Posted:
24/04/2009 08:50

please tell me more about this



mayes

[url= http://www.legalx.net]lawyer directory[/url]

Bradus


Joined: 25/02/2007
Posts: 2641

Message Posted:
24/04/2009 10:45

mayes



something wrong with the link. Can you check it?



Thanks.

neil27


Joined: 16/07/2008
Posts: 93

Message Posted:
24/04/2009 11:21

Elko2,

I am a little confused by this new law. Does it apply to all property purchased after 2008 by non TRNC citizens? We recently purchased a house in Ozankoy - descibed as freehold - and have since applied for PTP. Do you think that the new law will automatically tranfer the deeds into leasehold ones? Or have I misunderstood the way this new law works! Should our advocate not have warned us of this potewntial change in the status of our proposed purchase before we wnet ahead?

If all houses had been described as leasehold, we probably wouldn't have bought in the TRNC - there seem to be sufficient risks in the TRNC without adding yet another complication.

keithcaley



Joined: 13/06/2008
Posts: 2521

Message Posted:
24/04/2009 14:36

Pre-empting Elko slightly,

It's Optional, not Compulsory!

You can choose to go for a leasehold if you want, rather than buy (if you want to...) - and the original owner / builder can opt to lease, rather than sell - if he wants to.

Keith.

ROBnJO


Joined: 30/06/2008
Posts: 1289

Message Posted:
24/04/2009 14:52

ismet



I'm still thinking about your msg 18.



Rob

TheSaints



Joined: 28/01/2009
Posts: 1369

Message Posted:
24/04/2009 14:55

Cmon ismet, your have got us all in suspense msg18

cronos


Joined: 26/10/2008
Posts: 2093

Message Posted:
24/04/2009 15:07

Is the missing question...."Will any such leasehold agreement be legally recognised anywhere outside of TRNC and Turkey " ?

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
24/04/2009 15:16

ok folks, thanks for your patience.

First of all, this law is an additional option and nothing is compulsory.



Now msg. 18.



Suppose you want to get a plot of land and have your villa built on it. If you don't want to run any risks and you agree for a 99 year lease, it becomes very simple. You can make a good bargain with the title deed owner because he or rather his children will be the owners after 99 years. I bet it will be a very big bonus to persuade a Turkish Cypriot owner to reduce the price and make a good deal. Absolutely no risks involved. You draw up the agreement and pay over the agreed price after signing papers at the Tapu.. So for the next 99 years the land is yours (all arguments about the Cyprus problem and a possible solution and what risks it carries is another matter). Then you can hire an architecht and have your dream villa built.



The problem arises if you want to buy a villa or house which is part of an estate and does not have a separate kochan yet. the new

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
24/04/2009 15:26

ctd.

law has no provisions for such a situation i.e. one can lease and register a property which has a separate kochan. So in such a situation the only option left is to have a normal Sale Agreement and have it registered with the Tapu in order to get some protection.



So I think this new law will encourage people to lease a separate plot of land have his villa built on it. No common facilities and no management problems. You can fill your swimming pool oe leave it empty as you please.

ismet

rtddci


Joined: 29/12/2007
Posts: 842

Message Posted:
24/04/2009 16:16

So, another TRNC bodgit law then?

fire starter


Joined: 19/06/2008
Posts: 3401

Message Posted:
24/04/2009 16:51

why would someone lease a plot of land and then spend a fortune having a villa built on it?

so that in 99 years the land owner takes all??

gillken


Joined: 25/05/2008
Posts: 521

Message Posted:
24/04/2009 17:40

Like you say in 99 years someone can take the land away................but think about it, the Orans bought theirs freehold. They are EU citizens and could stand to loose their UK assets.

This way we ONLY own the Villa, not the land, hence EU assets would be protected if leased land.



Or am I barking up the wrong tree?

ROBnJO


Joined: 30/06/2008
Posts: 1289

Message Posted:
24/04/2009 18:28

FS



A 99 yr lease would be enough to outlive most people, their children and possibly grandchildren, there obviously could be an opportunity to renew the lease. This could be written into the contract.

In the UK most lenders are willing to provide mortgages on Leasehold property with as little as 40 yrs left. The %age loan will obviously decrease as the lease period does.



Also remember that laws change.

ROBnJO


Joined: 30/06/2008
Posts: 1289

Message Posted:
24/04/2009 18:37

ismet



Good point! But,...



I would imagine that the number of available individual plots for a single dwelling between 1&6 donums is reducing rapidly.

No-one is 'building' land anymore, as with elsewhere the value of such plots is rising, I cannot see many Titleholders being prepared to 'do a deal' for a Leasehold arrangement on such a plot for 1 dwelling.

Especially as the Titleholder could possibly still be the one in the firing line if any 'Compensation' is ever approved.



Supply & demand.



Rob

ROBnJO


Joined: 30/06/2008
Posts: 1289

Message Posted:
24/04/2009 19:37

My brain is starting to hurt!



Does this mean that someone ( an 'Alien'), with a criminal record can buy on a 99 yr lease without any need for PTP and it's corresponding checks, but will obtain a document similar to a Kochan and be able to take out a mortgage and be able to sell on at any time?





Have I had too much sun today??



Rob

keithcaley



Joined: 13/06/2008
Posts: 2521

Message Posted:
24/04/2009 20:13

ROBnJO,

Interesting point.

If residency was a requirement for taking out a lease, then presumably the mandatory Police Check would catch them, but I never saw anything to say that you had to have residency...

Ismet!

Help please!

Keith.

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
24/04/2009 21:36

There is an open door left for the Council of Ministers to decide as they please.

Parag.4(1): The CoM can declare certain areas not allowed to sell or lease to foreigners.

Parag. 4(2): The CoM can prohibit certain persons (real or legal) for specific reasons to their status or for security reasons for any specific property.



Any transaction at the District Land Office against such a decision will be null and void. Presumably this will not be retrospective but what happens if the clerk at the DLO overlooks such a decision and carries through the transaction. What will happen if the vendor spends all the money in one of the casinos and is not able to return the money he received? Presumably the buyer will have to sue the government for compesation.

ismet

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
24/04/2009 21:47

Now a new point which I overlooked before:

Parag. 15: The old laws about sale of immovables to Aliens Chapter 109 and 35/2002 are repealed but regulations made under these laws will be valid until new regulations under this law are made.

My understanding is that PTP proceedure will continue until a new regulation is made under this law specifying which areas are not allowed to be sold or leased to aliens. Thus PTP will be done away with and if anybody is refused PTP previously but if the relevant property is not in the prohibited regions under the new regulations, they will will be able to have the kochan. This is my interpretation.

ismet