North cyprus house price crash

[Reyntj]

As per the title really . Seems inevitable . the goverment introduced fixed rate exchange for existing rental contracts in £ at 5.20 n return for reducing the tax for landlords from 13 % to 1 % . I understand why this has ben done but this sought of meddling in rents is going to prevent new investors buying here . The attraction for many buyers is the decent £ rental yield . The economy has been bolstered by all the building and taxes etc that that industry creates .

Everything else will be going up in tl terms but existing rents will go down leaving landlords out of pocket. New contracts can be put in tl or in £ tl rents will attract a 2 % tl tax whilst new £ contracts tax will be 15 % . New investors will be concerned at paying in £ when the goverment at will announce fixed rate exchange tl reducing their return . Consequently this will dramatucally reduce new investors .

The property market and the industry that goes with it was already going to come under extreme pressure . These goverment measures will now exarcebate it and this can prbably help result in a deep house price falls and industry recession.

[ozankoys]

When do these measures come into force please?

[TAC]

Does this apply to people who live in trnc and rent long term or will it apply to holiday lets as well.

[Reyntj]

The new contract tax rates are from 1 st of september. Im niot sure on the existing contract exchange rate. This was announced by decree yesterday . One of my tenants called me .last night about it they had heard it on turkish news! I did some googling last night and found an english article but cant seem to find it now . I expect the fx rate of 5.20 is either immediately or from the 1 st . As most tenants pay from the 1 st its largeyl immaterial. Most of my rental contract are up for renewal . Im going to be having sone very difficult conversations with tenants. Finding a middle ground is difficukt . Thers no point charging rent that people cant pay but at the same time can people expect to pay discounted rent when everything else is going up . I just read that from monday the bread is going up to 2.5 tl from 1.25 tl.

The rental tax office in girne id already in dissaray . Expect long waits !

Just remembered i couldnt find english article i translated a turkish one eg.

https://haberkibris.com/iste-bakanlar-k ... 08-17.html Details here

[EnjoyingTheSun]

So what happens at the moment? A tenant pays say £500 a month and you pay how much tax?

So what will happen after the change?

[Reyntj]

The tax on £ was 10 % then a few minths ago they increased this to 13 % to try to incentivisee tl contracts but because tl inflation is so high no one wants to do this

So on £500 the tax is £65 . Ie £435 net at current tl c 7.70 that is c 3350 tl

With new fixed rate its 500 x 5.20 is 2600 less only 1 % tax is 2574 tl

The tenant would have had to find c 3850 tl which is now redced to 2600 a saving of 1250 tl

The landlord loses 774 tl just over £100 so instead of having £435 they will have tl equivalent to £335 . The tl is likely to deoreciate a lot further in my opinion sonthe situation will get worse.

I dont expect any empathy for landlords as in general people dont have any . This is helping tenants giving them a reduction tonthe rate of payment when the tl was at 5.20 8 months ago! When the tenants come to renew the contract its going ti cause friction and difficulties . As my initial thread my post was highlighting that this will deter investors from buying here .

[sophie]

I think there is an article in C2D outlining a load of the decrees announced by the Government on Thursday, Not sure how detailed it is though.

[JoandJelly]

Does this mean that tax must be paid in TL on sterling contracts or can we continue to pay the tax in sterling?

[Reyntj]

Id expect so but the tax will be small as its now only 1 % ....eg for a £500 existing contract the tax will only be 26 tl about £3.70..........im amswering these questions but in all honesty i dont really have much more info than anyone else.

I just took a call about an apartment i have advertised the advert is in $ its in famagusta . The caller told me last night he saw the $ rate us now $3.80 for rentals so how much was my rental flat in tl . I explained that was for existing contracts he hung up....

[jackvern]

So how does this effect UK owners who rent to UK ex pats. They pay in Sterling into a UK bank. If they don't inform the local,Belie and pay rental,charges. I have neighbours who have done this for years and they have not lived here or visited. I accept that there is no conversion from Pounds into Lira so it really does not concern them. The government really have no idea what living premises are rented. This will only apply to tenants who are charged in Sterling and pay into local banks. Quite right to but should not the UK owners also contribute to the enconomy. If they are going to sort it out then do it properly. Guess that will,never happen,and yes I have informed the local Beldi.

[DenizIsmail]

This was an article sent to me this morning ?

The Turkish Republic of Northern Cyprus uses the Turkish lira as it’s currency. While any store will accept GBP, the lira is the official currency.

By now you know that the US President and Turkish President Erdogan are locked in a fight. The upshot of this has been the near collapse of the Turkish Lira (₺). The currency has fallen forty percent against the US Dollar ($) over the last year. Your Pounds (£) will now buy half again more. On Friday the exchange rate was 7.45 Turkish lira to one pound sterling.

You may be concerned that the price of Real Estate is also fluid at the moment, not true. In fact, property continues to appreciate in an orderly fashion. The reason for this is simple: homes in North Cyprus are sold in pounds, not lira.

Due to the lira’s slide, the government is working on a change to the law to encourage investment. The number of properties an investor can own and still take advantage of certain tax breaks may be increased. There should also a decrease in certain other taxes. Because all this is so fluid, please ask your Busy Bees Estate Agent when you come for your complementary inspection trip.

Sitting aside Real Estate for the moment, anything locally produced or produced in Turkey has not risen in price drastically.

Perhaps a bit of explanation is in order. Because the Lira is down 34% and inflation has risen to 15%, it’s the 19% gap between those two numbers that represents the discount when you use your UK credit card today.

An item imported from Europe or North America (basically electronics & cars) cost the same number of pounds but local items, which is to say everything else, have fallen by 19%. Over the course of a few months this 1/5 discount has added up to a considerable sum of money.

We can’t predict the future. But we do read a great deal about this each day and chat with friends. As you would imagine, this is the top topic of conversation. The consensus of our little group is that things will get worse (better for you & me) and stay that way for awhile. We don’t want Turkey to collapse but we don’t think things will return to normal for a long time.

We’ll close by saying if you were considering the sunny Mediterranean Sea as a place to settle, now is the time and North Cyprus is the place. It’s politically stable and your pounds will continue to have high purchasing power.

[Reyntj]

Yes clearly written by an estate agent . When they start writing things like this you can be sure they are panicking ....the news about foreigners is buying extra properties is a bad joke ! Whose going to buy an extra home to rent out and pay sterling when the rents are getting hammered and the goverment are converting rents to tl at very low rates !

Also i have read yes they are decreasing the transfer tax by 2 % but guess what thats only for citizens ! So the article is extremely misleading.

And guess what also they are increasing the transfer tax for second homes to 10 % for foreigners. Yes 10 % . So thats reall going to encourage buying .....er not .


When estate agents start preparing articles lke this theres a very bad problem on its way .....