Northern Cyprus is attractive - but it's a risky buy

published 25 July 2006

Thirty two years ago this week, a coup d'etat by the Greek Cypriot military was the pretext for the Turkish army to invade Cyprus by sea and air. As the island split in two between Greek and Turkish factions, over 167,000 Greek Cypriots fled from the Turkish invasion. This week, the British courts will begin arguing over the fate of the subsequent wave of foreigners who came to live on the Mediterranean island. The result will have far-reaching consequences for property owners there.

Buyng property in Northern Cyprus: legal challenges to ownership

Before separation, there were only 25 Britons in what is now the Turkish Republic of Northern Cyprus (TRNC). Attracted by the relatively cheap price of property compared to the south, there are now 6,000. But prices that are less than half of those on the southern half of the island reflect the insecurity of title, as the vast majority of buyers are snapping up what was Greek-owned property before the invasion of 1974. The former owners of that land are now challenging existing occupiers' right of ownership. One of them is Meletis Apostolides, who this week will bring a case to the English High Court against the Orams, a British couple who bought the land on which he lived before the invasion.

Apostolides aims to get what The Daily Telegraph called a "suspiciously speedy judgment" in the Greek courts enforced here. It ruled that the Oram's villa be demolished and damages of £7,650 and £294.41 a month be paid to Apostolides until the "situation" was resolved. But while the Greek court's decision is theoretically enforceable in all member states of the EU under EU law, Turkey and its Northern Cyprus protectorate are not members. That's why Apostolides is looking to appropriate the Oram's UK property as compensation. If he's successful, it will open a can of worms for foreign property owners. Ian Betts, founder of the European Property Association of Northern Cyprus, is unconvinced of the merits of the case, saying it is flawed. The Greek court's decision was made only 12 days after the serving of the summons, he tells The Daily Telegraph, "hardly a reasonable time to obtain a translation, let alone organise a defence". Betts has an obvious interest that things will not go against the Oram's.

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But British buyers remain undeterred in seeking out bargain properties, flocking to Northern Cyprus as developments begun in 2004 near completion. That building boom started when a UN-backed reunification plan looked likely to be successful. Because it wasn't, the number of potential investors was overestimated and a glut of properties have appeared on the market. That forced down prices for those looking to take a risk. Agents maintain that if you're worried about the outcome of the case, buy property with pre-1974 title deeds.

But this kind of property is scarce and 30% more expensive. And as Sefika Durduran, a local lawyer, told The Guardian last year, local agents shouldn't be trusted. "There's been a great deal of definite legal misrepresentation with a lot of estate agents choosing not to disclose the risks to prospective buyers." Plus, despite having Cherie Blair's counsel behind them, the Orams will know that current case law is sympathetic to Apostolides' claim. In 1998, the European Court of Human Rights awarded £340,000 in damages to Titina Loizidou, after it was found that Northern Cyprus had prevented her from gaining access to her property in the Northern seaport of Kyrenia.

Even the Government is anxious. Only last year, the British parliament's Foreign Affairs Select Committee warned British citizens thinking of buying property in the north that they risked "exposing themselves to legal action by Greek Cypriots who may be the rightful owners of those properties". That uneasiness has affected property agents in the UK. "We do not encourage our member agents to sell there, because no one knows what is going to happen," says Adrian Medd, Chairman of the Federation of Overseas Property Agents Developers and Consultants (FOPDAC) in the Manchester Evening News. "Anyone who does buy there has to realise they may be called on to pay substantial compensation to the displaced owners in the future."

Jody studied at the University of Limerick and was a senior writer for MoneyWeek. Jody is experienced in interviewing, for example digging into the lives of an ex-M15 agent and quirky business owners who have made millions. Jody’s other areas of expertise include advice on funds, stocks and house prices.