Rental Market in North Cyprus?

shellbell


Joined: 30/10/2007
Posts: 18

Message Posted:
02/11/2007 14:18

We're looking at purchase in the North, but a fair way off being able to use it loads.

So is there a rental market there? Or do people get put off by flight issues? I've heard that you can't hire car at Larnaca & take over to North - do you find this puts holidaymakers off too?

Any input welcome

shellbell


Joined: 30/10/2007
Posts: 18

Message Posted:
02/11/2007 16:57

I posted this question on another site too & have had 1 response - which I'd like to check out here, as its a site dedicated to Cyprus.

Reply said that not only is it difficult to get rentals in North Cyprus, you have to pay tax at 10% on turnover, not profit. Far more worrying for me though, they also said you have to pay tax MONTHLY IN PERSON.

Whilst renting was just to offset some costs, not really about making a profit, appearing in person every month would be impossible for us.

So does anyone know of this law/tax? How do others deal with it?

ANY INPUT WOULD BE APPRECIATED - AS DEAL LOOKING DECIDEDLY WOBBLY NOW.

ilovecyprus


Joined: 08/05/2007
Posts: 2880

Message Posted:
02/11/2007 17:14

Hi shellbell



I have also heard excatly what was stated to you on the other site. It seems that this is likely to be true.

You could get a management company to make the cash payments for you, but of course this increases your fees.



I think I might be true that you have a better chance of renting out in Girne as their is a working population there.



If I was looking to rent my property then I would firstly go to Donaghy and Beyler to seek their advice http://www.donaghyandbeyler.com/



Donty and ukturk on this site may be able to give you more useful info

shellbell


Joined: 30/10/2007
Posts: 18

Message Posted:
02/11/2007 18:24

Thanks - I'll take a look at site. Turning up in person would really be impossible - so I need to clarify position quickly.

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
02/11/2007 19:03

Hi shellbell



Yes you do have to pay 10% of rentals in tax, however, the tax people seem to know little about this. I understand that they are going to put in place a system (online) so that absent landlords can pay this tax and that this will be sometime in 2008.



You can hire a car at Larnaca and take it to the North but I would not recommend this as you would only be covered by 3rd party insurance. There is no way I would do this.



The rental market last year and this was not particularly good, it wouldn't be advisable to purchase if you are relying on getting many rentals.



It can cost quite a lot to get someone to manage your property and more importantly it is difficult to find someone/or an organisation to do this PROPERLY for. I let quite a number of villas and my own so have first hand experience of some of the failings of these management companies, they all promise the earth.

shellbell


Joined: 30/10/2007
Posts: 18

Message Posted:
02/11/2007 19:11

Just found cyprus.com which said you can take car hired in south to north, but need to buy extra insurance at border. It doesn't indicate how much this would be. So do I take it from your post that extra insurance you buy is only 3rd party & you can't get full cover?

Not relying on rentals too much. Just thought it'd cover some ongoing running expenses really. How many weeks would you think possible - on a conservative estimate? Always err on the side of caution I say. Looking at villa at Sweetwater Bay probably.

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
02/11/2007 23:15

Yes you are correct the insurance you get at the border is only 3rd party. It is not possible to get fully comp.



To rent I wouldn't rely on more than 6-8 weeks if the villa has a private pool fewer if there is a communual pool

ukturk



Joined: 01/09/2007
Posts: 1974

Message Posted:
03/11/2007 00:29

According to Article 31 of The Income Tax Law No.24/1982 of Northern Cyprus, anyone who owns a propertey and rents it out is liable to pay 10% income tax on the gross profits, payment has to be made at the nearest Revenue and Tax office by the 15th day of each and every month.

as i write this email the British Residents’ Society are lobbying for permission for owners to pay their tax yearly and the tax office has stated that they are reviewing the law for people who are not residents

a word of advice if you do start renting do not inform the u.k tax office that you have a rental income from n cyprus on your tax return otherwise you will be liable to pay tax on this income aswell as tax in cyprus but wont be able claim back the tax against liabilities because the u.k dont have no double taxation agreement with north cyprus

secondly im not suggesting you should do this but dont worry too much if you do rent out your property with a agent the agent has no legal requirement to inform the tax office about you and i know of many people who rent either privately or through an agent and dont pay tax (dont agree with it but hey its your life)

if you are going to follow the rule book then if you rent it through an agent speak with them and ask them nicely for a small fee would they be able to pay this for you what you do is open an account and put a few hundred pounds in it and let them access the money to pay it and they can fax you a recipet once they have paid it or just simply give them the money directly every time you are out in cyprus

or you can use a property management company like lynx website link provided below

http://www.lynxco.com/ well know management company or http://www.fraserandco.com/rentals-lettings.html who are a estate agent who rents out properties

http://www.donaghyandbeyler.com/contact_us.php another agent who i would reconmend contact a lady called gonul she is the sales manager but im sure she will be able to help you out just mention my name erkan ibrahim from turkey she will know

also you can contact the british residents society http://www.brstrnc.com./ for help

i hope this all helps if you need any further help on any other matters please dont hesitate in posting me or contacting me

regards

ukturk

shellbell


Joined: 30/10/2007
Posts: 18

Message Posted:
03/11/2007 11:57

Thanks everyone. Just found, on this site insurance details at border crossing - says £20 approx, but didn't say whether 3rd party or fully comp. Good to get info from 'the horses mouth' as they say.

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
03/11/2007 13:20

ukturk



You forgot to mention that if ones income in the TRNC is less than the minimum monthly wage you can seek exemption from paying tax on your rentals.



If you are resident in the UK there is not a problem in notifying the UK tax people that you have rental income. When producing your tax return if you are clever you should be able to show a loss (it's only a paper loss to you) in renting a property.



As far as the UK and TRNC are concerned I would recommend that anyone who owes tax pays it directly to the tax people and not a third party, that way you know for sure that you have paid. As I mentioned in my earlier post the TRNC tax people say that an online system to enable you to pay the 10% tax should be avaialble in 2008. They clearly recognise that there is a problem with absent landlords.

BOJOY


Joined: 13/09/2007
Posts: 26

Message Posted:
03/11/2007 13:31

Hi Shellbell,

If it helps, we arrangeed for Bellapaise Taxi`s to pick us up at Larnaca and then on arrival in the north we hired a car from them, which was delivered to our Villa. The service we received from them was excellent.

suntanman



Joined: 18/04/2007
Posts: 721

Message Posted:
03/11/2007 16:56

shellbell

I have made the journey from south to north in a southern hire car several times this year, the insurance in Sept was 15CYP for two weeks, and it is only third party.

Don't be too put off by peoples comments about poor driving standards in the north, it's not as bad as driving in the UK, ok there's always a risk driving with third party insurance, that's for you to decide whether to take that risk. For me, the cost of flights to the south and hire car costs out weigh the possibility of having a 'bump' without fully copmp insurance.

Sorry, can't help on the renting side of things.

mikedalton


Joined: 19/06/2007
Posts: 21

Message Posted:
04/11/2007 13:26

Shellbell



A few notes that may be helpful based on our experience renting in North Cyprus, in the UK and in Spain.



- You need to find a way to get your property in front of your potential customers. Online, agent, magazine, word of mouth, radio, tv etc.



- Plan your campaign in advance and cost it out. 80% of your rental income is likely to come from UK tourists.



- Allow about £1,000 to £1,500 per year for typical management and advertising costs.



- An agent will charge you about £600 to £1,000 to manage your property per year and take about 10% of any rental income generated by the agent.



- 2007 was a tough rental year. Rental yields were quite low. My guess is that 2008 will be slightly better.



- With a solid campaign you may manage to rent for 5-7 weeks per year in the first year and hopefully more as time goes on.



- Do NOT count on rental income to manage property payments!!



- A realistic rental yield on well placed NC property is likely to be no more than about 3% per year in the early days. In other words if you've spent say £100,000 on a place (basic price) a reasonable result would be £3,000 per year in rental income for year one, or say about 7 weeks at £400 per week for short term lets.



- Rental income is directly reflected in the price you'll pay for an NC property. Property would be MUCH more expensive if typical gross rent yields compared to say a major town in UK where you can achieve 7% with the right property. In fact as many of you probably know rent yields have declined significantly in south east England as asset values became so high.



- Another factor is the cost of managing and furnishing NC property that is currently higher than it should be. This is an immature market so there are few norms to base values on. For example, customers may expect to rent a £150,000 villa long term for £400 per month (gross yield of 3.2%). That may seem too low compared to the cost of money and the overall risks. If this is the case (and I believe it is) the supply of that type of property will decline and prices rise until supply and demand are more equal.



- If you are an investor then you need to look long term to a time when rent yields improve and property management costs decline relative to asset values.



In my view the rental situation is unlikely to deteriorate as there are very few pressures in that direction. There are many other factors influencing the NC rental market but this is probably not the forum for a detailed debate.



In summary do your own homework don't imagine you will achieve a massive rental income. Remember you are purchasing property at lower cost than in most comparable locations and there is a reason for that.



Good luck, it's a beautiful place.

shellbell


Joined: 30/10/2007
Posts: 18

Message Posted:
04/11/2007 18:40

Bojo,

How much do hire car co charge to pick you up from Larnaca? Is it equivalent to a taxi? Is car hire in North more expensive than south?

Thanks once again for all your help.

We wouldn't rely on rentals. Just thinking if we can't use it too much for a few years yet, renting might be worth trying to help towards ongoing costs. Not a necessity - just a nicety I suppose.

BOJOY


Joined: 13/09/2007
Posts: 26

Message Posted:
05/11/2007 17:57

Hi Shellbell,

Taxi fare was £30 each way and Car hire i think was £24 per day for an Astra

(5 seater) That was early August this year.

McSteviet



Joined: 11/05/2007
Posts: 1089

Message Posted:
05/11/2007 18:58

Mike,



I read with much interest your post, thanks for taking the time to write it. Has certainly given me something to think about.



your villa site looks great, hope it all goes well.



Regards



MC

lovingcyprus


Joined: 02/03/2007
Posts: 1272

Message Posted:
05/11/2007 19:01

It is a well known fact that the standard of driving in North Cyprus (and indeed in the South) it is far worse than it is in the UK. I'm not sure what roads suntanman drives on but I'm often on the Girne to Lapta racetrack. There are accidents at least three times a week at the turning to Escape beach and at the turning to the Merit Crystal Cove hotel.



Take a look at Cyprus Today from time to time they have articles with statistics about the number of accidents and fatalities.

shellbell


Joined: 30/10/2007
Posts: 18

Message Posted:
05/11/2007 19:43

So car hire co will charge a bit less for transfer than taxi. Must admit, I don't think I'd risk 3rd party insurance only.

Never had an accident yet........ but sods law has a big sense of humour......... & you can bet thats when I'd have my first!

I may have read this somewhere already, but my heads spinning now - is beach sandy or shingle, safe for kids & swimming?

shellbell


Joined: 30/10/2007
Posts: 18

Message Posted:
05/11/2007 19:46

Sorry folks - told you my head was spinning - thought I was posting on the Sweetwater Bay thread - question re beach was for Sweetwater site!

gaynorish



Joined: 29/05/2007
Posts: 74

Message Posted:
06/11/2007 00:33

Hiya shell,



The beach isn't very sandy. If you join the msn websites you can see the pictures and the videos that N4M took recently of the site and beach there.



Cheers Gaynor

shellbell


Joined: 30/10/2007
Posts: 18

Message Posted:
06/11/2007 13:00

Thanks Gaynor,

I've registered on msn & can see pickies but not video. Am I looking in right place?

Ta

Shellbell