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Mortgage Bill by End of Year to Boost Property Market in Northern Cyprus

Aug 21, 2008
Sungur: A Mortgage Bill has been proposed, for approval by the end of this year, in Northern Cyprus.

The plans are set to boost property market, and some experts suggest that the move will also benefit ex-pats.

A draft mortgage bill prepared by the Estate Agents Union has been presented to the Prime Ministry.

Union chairman, Hasan Sungur, said he believed the new law would be passed before the end of 2008 and would bring significant advantages to homebuyers, especially expats.

It will, he says, be a boom to the North Cyprus property market, too."Instead of going for cheaper houses, which suits their pockets, those coming from England or elsewhere will be able to buy more expensive and completed homes," said Mr Sungur.

It means that people might have to avoid offers such as a three bedroom house for 60,000.

People usually choose this kind of offer because that's the amount they have available. However, this will cause problems for them because it is impossible to complete a house with that amount of money, and the the link between the Mortagage Bill and housing markets means that house prices in North Cyprus - already accepted to rise - make continue to peak after the initial boom.

"People tend to purchase what's most suitable for them from what they can find. This creates problems because contractors do not have insurance like estate agents do.

"They do not have a mechanism of punishment in case of acts of fraud. The Mortgage Law will give people more choice because they will not be limited by the amount of money they have," he added.

Mr Sungur said the buyer will not have to take risks with 50,000 or 60,000 just because the house is cheap and their budget only covers that amount.

"With the mortgage legislation, they will be able to purchase properties which cost 100,000 or 150,000. These houses will be completed ones and the buyer will be able to move into a fully completed house without facing any problems."

Mr Sungur said that most mortgages available in the TRNC were in fact straight loans, with would-be homebuyers having to get a bank guarantee and provide tow guarantors to obtain a loan; some have suggested that this might in the long-term prove to be detremential to the supposed benefits of the new Mortgage Bill.

With the draft mortgage legislation, a mortgage of up to 75 per cent would be available to people unable to provide two guarantors. With guarantors in place, 100 per cent mortgages could be offered.

Mr Sungur also added that the interest rates in mortgages will be low, at least lower than the current value of interest set by the state.

"It will definitely be lower than the interest rates of the banks. Both for YTL and for foreign currencies" he said.

English-style mortgages have been offered for the first time in North Cyprus this year, with Lewis Finance offering deals of up to 70 per cent over a period between five and fifteen years.
About the Author
Linda Cartwright is a property expert specializing in Northern Cyprus property for Meridies Homes real estate agents in Northern Cyprus. http://www.meridieshomes.com
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