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Buying Property in Turkey

Buying Property in Turkey
Publication date: 2018-11-20 Category: Investment in Turkey

In this article, we will talk about buying property in Turkey in terms of:

Why is Turkish real estate a good invest?

Who can buy property in Turkey ?

What do I need to buy property in Turkey ?

Buying process ?

What is TAPU?

What is average price of Turkish properties?

Where are the best places to buy property in Turkey?

Why Buying Property in Turkey?

Location:

Strategically situated at the crossroads of Europe, the Middle East, Central Asia, and home to almost 81 million people, Turkey offers great opportunities for real estate developers and investors by combining a large construction sector with growing commercial and industrial output.

Economy:

 According to the World Bank GDP (PPP) Ranking, Turkey is the largest economy of Central and Eastern Europe (CEE) and the fifth largest economy in Europe overall. According to IMF figures, Turkey’s PPP-adjusted GDP actualized at USD 1,908 billion as of 2015 and reached USD 1,988 billion as of 2016 year-end. The table below shows that Turkey’s GDP figures are higher than many CEE countries’ GDP figures. The Ministry of Development’s 2018–20 Medium-Term Program (MTP) projects that the growth rate will be maintained at 5.5% for 2017, while the IMF projection indicates a growth rate of 5.1%.

Foreign Direct Investment

The macro-economic and political stability that has been evident since 2002 has had a positive impact on foreign investment inflows into Turkey. Turkey attracted USD 130 billion of foreign direct investment (FDI) over the last ten years. Part of this can be attributed to adoption of the EU reform agenda, which includes the reduction in red tape bureaucracy concerning company establishment, a reduction in corporate tax rates from 30% to 20%, and liberalization of the investment environment, enabling foreign companies to be subject to equal rights and conditions as Turkish companies. The educated labor force of Turkey, with lower wage levels than Europe, adds to the country’s attractiveness as an investment destination.

Foreign Direct Investment in the Real Estate Sector:

Looking at retail investment in terms of commercial real estate, Turkey ranked as the 9th most traded market in Continental Europe in 2006/2007. This indicated the scope of investor interest in the market, which was driven by strong demographic features, growth prospects, the quality of shopping Centre supply, and retailer demand. Starting from 2003, the investment climate began to improve due to the “Foreign Direct Investment Law” passed by the Parliament. Article 3/d allowed foreign investors to acquire real estate assets without any limitation. However, Turkey experienced some political and legal changes in 2008, such as the annulment of the regulation by the Supreme Court that enabled foreigners to acquire assets in Turkey. This caused uncertainty in the market and investor appetite decreased. The issue was corrected when the new regulation concerning the Acquisition of Real Estate and Limited Rights in Rem by Companies with foreign Capital was put into effect in October 2010. The new regulation reduced limitations on foreign investment in real estate and caused the investor appetite to come back. This was supported by further legislation improvements over time, increasing investor confidence in Turkey. When the Reciprocity Law took effect in 2012, real estate acquisitions by foreign investors almost doubled. The market has witnessed a strong appetite of investors from Gulf Countries such as Iraq, Saudi Arabia, and Kuwait. Investors from Russia, United Kingdom, and Germany have also had a considerable impact on home sales.                                                                                   

In total buying property in turkey is a good invest

Who can buy property in Turkey?

Overall limitations and restrictions that apply to all countries’ citizens are as follows:

Real estate (land and/or property of any class and/or type) that belong to foreign nationals in any one town can't exceed 10% of that town’s total area or be higher than 30 hectares throughout Turkey.   This is to say, if a foreign national wish to purchase in excess of 30 hectares (300,000sqm or 74 acres) of land in Turkey, then he/she will need to seek special permission from the relevant government authorities.  Generally speaking, for such large acquisitions, we recommend setting up a Turkish limited company in order to be able to acquire in excess of 30 hectares of land in Turkey. 

If a foreign national, person or corporate, purchases land in Turkey with a view to developing it, then they are required by law to submit their project plans to the relevant authorities for approval within 2 years of purchase.  This is to prevent foreign nationals from land-banking in Turkey without adding value to the land purchased.

In addition to the above, there are restrictions and special cases applicable to certain foreign nationals purchasing land and property in Turkey.  We have summarized these as follows:

Citizens of countries, who can purchase properties in Turkey without conditions

 

Argentina

Colombia

Ireland

Namibia

Serbia

Belgium

Croatia

Italy

Netherlands

Slovakia

Belize

Dominican Republic

Kenya

Niger

South Africa

Benin

Estonia

Kosovo

Northern Cyprus

South Korea

Bosnia and Herzegovina

Finland

Kuwait

Norway

Spain

Brazil

France

Lebanon

Peru

Sweden

Bulgaria

Gabon

Libya

Poland

Switzerland

Burkina Faso

Gambia

Luxembourg

Portugal

United Arab Emirates

Burundi

Georgia

Mali

Republic of Cote D’Ivoire

United Kingdom

Canada

Germany

Moldova

Romania

United States

Chad

Guinea

Monaco

Saudi Arabia

 


Citizens of countries, who are allowed to purchase restricted number of properties 

China

Denmark

East Timor

Fiji

Israel

Jordan (can buy up to 2 residences and 1 workplace)

Citizens of countries, who are not allowed to buy property in Turkey 

Armenia

Cuba

Nigeria

North Korea

Syria

Yemen

How to buy property in turkey?

Do Foreigners Need a Residence Permit to Buy Property in Turkey?

Residence permit is not required for buying property in turkey.

Documentation needed

To buy property in Turkey, you need your passport and a local tax number, which is also needed to open a bank account in Turkey. You will also need two passport photos for identity.

Do I need a lawyer?

Although it is not a legal requirement to buy a property in Turkey, we advise you to use a lawyer.

The Buying Process :

After you arrive at you dream of obtaining a property in Turkey, usually a holding deposit will be required, which varies according to the area and the seller, but is typically £1,000 to £2,000. You will need to pay a full 10 to 30 per cent deposit at a set date and for this you will need to get a tax number and open a bank account.

Once the deeds including Iskan are ready for issue, sellers accept the balance of the asking payment. Taxes will also be payable at the deed issue time. The lawyer will then draw up a contract to complete the transaction. Once all the paperwork is signed and the deposit is received, your application papers will be sent for military clearance, before the deeds can then be issued into the buyer’s name.  There is no need to stay in Turkey to sign your deeds; you can get a notary from your country to appoint the lawyer to sign on your behalf.

Fees and Costs Involved in buying property in turkey :

The acquisition of real estate takes effect only after it is duly registered at the relevant Land Registry Office. Once the title has been transferred, the buyer must pay the sale price and the seller must allow the buyer to have occupation of the property. To prevent tax avoidance, the sale price cannot be less than the market price determined by the relevant Governorship. The sale price is noted on the formal Title Deed document and the Title Deed Fee is calculated based on this amount.

In addition to the sale price, there are certain financial obligations which arise during the purchase of real estate in Turkey. These are outlined in the table below and VAT is discussed in the next section below.

Financial obligation

Preliminary Sale Agreement

Sale Agreement

Title Deed Fee

If one of the parties wishes to have the preliminary sale agreement annotated to the Land Registry, that party must pay 0.683% of the sale price.

The buyer and the seller must each pay 2% of the sale price to the Land Registry Office

Circulating Capital fee

Not Applicable

The seller must pay a circulating capital fee to the Land Registry Office

Stamp Duty

Unless otherwise decided by the parties, the seller and the buyer must pay 0.948% of the sale price.

Not Applicable

Notary Fee

the party who request the preliminary sale agreement to be executed must pay 0.113% of the sale price per signature required

Not Applicable

 VAT Regime for the Sale of Property in Turkey:

If the seller generates a commercial income from the sale of real estate, the sale transaction will also be subject to Value Added Tax (“VAT”). This is in addition to the financial obligations listed in the table above. The ratio of VAT depends on the net area of the real estate. In principle, the VAT payer is the seller. However, since VAT is a tax which can be passed on to the other party, in practice the seller generally adds the VAT amount onto the sale price to create one combined sale price. This effectively results in the buyer paying the VAT amount.

What is TAPU?

TAPU, the Title Deed, is a legal document establishing the absolute ownership right to the acquired Property in Turkey. Registering and obtaining the TAPU, Title Deed, for a foreign citizen takes 1-3 days. The general rule for purchase is that the full purchase price must have been paid by the time the buyer receives the TAPU.

Province 1
City 2
District 3
Settlement 4
Street 5
Locality 6
Number of development lot 7
Real estate type 8
Total area of the development 9
Boundaries 10
Type of ownership 11
Cadastral value 12
Purpose of the real estate 13
Owner's land share in a real estate 14
Block 15
Floor 16
Apartment number 17
Former owner and the reason for the Title transfer 18
Real estate owner 19
Number in the cadastral register 20
Date of the Title transfer (registration of the Tapu) 21
The signature of the Head of the Tapu Office or a person authorized to sign on his/her behalf 22

if you purchased an empty land you will get the blue TAPU

Sales Numbers & Prices :

 Property sales increased gradually between 2013 and 2017. Due to the size of its population, Istanbul holds the lion share (18%) of property sales since the beginning of 2013. Ankara recorded 150,000 units sold in 2017, while Izmir, Antalya, and Bursa have been following Istanbul and Ankara in terms of property sales with shares of 6%, 5% and 4%, respectively.

In terms of average house sales, prices in these leading cities, Izmir, Antalya, Muğla, Yalova, and Sakarya surprisingly outpace Ankara.

Looking at the price-to-rent ratio, which is a measure of the affordability of renting and buying in a given market through calculating the ratio of home prices to annualized rent, Istanbul, Muğla,Yalova, and Trabzon exceeded the average over the past 20 years, indicating that renting is a better choice than buying in those housing markets. Ankara, Izmir, Antalya,Bursa, Sakarya, and Mersin have almost the same price-to-rent ratio between 17 and 19 years, while Aydın stands out as a favorable city to homebuyers with lower ratio circa 13 years.

Where are the best places to buy property in Turkey?

Aside from Istanbul, Antalya, Trabzon, and Bursa, cities that are famous for their touristic destinations, such as Aydın,Muğla, Sakarya, and Mersin, have also found favor among foreigners over the last few years. 


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