Deciding to Buy a Property in Istanbul
In last few years, foreign citizens are interested in purchasing property in Istanbul more than ever… Istanbul and Turkey are popular holiday destinations which attract millions of foreigners and they are increasing their market shares every year. Ideal climate, beautiful coastline, many historical and natural places make the country more and more attractive.
Of course, buying property in Istanbul is becoming a good future investment considering that Turkey is one of the fastest growing emerging markets in the world. Although, reciprocity had been a big obstacle for many countries’ citizens to have a real estate in Turkey , many foreigners bought properties in Turkey. And the good news… The new legislation passed on the 3rd of May, 2012 and reciprocity is not a concern in Turkey anymore… All foreigners can buy property in Turkey (some restrictions apply to citizens of few countries).
Turkey has become the 16th largest economy in the world and is expected to be the 10th in 2023. If Turkey overcomes its energy dependence, the country can easily target the 5th place… With new technologies and the country’s efforts, now it is a reachable target. All these improvements keep the country running and move the property market in Turkey up…
Many foreign citizens do not have enough knowledge about property purchasing procedures in Turkey. Therefore, it is presumed that it is a difficult process… Although the process is slightly different for a non-resident, it is still quite straightforward as long as you are getting help from a professional…
Deciding What Kind of Property
The potential purchaser must first decide on some crucial criteria in property search, whether to buy the property for investment purposes or to reside? If buying purpose is for residential, a different criteria must be applied… If the purpose is for investment, then it must be analyzed differently…
Some Crucial Rules
- Buying a cheaper property doesn’t mean that is the best investment…
- Increased price does not necessarily mean that you will be able to sell at the same price…
- Your investment might have a higher price but another important point is how fast you are able to sell… Supply and demand balance in the district is so important…
- How well can you analyze the quality of property construction… Are the facilities enough…?
- What are you buying? What does space really mean? Gross area is not enough for you to compare real estates in Istanbul….
- Transportation alternatives are important factors for the value of a real estate in Istanbul… Current and future alternatives should be known…
- When you buy an off-plan property, are you sure it will be completed… Will it be delivered at the time promised… Will it be as same as it was shown in the catalog… ?
- What is the cost of living expenses of the area?
- Who is your professional? Does he/she is experienced how to analyze the business environment…? Or he/she has only a motive to close the deal?
*** Please keep in mind. there is no Capital Gain Tax payable in Turkey after having property for five years…
Signing the Contract
The buying process is very smooth in Turkey; once you have found your property and agreed on the details such as price, the Sales and Construction Agreement (Purchase Contract) can be drawn up both in Turkish and English.
In the contract, agreed sale price, payment schedule, the names of Buyers and Sellers, full property details, obligations of both parties, and the completion date must be set. It must be ensured that the property is free from restrictions. Also, to make sure the legal side of the process is taken well care… Hiring independent bilingual Legal Adviser/Solicitor who is experienced in Turkish Property Law will be helpfull.
Power of Attorney (POA) may be issued in a Notary Public found in every town. Issuing Power of Attorney (POA) will enable the Solicitor to follow and complete the purchase process on your behalf without the need for you to be present until a convenient time. A POA can be issued abroad as well; usually Solicitors abroad have the authority to notarize the documents. The notarized POA should then be apostilled at the Local commonwealth Office or should be certified by the Turkish Consulate in order to be recognized as valid.
Obtaining a Tax Number
All Buyers will need to obtain a tax identification number from the local authorities (tax office) to open a bank account (for the transfer of the funds), sign up to utilities or obtain the title deeds of the property in your name. It is a very easy process; a 10-digit number you will obtain with the photocopy of your passport. It can easily be obtained by your solicitor via POA as well.
The Builder/Seller must apply for military permission. This procedure is standard for all foreign purchasers in Turkey. The checks are to ensure that the land on which your property is built is not in a military, strategic or security zone. Once you have clearance, than the title deed transfer process shall start.
It is important to note that the military search period may take up to 4 weeks and in some cases 6 weeks.
Title Deed Transaction
The title deeds (known as “TAPU” in Turkish), will be signed at the Land Registry Office, and then the Buyer should pay all costs and taxes related to the transfer of the title deeds.
Who Is Eligible to Buy Real Estate in Turkey?
With the new legislation that just passed several days ago, all Foreign citizens or residents can buy property in Turkey, except citizens of forbidden countries by the Turkish Board of Ministries… Foreigners can buy property and land within a zoned municipal area, which means all cities, towns, the coastal resorts and large areas around them.
How Are Properties Priced in Turkey?
Property values have been progressively increasing. As it is the case all around the globe, the property value defers based on the location and the quality of the construction material, as well as its architectural characteristics. Transportation, economic activities in the region, and availability of necessary services are also factors that determine the value.
Having an appraisal report of the interested property by a certified appraisal company will be a smart thing to do. The report will include all kind of information about a property detailing the district and land registry office records…
How Can I Open an Account at a Bank?
You can open an account at a Bank in your own name. All you need to do is get a tax number, and then submit it with a copy of your passport to a Bank branch. If you issued a POA your Solicitor can obtain the tax number and open a bank account on your behalf.
How Can I Apply for a Mortgage at a Bank?
After deciding on a property, you have to fill out a Mortgage Application Form at a branch, preferably a branch close to your designated property.
In Which Currencies Do You Provide Mortgages?
It is possible to have the mortgage in Turkish Lira for all foreign citizens but in Euro, British Sterling and US Dollar just for non residents.
Do You Provide Adjustable Rate Mortgages in Different Currencies?
Adjustable rate mortgages are available in Turkish Lira denominated mortgages only, as a result of the Mortgage Legislation in Turkey.
Do You Provide Fixed Rate Mortgages in Different Currencies?
Fixed rate mortgages are available in Turkish Lira, Euro, British Sterling and US Dollar.
What Is the Maximum Loan-to-Value (“LTV”) Ratio?
Maximum loan-to-value ratio for EU member countries, Norway and Switzerland citizens is 65% of the appraised value of the property For other countries, the maximum loan-to-value provided is 50%.
What Are the Minimum and Maximum Loan Terms for Mortgages?
There is a 3-month minimum term and a 240-month (20 years) maximum term for a mortgage loan.
Are There a Minimum and a Maximum Age Allowed to Apply for a Mortgage Loan?
Consumers between the ages of 18 and 65 can apply for a mortgage…
Which Nationalities May Apply to Have a Mortgage?
All countries’ citizens can apply for a mortgage loan in Turkey… Some country citizens can get up to 60% LTV (Loan To Value) while some can get 50%… Turkish citizens are eligible to get up to 75%…
Is There a Maximum Debt-to-Income Ratio to Apply?
Generally, there is a maximum debt-to-income ratio of 40%.
Nejat ÖZONAY (May 2012)