Buying property in Turkey is a very
different procedure from buying in The
U.K but it does not mean it is more
complicated, indeed two Turks conducting
a property deal can view , agree a price
shake hands and be the new owner within
48 hours. for foreign nationals the
process is a little more complicated.
Always use an Independent Lawyer
The buyer must have guidance from an agent and an independent lawyer to ensure everything is in order. The solicitor will draw up the sales agreement and check the title of the property to ensure the vendor actually owns it. They will also check whether there are any charges on the property, that building licences and permissions are in order, and that any terms and conditions from the vendor are fair and reasonable.
UK buyers should always insist on a translated sales agreements from a legal translator, so each party fully understands the other’s expectations.
Fees are usually paid once the sales agreement has been signed, to include deposit, legal fees and agency fees. Solicitors’ fees can range from
£350 - £2,000 – depending on whether local professionals, your own lawyer, or both, are retained - while agents charge around 3% (to the buyer and seller). Legal translators charge around
£70 and notaries will charge about £70 for Power of Attorney and a translator.
Military clearance
F oreigners
buying Property in Turkey require
clearance from the military and are not
allowed to buy in zones close to a
military base ,this is usually just a
formality The paperwork is sent off to the title deeds office (for the transfer of title) and they will send the passports/ID cards and title deeds (or Tapu) off for the military check to make sure the property is not within a certain radius from a Turkish military base. Since this can take from 2-3 months , some buyers decide to give the local solicitor a Power of Attorney to sign for the release of the deeds once they have been authorized (some agents offer this Power of Attorney service but an independent lawyer is more advisable).
At this point, the release of the title deeds is signed in the presence of a notary (again, this can be done in absentia through Power of Attorney) and you will usually have to pay the balance due on the property - as well as various taxes and fees. These fees/taxes are listed below (please note that they will vary depending on location):
- Buyer’s tax: Between 1.5% and 3% of the sale agreement price
- Government tax: From £100 - £950
- Property tax: Based on property type and location, it is approximately 0.5% to 0.6% of the property price (paid yearly)
- Utility connection fee: Based on property type/location, between
£200 and £700
- Earthquake insurance: Since much of Turkey is in an earthquake zone, this insurance is required by law and depends on property price and location
- Other costs will include furnishings (white goods, soft furnishings, etc) and for complexes there are maintenance costs of about £30 a month
Turkey enjoys a bilateral agreement to avoid dual taxation for UK buyers, but taxes are still determined by local authorities. The majority of property ownership is freehold, to include land as well as property, but there are some restrictions on title that buyers should be aware of (see The law of the land in Turkey below).
Promising a low cost of living, as well as cheap property with good growth potential, Turkey could become a key market for retirees. Those who plan to stay in the property for more than three months will need to leave the country and re-enter to re-new their visa - although property owners living in Turkey can buy a residency visa for one year (from £240 or £915 for five years). Those looking to set up a business will still need to apply for a residency visa and work permit.
Still seen as an emerging market with a lot of promise, Turkey fulfils much of the criteria for a range of buyer types. It’s worth bearing in mind, though, that the climate will vary in the north and south with much colder winters in the north. This should inform your choice of property and location based on whether you are looking to emigrate, retire, let to tourists or professionals or buy a holiday home.
Back to Top ^
How to Finance your Property Purchase
 A key reason why
property is so cheap in Turkey is the
lack of an established and competitive
mortgage market. Domestic mortgage
products were introduced by Turkish
lenders last year and are now available
foreign buyers . However, while there are still a number of options available to people who want to buy in this market, purchasers should be aware of the current regulations to ensure they do not expose themselves to unnecessary losses.
First of all, current regulations state that any monetary transaction which exceeds YTL8,000 (or £3,000) must be made through banks, private financial agencies or the post office (PTT). This is to ensure all transactions are documented, thus providing clear proof in the event of a dispute.
Although it is possible to pay in sterling, US
Dollars or Euros, it is often recommended that the currency is converted to New Turkish Lira (YTL) and price terms in the contract are set in this currency to reduce conversion errors (thus avoiding any tax evasion complications). However, it is possible to open accounts in any currency in Turkey and there are no limits on foreign currency accounts.
A key thing to remember with savings/deposit accounts in Turkey (where interest is paid at the end of the savings term) is that if the money is withdrawn before the end of the term then no interest is paid and you only receive the principal. Many Turkish banks will automatically set another savings term if the money is not withdrawn at the end, so it’s worth checking whether this is the policy (they would usually repeat the period renewal and apply current interest rates to the accumulated amount as the new principal).
Back to Top ^
Opening a Bank Account in Turkey
 To open a bank account in Turkey in your own name you would need to get a tax number from a local tax office and then submit it with a copy of your passport to the appropriate bank branch. Due to strict banking regulations in Turkey, no one else will be able to withdraw money or view details about your account unless they have Power of Attorney or are a joint account holder.
While Turkish citizens and foreign
nationals have equal ownership rights,
some provisions of the Title Deeds Law
became void on 26th July - thus
suspending all property buying
transactions by foreign nationals.
However, a new Act has since been
approved and announced in the Official
Gazette .
Sourcing Finance for Turkish Property
 Whilst Mortgages are
now available for foreign nationals,
they are a little restrictive, with low
loan to value (L.T.V) typically 60% of
the purchase price and over a shorter
period than a U.K mortgage . They are
also subject to affordability and are at
a higher interest rate than at home,
Often the best way to finance a house
purchase is using the equity in your U.K
property to pay cash for your new
purchase. By remortgaging you are able
to get the best interest rate and have
only one payment to worry about every
month. Turkish Homes and Villas can
recommend an independent financial
advisor to assist with this if you so
wish.
Nevertheless, a number of economic reforms are likely to provide impetus for a
competitive mortgage market in Turkey. Lower interest rates have created a borrowing boom in Turkey, with banks seeing more credit card business. It is hoped that this cultural change will drive further demand for mortgages and make them a mass market option for Turkish nationals.
Inflation has settled down in Turkey with consumer prices increasing at
6.72%, which is below the 8% official target for 2007 and the lowest for the last 37 years. The government economy taskforce recently announced its target for 5% inflation this year, and 4% for 2008 and 2009 – all of which will improve confidence in its business community.
Foreign buyers themselves are creating new economic conditions by raising property values and feeding the economy by creating new service industries or buying new products. As the price of property rises beyond domestic affordability, mortgages will become the only option for Turkish nationals.
Finally, a major factor for the introduction of a more competitive mortgage market is preparation for a more regulated environment as part of the ongoing negotiation for entry into the EU - although this is due between 2012 and 2016. In the meantime, mortgages are more likely to be introduced as a result of domestic market forces.
Once the Turkish mortgage is implemented, it will doubtless enhance Turkey’s position on the property investment map. This, in turn, will further boost this flourishing tourist economy and inevitably drive property prices upward.
Deputy Prime Minister Abdullatif Sener has confirmed that a bill regulating
mortgages of up to 30 years will be possible
|
