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Destination & Buyer Guides |
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Buyer Guide | FAQ | Taxes
 Buyer Guide
Many people buying property in Turkey are buying for investment, some looking for a holiday home with the aim of also making a little money and others as a dedicated investment that they may never even visit. It is essential that potential buyers of property in Turkey understand the procedures as it is a new country with regard to overseas property investment.
Buying property in an emerging market such as Turkey is very different from buying in a more traditional market like Spain, where millions of buyers already own homes from all corners of the world. In Spain the procedures are tried and tested and every notary is well experienced. However, in Turkey this is not the case and the lack of experience and firm procedures may lead to delays and confusion.
In Turkey there are some potential pitfalls as many properties do not have titles or planning permission or have simply been constructed illegally. In 2004 the Turkish Daily News reported 600,000 illegal homes in Istanbul alone. There are also various types of "title" available in Turkey giving different land ownership rights.
Purchase Procedure
Once you have found your ideal property in Turkey and have decided that you would like to purchase you can usually expect to follow the procedure below:
Reservation Contract
The reservation contract takes the property off the market, usually for between 2 - 4 weeks, allowing time for the appointed legal advisor to carry out the required searches on the property in question. Usually a reservation fee of between €3,000 and €6,000 is paid at this point.
If you do not continue with the purchase due to a legal problem then you should contractually be entitled to a refund of the paid reservation fee, although this is not always the case. However, if you decide not to proceed owing to a change of heart or mind then it is standard that you will lose the reservation fee.
If you decide to proceed with the purchase then the reservation fee already paid is treated as part of the payment towards the property in question.
 Preliminary Contract
After the reservation contract is signed and the required fee is paid, you are presented with a report containing the findings of the legal checks. Subject to the report, you then sign the preliminary contract and at this stage you will be expected to pay the required deposit. On a resale property, this is typically 10% and on an off-plan (new) property you must expect to pay varying amounts of around 30%.
If necessary, at this point in the process the vendor is required to apply for permission for you to purchase a property in Turkey.
With off-plan property purchases in Turkey the buyer may be expected to pay a number of stage payments throughout the construction process.
Completion
Once all parties are ready to proceed the property sale is completed. The buyer pays the required tax payments and the final contract or deed of sale (Tapu) is signed. The signing of this document means that the land ownership is transferred to the buyer. This is usually done at the land registry office.
Once signed, the deed of sale (Tapu) is registered in the land registry.
Off-Plan Security For Buyers
In Spain and most other countries where full or part payment is made before the property is fully constructed, a bank guarantee must be in place to ensure that should the developer go bankrupt before completion of your property, your money is 100% safe.
In Turkey this is not a requirement and owing to the early stage of the overseas property market in Turkey and the comparatively immature banking systems such guarantees are either impossible or very expensive.
This makes it extra important to work with developers with proven track records and of substance that can offer quality property and run no risk of running out of capital during the construction phase of a project.
FAQ
Can foreign nationals own property in Turkey?
Turkey works on a reciprocal agreement and if Turkish citizens are permitted to buy a property in their country, citizens from that country are allowed to buy in Turkey. With Turkey set to join the EU in 2007 this has opened its doors to allow citizens from many different countries to buy a property in Turkey in line with EU law.
Foreigners are allowed to buy property or land in their own names in towns but not in villages or rural areas.
 Why should I choose Turkey?
Turkey is a highly sought after holiday destination and this factor is a strong contributing factor to the property investment success the country is currently undergoing. 25 million tourist flock to its coastal resorts each year (up from 14 million in 2004) and this, combined with an excellent sunny climate, indicates the success that Turkey is today.
Turkey’s current status as a strong candidate for EU membership has added to the overwhelming international interest in property iin Turkey. Returns on property investment are high and last year alone, property prices rose by around 50% in some areas. An increase in demand is set to drastically push prices upwards and create an environment that is ripe for buy-to-let investments.
The stunning natural beauty, warm climate and vibrant culture in Turkey continue to attract tourists and retirees each year.
Turkey’s appeal also lies in comparatively low cost of living and stable economic situation, further enticing visitors to the country. The government has tax incentives in place which favour property transactions, such as exemption from annual property tax in for the first five years of ownership, no capital gains tax for individuals who have owned a property for more than one year and easy repatriation of funds.
What is the economic and political situation?
Turkey is a dynamic and emerging market equipped with a well-developed infrastructure and a globally competitive work forces. Turkey is also home to a thriving tourist industry and rapidly growing property market, attracting huge international interest.
The Turkish property market currently offers excellent quality and value for money. This, combined with the outstanding expected growth (25-40% per annum), offers property investors a unique opportunity.
Turkey is currently at the very start of the long road to possible EU inclusion. There are many factors yet to be discussed and Turkey issues to be corrected before inclusion will be seriously considered. When Turkey does get accepted into the EU, it can expect the price of property to rise substantially and tourism to improve even further. Many investors are purchasing in Turkey with EU inclusion as a major driving force for this investment, while they look to take advantage of the current low property prices and a growing rental market.
Turkish economy is very strong with 5.6% GDP growth in 2005 and Turkey now has the 22nd largest economy in the world.
Turkey’s system of government is democratic and it is a full member of NATO. The president, currently running the Justice & Development Party (AK), has broad powers of appointment and supervision, and is chosen by Parliament using proportional representation for a term of 7 years.
The stringent entry conditions imposed by the EU require human rights to play an instrumental role in the progress of a struggle between Turkey's policy makers. This will ensure a fully democratic system, in line with European standards, which is already well developed in such areas as allowing women a political vote and an allowance for complete freedom to worship any religious faith.
How do we travel to Turkey?
In line with the boom in tourism, low cost airlines such as Turkish Airlines are already planning new routes, lower fares and increased services to cater for the increased numbers of visitors. As accessibility increases, Turkish property will become even more sought after and investors will inevitably see encouraging capital appreciation.
The main points of entry for investors in Turkey are Bodrum, Dalaman or Antalya, with bookings from Turkish Airlines, British Airways, Thomas Cook and Excel.
In winter, daily flights to Bodrum are available from Heathrow with transfer in Istanbul to Bodrum. However in summer, you can fly to Bodrum direct from most UK airports.
What is the direct flying time from UK to Turkey?
Flight time is only approximately 3 ½ hours from the UK.
Is a visa required to enter Turkey?
Entering Turkey is simple and visitors from many EU countries and New Zealand are free to enter Turkey without the need for a visa.
However citizens of the following countries need to purchase a visa, which is a sticker obtained at the point of entry into Turkey and is valid for 3 months:
| Country |
Cost |
| UK GBP |
10 |
| US USD |
26 |
| Canada |
Free |
| Australia |
Free |
| Ireland |
Free |
| The Netherlands |
10 Euros |
You are well advised to apply to the Turkish Government Office for a Residents Visa if you are relocating to Turkey for more than 6 months. The document they issue will need to be taken to the police station for processing.
Taxes
Property Tax
Buyers tax: Approximately 1.5% based on the declared price of the property.
Government tax: Approximately €200
Community tax: Approximately €16 paid yearly for local services.
Property tax
Approximately 0,5% based on the declared value of property, paid yearly.
Buildings and land owned in Turkey are subject to real estate tax at the following rates:
- Residences 0.1%
- Other buildings 0.2%
- Land 0.1%
- Vacant land (but allocated for construction purposes) 0.3%
- Farming lands 0%
Inheritance and Gift Tax
Property acquired as a gift or through inheritance is subject to taxes of between 1% and 30% of the valuation. Tax paid in another country on inherited property is deducted from the taxable value of the asset. Inheritance tax is payable over the period of three years and in two installments per year.
Environmental Tax
Environmental Tax contributes towards the financing of certain services such as rubbish disposal. This tax is levied in staged payments and is charged according to the location of the property. |
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