Foreign citizens are increasingly drawn to purchasing property in Turkey, particularly in the southern Mediterranean region. With a stunning, unspoilt coastline and a climate that offers 300 days of sunshine a year, it is fast becoming established as a second home destination.
The property market in Turkey offers an excellent opportunity for those that are considering a second home overseas – many compare the current market potential to that offered in Spain some 15 years ago. Even at the resort hot-spots that are most in demand, property prices remain low when compared to most other popular overseas destinations. In addition, the ‘off-plan’ market is booming, with investors drawn to low entry level prices and the capital appreciation potential. The improving bank services are another reason that attracts investors, with mortgage loans being made available to foreigners only recently.
Comparatively speaking, however, the Turkish second home market is still in its infancy and the majority of potential buyers have limited knowledge about property purchasing procedures, with many assuming these are complex and time consuming.
The fact is, whilst the process is different for non-residents, it is relatively straightforward – the following information is a step by step guide to understanding this process:
1 – The Buying Process
2 – Residency and Citizenship
3 – Mortgage Issues
4 – Inheritance Law
THE BUYING PROCESS
The purchase of a property begins once a verbal agreement has been made between the Seller and the Buyer (sometimes through an agent acting as an intermediary). The property is then taken off the market, subject to payment of a reservation fee (normally between 1000 – 2000 Euros depending on purchase price). The Seller will then submit the Title Deed (Tapu) to the Land Registry in order that preliminary land and title searches can be made.
These searches will determine that:
The Seller owns and has the legal right to sell the property.
The property is not located within a restricted or military zone.
There are no outstanding debts on the property.
The reservation fee is refundable if the Seller withdraws from the sale. It is normally non- refundable if the Buyer withdraws from the sale.
Copies of the Buyer/s passport will be presented to the local Tax Office in order that the Buyer/s can be issued with a Tax Number (this number has no taxation implications – it is a personal identification number issued for security purposes). This number is required in order to process the title deed transfer (to the new owner) and a pre-requisite for both a Turkish bank account and residency application. It is not compulsory to have a bank account in Turkey – it does, however, have its advantages: for example, it will allow for international money transfers, setting up of direct debits to pay utility bills, proof of funds when applying for residency and as a deposit facility for rental income (if applicable).
A sales contract will be prepared relating to all interested parties – the Seller, Buyer and intermediary (if there is one). The contract will include include all relevant property information, Seller, Buyer and intermediary information and the appropriate payment plan. The contract will be in both Turkish and English (or alternative native language) – English or native language only contracts are not recognised in Turkish property law.
All residential property in Turkey is freehold – for apartments, the owner will own the apartment and a proportionate percentage of the land on which the apartment building is located. (House owners will own both the property and the plot on which it is located).
Foreigners can not buy property that is located in either restricted or areas of military interest. In July 2017, the authorities declared that there are no longer any of these areas in the district of Alanya.
The Tapu (Title Deed) is a document that denotes legal ownership of a property. The information shown on this is the exact same as that recorded at the Land Registry office, including Property Address, Size (m2), Land Plot (on which the property is situated), Current Owners etc.
This document is transferable each time the property is sold on.
Iskan (Habitation Certificate)
For all newly built properties, the Iskan is issued after satisfactory inspection by the Building Inspections authority; this inspection is to ensure that the property has been constructed in accordance with both the submitted plans and the current building regulations and that it is fit for habitation.
Tapu Transfer and Power of Attorney
The Land Registry will normally give around 2 weeks notice of the appointed Tapu transfer date – both the Seller and the Buyer should be in attendance and the actual transfer process takes around 15 minutes (a registered translator will also be appointed on behalf of the Buyer). In those cases where the Buyer is unable to be present, it is normal practice for that Buyer to give Power of Attorney (POA) to the Seller – this POA authorizes the Seller to transfer the Tapu (to the Buyer) in that Buyer’s absence.
RESIDENCY AND CITIZENSHIP
Currently, visitors entering Turkey on a tourist visa can stay in Turkey for a maximum of 90 days in any 180 day period – these days do not have to be consecutive.
All foreign property owners are eligible to apply for a Residency Permit. This eligibility applies to all and is not dependent on property value or the applicant’s country of origin. A Residency Permit allows travel to and from Turkey without any restriction – all first time permits are issued with a validity period of 1 or 2 years (according to the applicant’s wishes) and renewable all the while that the holder continues to own property in Turkey.
Costs vary depending on which country the applicant normally resides – however, as a guide, applicants will pay around US$ 25 for the 1st month of residency and US$ 15 for each month thereafter. So, for a 1 year permit, these citizens would pay around US$ 190 (payable in TL on the day the application is submitted). In addition, there is a cost of around 150 TL for the actual permit.
Those individuals applying for a permit must be able to produce:
- Completed Application Form.
- Copy of main page in Passport and copy of page showing most recent entry.
- Copy of Turkish bank statement showing a minimum balance of US$ 500 per month or the equivalent if the account is held in a different currency (so, 6.000 $ minimum balance if applying for a 1 year permit).
- Copy of Tapu (or notarised Rental Agreement).
- 2 passport sized biometric photographs
- Valid Private Healthcare Insurance Policy (current cost around 1000 TL per person depending on age and current health).
Health Insurance is not required if the applicant is 65 years of age or older.
Permits are normally issued around 3 – 5 weeks after application (and payment) is submitted.
Residency does not qualify a person to work in Turkey. Working permits can only be applied for by the company for whom that individual is intending to work.
After having had residency status for 5 years, all foreign residents are eligible to apply for Turkish citizenship: The general requirements are that the applicant:
- Is 18 years or over.
- Has been a Turkish resident for a consecutive 5 year period, with a total interruption period of no more than than 6 months over these 5 years.
- Is in good health and of good moral character.
- Is able to speak Turkish at a sufficient level.
- Is able to prove sufficient income to provide support for himself / herself and any dependents.
Citizenship can also be applied for if an individual invests a minimum of $US 250.000 into Real Estate.
Most of the major Turkish banks ( and European banks based in Turkey) will offer mortgages to non-nationals (of specified countries only), including HSBC, Garanti Bank, Denizbank and AK Bank.
Please note, however, that mortgage applications are generally considered only if the Seller (or Seller’s representative) holds the appropriate Tapu Title Deed) for the property being purchased
Therefore, given that the Tapu is only issued once construction is completed (and that the construction has been approved by the Building Inspections Committee), mortgages would not normally be available for those properties being purchased either ‘off-plan’ or in the early stages of construction.*
*These days, however, a significant proportion of property in Turkey is purchased either ‘off-plan’ or at the early stage of construction. As long as a Buyer (requiring a mortgage loan) is able to self-finance a minimum of 50% of the purchase price, then developers will allow a flexible payment plan; the self-financed portion of the purchase price is paid in instalments over the duration of the construction period and the balance cleared with a mortgage loan some time after construction completion (this loan is applied for as soon as the Tapu has been issued).
The term of a typical mortgage is between 1 to 10 years and the minimum value loan is around 20.000 Euros.
Mortgages are normally arranged on a fixed repayment basis, in equal instalments for the duration of the term.
If two names are to appear on the Tapu (shared ownership of property), then a joint mortgage application should be made.
If just one name is to appear on the Tapu, then the mortgage application should be in that individual’s name only.
If a property owner were to die intestate (i.e. without having made a will), then the Turkish Civil Code is applied in terms of inheritance of immoveable assets. Please note that any children will be the first statutory heirs and that there will always be a reserved portion of the asset that is granted automatically to any children. In the absence of a will, the property will be divided as follows:
- if the property is in the deceased’s name only and the deceased is married, then the surviving spouse inherits 25% of the property and any children (of the deceased) shall inherit equal shares of the remaining 75%.
- if the property is in joint names (and those parties are married), the spouse will already have a 50% share of the property – the spouse will then inherit a further 25% of the deceased’s share and any children will inherit 75% of that share.
- if the property is in joint names (and those parties are not married), any children of the deceased shall inherit equal shares of the deceased’s 50% share.
To effect property transfer pursuant to an overseas will, any heir/s must produce a will that has been witnessed and undersigned by a registered solicitor and then apostilled (notarised) by the legal department of the Turkish Consulate (Foreign and Commonwealth Office for UK wills). This must then be sent to Turkey and translated into Turkish by the public notary’s office before being submitted to the local relevant municipality in which the property is located. The local court will then issue an official authorisation of transfer to the Tapu office.
The simple solution here is for all property owners to effect a new will (in Turkey) that relates only to their real estate asset/s in Turkey. This avoids the complexity of effecting an will from overseas and ensures that only nominated beneficiaries inherit any of these assets.