When buying we strongly recommend you to instruct a local lawyer to ensure that all is in order. If dealing with a new development it must be checked that the plot/land is suitable for building purposes, i.e. zoning restrictions, building regulations, access to an official road, availability of water and electricity supply, telephone lines.
In the case of purchase of an apartment or house the lawyer needs to check building planning and other permits, the history, reputation and reliability of a developer and the title to the property.
Who can buy ?
Most foreign nationals can purchase property in Turkey providing:
There is a reciprocal agreement between the government of Turkey and that of the purchaser;
such an agreement does exist between Turkey and the UK or other countries.
The intended property lies within the boundaries of a municipal area, i.e. town or village
with more than 2000 registered inhabitants.
The intended property does not lie within the confines of a military zone.
These simple regulations are important. Foreigners, who have attempted to outsmart the system by
purchasing homes in prohibited zones in the name of a Turkish acquaintance under the protection of
a private notarised agreement, have no chance of recovering their property in the event of a dispute.
Property Purchasing Laws and Procedures in Turkey
Foreign people are increasingly interested in purchasing property in Turkey particularly along the
southern and western coast as more and more foreigners wish to have a pied-à-terra.
Turkey is becoming a popular holiday destination with its immense unspoilt coastline and Mediterranean
climate, which offers all-year-round sunshine. Not only this, but buying property in Turkey is seen
as a good future investment considering the fact that Turkey is on the verge of becoming a member of
the EU and has one of the fastest growing emerging markets in the world.
Here we will give you the essential but general information regarding the path to ownership of a
property in Turkey according to Turkish Laws ( article 35 of the Turkish Constitution ) and which
problems might arise during the process. Different properties are subject to differing laws ( depending
on location ). Because the following is general information only, we emphasise that you should only
purchase when advised by a local lawyer. Buying property in Turkey can be a complex matter and
knowledgeable, professional service is essential. Nonetheless it is exciting and fun and should be a
hugely enjoyable experience !
Turkish Property Legislation
Ownership is anchored in article 35 of the Turkish Constitution. This article stipulates that
anyone is entitled to ownership and that these rights can only be restricted by other legal
stipulations. The restrictions may consist, for instance, of zoning schemes, restrictions applicable
to foreigners, etc.
The ownership regulations are elaborated in the Turkish Civil Code, article 633. This mainly explains
how ownership is acquired. For the purchase of property by a foreign person, the registration of the
land is especially important. In Turkey there are regional directorates of the Land Registry Department,
which are subdivided in provincial or district offices and they are all controlled by the state.
Property Registration and Delivery
In most European countries the buyer and seller go to a public notary to have the property put in the
name of the new owner. The public notary is responsible for the correct settlement of this procedure.
The public notary is also responsible for the delivery, which often takes place in the form of a
" deed of transfer " and the entry in the property register.
In contrast to this, the entry in the property register in Turkey is not performed by a public notary,
but by an official of the Property Registry Department. It is legally compulsory for both sides
( the seller and the buyer ) to be present at the entry. It is possible to authorise another person
to do so but the authorisation requires a proxy deed. As a security measure, it is also advisable to
authorise the sale through an official notary.
The delivery of the deed of transfer does not require the intervention of a public notary in Turkey.
The only applicable stipulation concerning the delivery is that it takes place in writing. After the
entry and delivery the property register issues a proof of ownership, which is called " Tapu ".
The ownership is only obtained at the moment that the building(s), if under construction, has been
completed and the full amount has been paid.
Mainly there are no legal restrictions against foreigners regarding the acquisition of property
ownership. However, the Village Act and the Military Prohibited and Security Areas play an important
role; Article 87 of the Village Act denies the right to foreigners to ownership of property that is
outside the centre of a village in case the cadastral division of this area had not been arranged yet
or it may belong to the Ministry of Forest. Also, the act regarding Military Prohibited and Security
Areas can be an impediment and therefore restrict the acquisition of property by foreigners if the
property is located within a particular distance of military sites or strategically important areas.
The major legal restrictions mentioned above may in turn change or even be
( partly ) cancelled by more recent legislation which is closely related to the promotion of the
economic position of Turkey or the adjustment of regulations and laws to EU or tourism promotions for
foreigners etc.
Finally
Buying real estate in Turkey involves many regulations. Not only must formal regulations be taken into
account, but foreigners must also heed the various legal exceptions to acquire real estate.
The zoning schemes, the antecedents of the selling party and the legal restrictions imposed by Turkish
property legislation are some important aspects that must be approached objectively, reliably and
professionally.
The Legal Side of Buying a Home
Is the conveyance process in Turkey similar to that in England ?
No. The Turkish legal system is very different from the English.
Generally speaking, however, provided that the necessary checks and enquiries are made , there is
hardly any more need to worry about buying a house in Turkey than about buying one in England.
We emphasise that a foreigner buying property in Turkey should take independent legal advice.
What should I look out for when finding a property ?
In Turkey there are huge numbers of properties that have no title, no planning permission or are
illegally constructed. According to the Turkish Daily News ( 14th January 2004 ) there are 600,000
illegal houses in Istanbul alone! That is 60%. In the south it can be worse.
There are various types of " title " in Turkey , some of which give you only the right to
occupy land rather than full ownership.
Cooperative developments might only give you ownership of the stones and concrete from which the building
is constructed, without conferring any right to live in the property or an independent legal title !
There are many areas - some in the most unlikely places designated " military zones ", where foreigners
cannot own property.
If you buy a plot of land which is designated as an archaeological site ( sitalan) the Museum Service
can freeze all activity on the land until it has been thoroughly investigated. You cannot even cut the
grass, let alone build. Similar restrictions apply to historic buildings.
Do not be alarmed ! It is perfectly possible to buy a property with good title and no legal problems.
You just need to be particularly careful and get good legal advice before you commit yourself to a
purchase.
Therefore, the most important thing we would stress to you, is that you should NEVER SIGN ANYTHING until
you have had it checked by your lawyer. If you do sign you will be committed to a contract that you may
not understand, that may be totally unfair or unsafe and which could be structured, financially, in a way
that is totally unsuited to you and tax inefficient.
Once the reservation contract has been signed there is usually a period of 2 - 3 weeks for us to carry
out checks on the property before you sign the main contract.
How does the purchase of a property in Turkey work?
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You find a property you like and you instruct a Lawyer. |
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You sign a reservation contract, if necessary. Often this will not be necessary as
the Seller will allow you time to carry out your investigations without requiring you
to sign anything. |
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Various checks are made to ensure that the property has good transferable title,
planning permission etc. |
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You sign a purchase contract and pay, typically, a 10% deposit. |
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You apply for a security clearance to permit you to own a property in Turkey. This
is, typically, applied for by the estate agent or the Seller. |
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Further checks are carried out to ensure that the property still has good clean title. |
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The property transfer taxes are paid. |
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You then sign a deed of transfer in front of an officer at the Land Registry. At
this point you pay over the rest of the price. |
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The Land Registry records you as the official owner of the property. |
What are the special dangers of buying property in Turkey ?
There are some dangers applicable in every country :
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Does the property have good title? |
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Is it affected by debts? |
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Has the building been constructed legally? |
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Does the property suffer from any defects? |
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Is what the Seller and the agent have told me true? |
In addition, there are issues that need special attention in Turkey .
In particular,
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Is the property subject to any court or family dispute ? |
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Is the form of title deed sufficient to give you full ownership of the property ?
Watch out for the irtifak tapu. |
| • |
Is the property a cooperative property where the cooperative has not yet been "
signed off " ? This stops you getting title to the property. |
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Is the property an archaeological site? If so the museum can seal the site until
they have investigated it. You can't even plough the field ! |
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Does the property belong to the government ? If so special procedures apply. |
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Is there evidence of fraud ? |
Where should the money be paid ?
When the title is signed either the purchase price is handed over to the person
selling the house or the Seller confirms that the money has already been handed over.
Acknowledgement of such payment is then incorporated in the title deeds of the property.
Usually the price may be paid wherever in the world the parties
agree.
Do I have to be in Turkey to complete the transaction ?
The person buying the house may attend in person, but, if this is inconvenient,
arrangements can be made for a Power of Attorney to be granted enabling another person to
attend on their behalf. This must be in the local form and signed in front
of a Notary.
Is there a Land Registry system in Turkey ?
Yes. When the title has been signed it is registered at the Land Registry.
In whose name should you purchase the property ?
There are a number of ways to purchase the property or any company owning it.
Each method has its own advantages and disadvantages. Everything depends on your own
personal circumstances. We shall be pleased to discuss the various ways of buying and to
advise as to the most advantageous method for you.
It is worth paying careful attention to this point because of the potential tax and other
savings that can be made at a later stage.
These tax savings arise because of inheritance tax ( where careful planning can dramatically
reduce the tax payable ) and because of the way that, each time a property changes hands,
certain taxes and fees become payable. If you can minimize the number of times it changes
hands, you can greatly reduce your tax liabilities.
As always with tax savings schemes there is a danger that the Government can close the
loopholes that allow the schemes to operate and, as always, there are disadvantages to
them as well as advantages. In each individual case, you will
have to weigh up the advantages and the disadvantages and decide how you wish
to deal with the transaction.
What about raising the money ?
It may be possible to raise finance to assist with the purchase of a property in
Turkey. At the moment it is not possible to mortgage your house in Turkey - this facility
may be available soon. Please ask. People wanting to borrow to buy their home in Turkey
will, therefore, mortgage or add to the mortgage on any property which they may have in
England. We can assist in this if required.
What extras are there on top of our legal fees ?
These will vary from case to case but would typically include the following :
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Search fees - allow £50. |
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Stamp Duties - 3% of the price of the property - sometimes split between
the Buyer and Seller |
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The Land Registry may insist on a certified translator being present
at the signing. If this happens in your case it is likely to cost about
€40 - €75. |
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On a resale, usually the estate agent's fee is paid half by the Buyer
and half by the Seller. It is typically a total of 6% of the price of the
property. |
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If you need a Power of Attorney there will be an additional cost of,
usually, €150 plus the fee paid to the notary who witnesses it. That
is typically €60. There may be couriers' fees to take out your Power
of Attorney ( if you are not going yourself at the appropriate time )
and to have the Power certified in the UK . Allow €60 in all. |
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There will be a fee payable to the Foreign and Commonwealth Office to
certify the Power of Attorney for use in Turkey . This is currently
€18 per Power. |
The overall cost of buying a €100,000 property in the course of construction and
without a mortgage, including our fees, is likely to be about €5,000. For more
expensive properties, allow 5%.
These " extras " will be exactly the same whichever firm of lawyers you use.
If someone gives you a different estimate of these fees it is simply because they have
based their estimate on different assumptions.
How do I get the money to Turkey ?
By bank transfer or through an exchange company. We are happy to assist.
Are there any other things I should do at the same time as I buy a property ?
We believe that it saves a great deal of time, effort and money later on if you
now review your English Will and make a separate Will for use in Turkey . For most people
the cost of this is fairly small.
It is highly advisable for any person who has a property in Turkey but does not live
there all the time to nominate a " tax representative ". This is a person to
whom the tax authorities can send all correspondence relating to your affairs in Turkey,
secure in the knowledge that it will arrive. The representative must be resident in
Turkey, but it is for you to choose whom to appoint. It can either be a friend,
neighbour, a lawyer, or your tax adviser. We can recommend people who can do this
for you. If you wish to know more about this, please ask.
You will wish to insure your property and its contents. Once again we can assist you in
doing this.
You will wish to have the electricity, water and rubbish collection charges
transferred to your own name. You will need to notify the Town Hall that you own the
property and register for local rates, open bank accounts and register with the
authorities in Turkey for tax and other purposes. If you do not speak the language we
would recommend that you use the services of a local person to do these things for you.
If you prefer, we can arrange this for you.
You should register as the owner with the Community of Owners if you live in an apartment
block or an estate with shared facilities.
What happens if I decide to live and/or work in Turkey ?
As part of our service we can assist you with residence permits, work permits and
licences and permits in connection with the opening of new businesses. We also advise
on the importation of cars, furniture and pets into Turkey, obtaining payment of your
pension in Turkey, Healthcare issues, planning your tax affairs, National Insurance and
other related matters. Please ask for details.
After I have settled in, what taxes do I have to pay ?
If you spend less than 184 days a year in Turkey then you are, generally
speaking, classed as a " non-resident " .
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You will have to pay local property taxes. These are very low.
Perhaps 0.01% of the price of your property per year. For a £100,000 this
is £10! |
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You will have to pay Income Tax on the income from renting out your property at,
usually 22%. Some lettings are tax exempt. Deductions can sometimes be claimed. |
| • |
Most residential sales are exempt from Capital Gains Tax. If tax if payable it is
likely to be taxed at 30%. There are some deductions to set against the gain. If the
property is held for 5 years there is no Turkish tax payable. The gain will also have
to be declared for UK tax purposes if you are UK tax resident. |
| • |
There is currently no Turkish inheritance tax for foreigners in most cases. The
inheritance of your assets in Turkey will be subject to UK inheritance tax if you are
domiciled in the UK. |
What happens if either I or my co-owner should die ?
Jointly owned property does not automatically pass to the survivor. It will be dealt with
according to any instructions which you leave in your Will
( either English or in Turkey ), or, if you do not leave a Will, under the rules relating
to intestacy.
It is generally much cheaper and simpler to deal with your affairs if you have made a
local Will. We will be pleased to help you do this.
What happens if I want to sell ?
You will be entitled to do so and will be able to export the proceeds of sale.
What do I do next ?
If you would like further advice, please telephone.
We can then have a brief discussion over the telephone and, if necessary, make an
appointment so that we can meet to look at the matter in more detail.
We are used to acting for Clients from all over the world and, generally, find that it is
not necessary to meet in order to deal with the purchase of a property in Turkey. Of course,
we are delighted to meet to discuss matters personally if that is convenient for you. |
