Buying Property in Turkey
Turkey, the land bridging Europe and Asia, extends beyond tourism to real estate investment, drawing the attention of both domestic and international buyers. Naturally, the first question for many overseas buyers is whether buying property in Turkey is risky for foreigners. Many foreign buyers do not have knowledge of housing markets, average property prices, types of property, regions, prime locations, and how the buying procedure works, leading them to have many questions.
Whether it's bustling Istanbul, the stunning coastline of the Aegean and Mediterranean, or the historical charm of cities like Izmir and Antalya, Turkey offers many options. However, like any investment decision, purchasing Turkish property comes with risks, advantages and disadvantages. This comprehensive guide will delve into the various facets to help you make an informed decision about whether investing is right for you.
The Risks of Buying Property in Turkey
NOTE: This article will discuss the risks of buying property and explain how to avoid risky investments and real estate fraud. However, in our experience, many buyers' fears are due to a lack of knowledge because Turkey is a foreign country. However, the Turkish government has implemented regulations and procedures to ensure a safe buying process so foreign buyers can become legal owners. As long as you follow these guidelines, the risk is minimal. Therefore, this article aims to give you information to feel more empowered as a house buyer in Turkey.
About Zoning Legislation and Boundaries
Thankfully, these days, thanks to relevant legislation and the issuing of approval at various stages of building, tales of zooming boundaries are few and far between. Additionally, foreigners no longer need military clearance, but a sale won't go through if any homes are within military zones. However, your lawyer will check for any existing disputes according to boundaries and military zones, and any good property agent will also have done their due diligence.
Exchange Rates, Property Values and Investment Returns
Many property agents selling to foreign investors and buyers display prices in Euros, Turkish lira, pounds and American dollars. Hence, anyone browsing through listings knows whether that property fits their budget. However, regarding the actual sale, all transactions must be carried out in Turkish lira. But maybe you will sell and convert the money back into your home currency in years to come. In that case, the exchange rate will affect your average house price and overall return on investment.
Lack of Regional Knowledge and Popular Locations
One big mistake that foreign buyers make is assuming Turkey's real estate market is the same from region to region. It isn't. Some places are considered better investment hotspots, some are known for budget property, and some consist of luxury homes. The demographics of where people buy are also significant.
Foreign investors tend to head to the big city of Istanbul, whereas foreign buyers, either holiday homes or those looking to retire in Turkey, like the coastal regions of the Mediterranean and Aegean coasts. Some coastal areas, like the Bodrum peninsula, carry higher price tags. In contrast, others like Fethiye are known for being budget-friendly. Regional research is essential, especially in gauging average house prices.
Construction and Pool Licenses
Turkey has taken many steps to ensure buildings are safe for people to live in. Any construction company first has to submit an application to build. Their construction projects are reviewed at various stages to ensure they adhere to building regulations. Any good agent or lawyer will check that construction projects are carried out according to this law; however, if you buy property older than 20 years old, this is especially important since building regulations are constantly being updated. Additionally, whether you buy in an apartment complex with a pool or a private villa with a pool, check that there is a licence for the pool.
Red Tape and Bureaucracy
Even though the buying process is quick to complete, there is still a lot of red tape and bureaucracy to handle at district offices, much the same as any other country. From the tax office, land registry office, notary office and more. You also have to open a bank account. Any good agent will handle this and explain what is happening so you are entirely in the know. It may seem daunting, but with the help of an estate agent, it can be completed in the next few days.
Cultural and Language Differences
Foreign investors may encounter cultural nuances and language barriers when conducting business in Turkey, which can complicate negotiations, transactions, and property management activities. Building relationships with reputable real estate professionals who speak your language can help bridge these gaps and facilitate smoother transactions.
Compulsory Earthquake Insurance
Turkey has had earthquakes that have caused significant damage to major cities. However, these are few and far between. Still, to ensure the safety of citizens, the government has put earthquake regulations in place and constantly updates them according to topography changes and shifts. They also use the latest technology to ensure earthquake-resistant buildings. Part of the earthquake regulations is compulsory DASK insurance, purchased annually by the homeowner.
Turkish Condominium Law and Residential Complexes
If foreign citizens want to purchase a home in a complex with more than eight apartments or villas, the complex must adhere to the Turkish condominium law governing maintenance costs. This law regulates the use, management and maintenance of all communal areas and facilities like swimming pools and hallways electricity.
This legal requirement states there must be a management committee. Any potential buyers looking at this avenue should ask to speak to the baskan (manager) and also the accountant to check if owners are paying their dues and how the money is managed. A mismanaged complex often leads to many arguments between neighbours.
The Property Buying Process
When researching the purchase process in Turkish housing markets, foreigners understandably feel daunted since the process is entirely different from that of their home country. However, the good news is that a property purchase can be completed in as little as three days if all finances and paperwork are in place. Previously, foreigners had to wait ages for ownership transfer, but this no longer applies. Professional property consultants who are good at communication will explain the foreign ownership process at every step.
Property Ownership Document
For every property sale, there is a Tapu, which is basically the title deed. There are various forms depending on the range of properties, but because they are in Turkish, foreigners aren't sure what to look for or what each section means. You can find translations of Tapu examples online. Still, good estate agents will also explain each section and its implications and meaning.
Financial Transactions
These days, all financial transactions must be carried out according to the law. The first step is to open a Turkish bank account and use designated Turkish banks to exchange the currency into Turkish lira. You will then send the money from this account to the seller. This ensures a paper trail. Never hand over actual cash. All good property agents will assist with helping to open a bank account. These days, property valuation reports are also required to ensure you pay the market rate.
Minimising the Risks of Buying in Turkey
Conduct Comprehensive Research: Before buying immovable property, thoroughly research the real estate landscape, including local housing trends, land registry procedures, property prices, rental yields, and legal regulations.
Engage Local Experts: Seek guidance from local agents, lawyers, and property management companies on relevant legislation. These professionals provide insights into market conditions, legal requirements, and cultural nuances, helping you navigate the complexities and avoid common pitfalls.
Home Viewings: Visit in person to assess its condition, location, and surrounding neighbourhood. Viewing firsthand allows you to identify any potential issues or discrepancies that may not be apparent from photos or descriptions. If you buy off-plan property, check that it is government-assured.
Verify Legal Ownership and Title Deeds: Ensure clear legal ownership and valid title deeds, free from encumbrances or disputes. Work with qualified lawyers or legal advisors to conduct due diligence on the ownership history, zoning regulations, and existing liens or claims. Verifying the legality of the transaction is essential for avoiding legal complications down the line.
Understand Tax Implications: Familiarise yourself with the tax laws and regulations governing property ownership and rental income in the target country. Consult with tax experts or accountants to understand your tax obligations as a foreign property owner, including income taxes, property taxes, and capital gains taxes.
Consider Currency Risk: When investing in property abroad, consider currency fluctuations and exchange rate risks, especially if you're financing the purchase with foreign currency or expecting rental income in a different currency. Implement hedging strategies or consider using financial products like forward contracts or currency options to mitigate exposure to currency volatility.
Plan for Contingencies: Anticipate potential challenges and have contingency plans to mitigate risks and protect your investment. Consider factors like property maintenance costs and unexpected expenses. Stay informed about changes in the local market, regulatory environment, and economic conditions. Monitor key indicators and trends, like property prices, rental demand, and government policies, and adjust your strategy accordingly.
Should You Use a Lawyer for Legal Advice?
Turkey doesn't require the use of a lawyer when buying property, and many Turkish citizens don't use one. However, many foreigners do seek professional advice simply for peace of mind. Every investment opportunity has aspects to consider, and lawyers and credible real estate agents should help you make balanced decisions.
Weighing up the Risks with the Advantages
Strategic Location with Good Flight Access: At the crossroads of Europe and Asia, Turkey enjoys a strategic geographical position, making it a hub for trade, commerce, and tourism. This unique location offers cultural richness and lucrative investment opportunities, especially in real estate.
Excellent Property Prices: Compared to many European countries, property prices in Turkey remain relatively affordable, allowing investors to acquire prime real estate at a fraction of the cost. Whether you're interested in urban apartments, seaside villas, or rural retreats, Turkey's property market caters to diverse budgets and preferences.
Lifestyle Benefits: Beyond financial gains, owners enjoy access to picturesque landscapes, cultural immersion, and vibrant social scenes. Whether enjoying a leisurely stroll along the Bosphorus or savouring culinary delights in quaint coastal towns, Turkey offers fulfilling lifestyles that complement property ownership.
Infrastructure Development: Turkey has invested significantly in infrastructure development, including transportation networks, healthcare facilities, and educational institutions. These advancements enhance the overall quality of life and contribute to the attractiveness of real estate investments in urban and rural areas.
Cost of Living: For many property owners who are retirees, especially those from European countries, living costs, alongside affordable real estate prices, are a significant factor. Also, housing costs are low, especially since there is no TV licence and the council tax is a fraction of the like in other countries.
Choice of Locations: Alongside the sandy beaches and beautiful landscapes, foreigners have many choices of location. Whether you want to buy investment property in major cities or homes for sale in rural areas, the abundant market means you will find your ideal property.
Most Popular Places for Foreigners
Vibrant Istanbul: Istanbul is Turkey's largest city, and foreign investors head there. Of all the Turkish cities, Istanbul is the most expensive per square meter. Still, investors are heading to the outskirts instead of the city centre for residential and commercial properties. On the outskirts are many new developments with off-plan properties selling with 0% interest-free payment plans.
Antalya Region: Alongside the city centre, foreign property buyers like the coastal resorts of Kas, Kalkan, Belek, Kemer, golfing Belek, the historical side, and bustling Alanya. The Antalya region is also the favourite hotspot for holiday homes, thanks to Turkey's reputation as the best beach destination. The area also attracts Russians, Germans, and British retirees who live there all year round. This region is a winner, from the ideal climate to the historic sites.
Fethiye Region: Many people flock to the Fethiye region for affordable apartments in the city centre or large villas in the Hisaronu and Ovacik districts. Calis Beach is another area well famed for real estate investments thanks to the seaside location and tourism industry. There are mixed residential properties, and those are ideal for holiday homes.
Bodrum Peninsula: In Bodrum, residential properties have hefty price tags, especially in places like Yalikavak. However, the region has long been associated as a hang-out destination for the rich and famous, and it is heavily featured in Turkey's yachting and sailing scenes. Architects design luxury properties to feature the best in modern living.
What is the Turkish Citizenship by Investment Program?
The Turkish government introduced the Turkish citizenship program to boost the Turkish economy's real estate sector. The process involves a foreign national buying a property worth $400,000 and pledging to keep it for at least three years. In return for this foreign investment, they and their families will receive lifetime citizenship that enables them to live, work and study in Turkey without needing a residence permit, and they can keep dual citizenship.
Many international real estate investors have taken advantage of the program by buying homes in the strategic location of Istanbul, where many government-approved properties are available for the scheme. The citizenship application process has also sparked increased interest among high-net-worth individuals seeking to diversify their citizenship portfolio while enjoying the benefits of Turkish residency.
How to Start the Buying Process?
Research and Preparation: Before diving into the Turkish housing market, clarify your objectives. Are you looking for a holiday home, a rental property, or a long-term investment for capital appreciation? Turkey offers many locations, from bustling cities like Istanbul and Ankara to tranquil coastal towns along the Aegean and Mediterranean coasts. Consider proximity to amenities, accessibility, and climate when selecting where to buy.
Finances and Budget: Determine your budget, considering not only the purchase price but also additional costs like taxes, legal fees, and maintenance expenses. Clearly understand your financial resources and limitations. If you require financing, explore your options for mortgage loans from local or international banks. Be prepared to provide documentation like proof of income, credit history, and collateral to qualify for a loan. Alternatively, consider alternative financing options or leveraging existing assets.
Start Your Property Search: We have a wide range of properties for sale across Turkey. Whether you want to make minimum investments or buy a luxury apartment, we can help. From the cheapest apartments for sale in Turkey to millionaire mansions, our portfolio is all-encompassing. Each listing contains the sale price, location, home features, and photos. If any property stands out, use the contact details to find out more via email or to arrange viewings. (Browse listings in Turkey.)
Obtain Legal Assistance: Use a qualified lawyer or legal advisor specialising in Turkish real estate law to review the sales contract and oversee the transaction process. Your lawyer can help ensure that all legal requirements are met, title deeds are clear, and the transaction proceeds smoothly from start to finish.
Complete the Purchase: As your real estate agent, we will walk you through the process of obtaining tax numbers, opening bank accounts, making an offer, and arranging payment. If you cannot take ownership in Turkey, appoint a power of attorney. We will facilitate any necessary paperwork or administrative procedures.
Transfer Utilities and Services: After taking ownership, we will arrange to transfer utilities and services like water, electricity, gas, and internet into your name. Familiarise yourself with local service providers and procedures for setting up or transferring accounts.
Stay Informed and Engaged: Stay informed about Turkish real estate market developments, economic trends, and regulatory changes. Engage with local communities, networking groups, and industry associations to stay connected and gain insights into market dynamics and opportunities.
More About Buying Property in Turkey
Ask Us Questions: If you have any more questions about whether buying property in Turkey is risky for foreigners, call or drop into one of our regional offices in Turkey. Our head office in London is also open, and we are available on WhatsApp to answer all your questions. As real estate experts in Turkey, we've helped thousands of foreign buyers to make profitable investments. Also, follow us online to stay updated on immovable property updates in Turkey.
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