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Buying Turkey Residential Property as an Overseas Investor

01/04/2020

Buying Turkey Residential Property as an Overseas Investor

If you are an overseas buyer, you may be considering buying Turkey residential property as an investment whilst the value of Turkish Lira is down. We are trying to explain what to decide before checking real estate market in Turkey, the title deed type, what to know before investing, what to know after investing, what are the expected ROI figures valid in the business and importance of getting professional advice for real estate in Turkey.

Set clear objectives before investing on real estate abroad

First of all, you need to know what exactly you are looking for before you decide buying property in Turkey. Are you looking for a capital gain? Buy property in Turkey and get citizenship? A holiday home? Are you planning to move to Turkey? Depends on what the investor’s requirement you can find different options in Turkey and by making the decision in first stage will save a lot time both parties between you and the company advising you to find the best possible option. If you know what exactly you are looking for, then let’s have a look at the information and the figures about real estate in Turkey.

Title Deeds are FreeHold or LeaseHold in Turkey?

As you may know, freehold title deed means: Own the property and the land it sits on and leasehold title deed means: Own the property but usually has to pay ground rent to the freehold owner. In Turkey, all of the residential and commercial title deeds are freehold. Leasehold title deeds are only exception in Turkey.

What to know before investing in real estate in Turkey?

As of most of the countries, Turkey also has its own procedures rather than generally known documentation. Here you can find the list of the payments you need to make if you decide to buy a property in Turkey:

- 4% Purchase tax (with title deed)

- 1% VAT (if the money comes oversees, no need to pay & non-resident in Turkey)

- 1200TL evaluation of the apartment (with title deed)

- 2500TL subscriptions for electricity, water, natural gas

- 1500TL delivery of the apartment fee (depends on the developer)

- 1300TL approximate circulating capital for title deed office

- 500TL Sworn translator SPK licenced

 

What to know after investing in real estate in Turkey?

After anyone bought an apartment from Turkey, they need to pay some fees to the developer or the government or to insurance companies because of the things compulsory by the government. Here you can find the list of the fees after purchasing of the property:

- Between 2TL to 20 TL per sqm/month maintenance fee depends on the project after delivery to the developer (tenant is paying, not the owner)

- Around %0.05 earthquake insurance per year to the insurance company

- Around %0.1 full insurance for the property per year to the insurance company (this is not compulsory if requested by the owner)

- Between 15% and 40% income tax depends on the income from the property to the government if the apartment is given to the tenant. Income tax percentage in Turkey is starting from 15% for year 2020 for 18.000TL income per year and when the income is increasing, then income tax the owner need to pay to the government is also increasing as well.

 

Get professional advice before making the final decision

Getting professional advice is very important not to have a headache during whole investment process starting from the very beginning till the end. There are a lot of people on the market who are scamming investors are also searching for their next victims as valid as all over the world. That’s why it would be better to work with professional real estate advisors to make right decision for investing. In Turkey, real estate advisors are not requesting any commission from the buyer if they are marketing reputable real estate developer’s projects. For second hand opportunities 2% from the buyer and 2% from the seller, realtors are eligible to get paid according to the law in Turkey.

The investors are also needed to be careful if they are aiming to get Turkish Citizenship by investing 250k USD on real estate. Since, the cost for investor paying should be as much as close in evaluation report of the property by tested evaluation company which is authorized by the government, on the title deed/title deeds and all the bank transaction reports. After that, the property/properties cannot be sold again for 3 years since the title deeds are annotated as “Under the obligation of not to be transferred or abandoned for three years in the land registration office” by the government.

That’s why it would be better to work with professional real estate advisory companies to handle all the procedure safely. If you make your all investigation and find the real estate company if you feel safe when you are talking on the phone with representative or when you meet with the representative in Turkey, then it would be better to go on with that company. Otherwise, the investor is wasting both his/her time and the realtor’s time, since marketed projects are almost the same for well-known real estate companies. Before making a decision, it would be better to investigate more and more and check the options as much as possible, the real estate company offering and make the decision before visiting Turkey about working with from which real estate company.

ROI figures about real estate market in Turkey

Capital appreciation is between 10% and 15% in Turkey, rental income from residential properties is between 3% and 5% and rental income from commercial properties is between 5% and 8% in Turkey. If you compare the prices between residential and commercial, residential properties are cheaper than commercial properties. So, according to your budget, you need to choose which platform it suits you. For Turkey, it would be better to think total ROI including capital appreciation and rental income. It is a big mistake to focus only rental income or capital appreciation for Turkish real estate market.

Is it safe to make an investment decision while the investor is not in Turkey?

As an investor, if you cannot come to Turkey and at the same time if you don’t want to lose the chance if there is an excellent investment opportunity, you can also book the apartment by checking videos or pictures regarding to the real estate project and also for specific apartment. If you are comfortable, you can deal with the developer directly with the payment plan, then when you come to Turkey, you can handle the rest of the procedure. Even some developers are OK with only booking the apartment by paying minimum 5% of whole price of the apartment and make your final decision when the investor are eligible to visit Turkey.

As PropertyTR team, we are ready to guide you in right direction to help you to find best possible option and investing in Turkey, safely. To get more details, please don’t hesitate to contact us.

If you want to watch the interview video of the subject, please click on the link

- Abdullatif Koc, Vice General Manager at PropertyTR

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