Buying Property in Turkey

Turkish Conveyancing Procedure
As in most foreign countries, the conveyancing procedure in Turkey is complex and should be undertaken only with legal representation at all stages, thus ensuring the buyer's interests are upheld and all contracts and transactions are legal and binding within the Turkish Legal system.

Foreigners may purchase freehold land and property in Turkey, in their own names, provided that:

1. Their Country has reciprocal agreements regarding property purchase with Turkey. (The United Kingdom and Turkey have these agreements in place).
2. Military investigations are finalised and a clean record is received for the buyer, who should not have any criminal record or have a background of working in intelligence, or record for spying etc).
3. The land or property is outside Military or Restriced Zones.

When a buyer has decided to purchase land or property within Turkey it is strongly advised that they appoint a Solicitor and Power of Attorney (POA) to act on their behalf. Under normal circumstances the buyer's Solicitor will act as POA.

Once appointed by an Authorised Notary, the POA will then be legally entitled to act on the buyer's behalf. If required the POA can be empowered with access to Bank transactions or anything deemed necessary, by the client, to act on the their behalf.

The POA can undertake the following:
1.Perform search at the Title Deed Registry Office. Confirmation the deeds are clear of debts
2.Confirmation the deeds are free of litigation
3.Confirmation of the owner of the deeds
4.Confirmation there are no discrepancies over the title deeds
5.Qualify all outstanding debts to be settled at the Tax Office
6.Apply for Military approval
7.Preparation of Sales Contract in Turkish and English
8.Preparation of Land and/or Building Contracts
9.Perform registration of the Title Deed (TAPU)
Note: For each new conveyancing transaction, the purchaser must seek Military clearance against the property and also against the buyer's own name.

Costs
The disbursements which the buyer may be required to pay, in addition to legal fees, are as follows :

Solicitor fees: £500-£1200
Military Clearance fee: £750-£1500
Legal Translator fee: £40 per document
Notary Stamp fee: £40 per document
Water and Electric connection: 250TL-400TL
Stamp fee on transfer tax: £100
3,30% Purchase Tax payable at the Title Deed Registry Office on transfer of Title Deeds (TAPU).

The Buying Process
1. A non-refundable, negeotiable, reservation fee can be paid by the buyer to take the property out of the market for up to 20 days.
2. A Private Purchase Contract is drawn up between the buyer and owner/builder. The Contract should contain all details and conditions related to the purchase and Terms and Conditions of payment, together with buyer's and seller's responsibilities The buyer will be required to pay a deposit in an agreed time to activate the contract.
(Note: The section in this document under the heading "Contracts" gives details of clauses which should be considered for inclusion).
3. Once the Contract is signed by all parties and activated the property is considered as sold. This protects the buyer from the owner, as the owner, after signing the Contract, cannot re-negotiate the price or sell to another bidder. The owner is also protected as the buyer has agreed to the methods of payment, and will forfeit any monies already paid if the Contract is not adhered to.
4. After the Contract is signed and the deposit paid, the process of applying for Military clearance can begin. This usually takes 3 - 4 months and the TAPU cannot be transferred to a foreign purchaser before clearance is received.

Registration of property
After Military clearance has been received and all outstanding monies paid the propertycan be registered in the buyer's name.

How to do this
1. Register with the Tax Office to receive a Turkish Tax Number
2. Have the transfer of Title (TAPU) registered in the Title Deed Registry Office
3. Register as the new owner with the Municipality, prepare and submit a Real Estate Tax Statement
4. Register utilities, Electric, Water, Telephone in the buyer's name. Other incurred costs
5. A 1.65% tax (Stamp Duty) to be paid by both the buyer and the seller during the transaction
6. Agent's commission
7. 0.3% donation to Education Funds etc.
8. Annual property Tax paid to the local Government, at the rate of 0.3% of the declared value of the property. Revaluation is conducted by the local Government every 5 years
9. Environmental Cleanliness Tax calculated on the square meterage of the property

Note: New properties are exempt from Annual property Tax for 5 years.

Capital Gains
Capital gains made from the sale of a property are taxable. However, individuals do not have to pay Capital Gains Tax provided they have owned said property for more than 5 years.

Should the property be sold within this time period the rates for Capital Gains Tax are detailed below:

If the profit is equal or less than 6,000 TL there is no tax, however above this ceiling the following percentages apply:

Between 6,000 TL 7,000 TL 15% of income is due
Between 7,000 TL 18,000 TL 25% of income is due
Between 18,000 TL 40,000 TL 27% of income is due
Above 40,000 TL 35% of income is due

Taxes due on Rental Income
If the rental income is less than 2,200 TL per annum no tax is due, above that income the following percentages apply:
Between 2,200 TL 7,000 TL 15% of the income is due
Between 7,000 TL 18,000 TL 25% of the income is due
Between 18,000 TL 40,000 TL 27% of the income is due
Above 40,000 TL 35% of the income is due

Other considerations
It is strongly recommended that for all payments during the buying process and for future expenses you open a Turkish Bank Account.
Property may be sold to Turkish or foreign nationals without any restrictions and funds transferred to the country, currency and Bank of choice

Contracts
Although not exhaustive the following clauses should be considered for inclusion when drawing up a Contract between the buyer, seller, agent and professional representation:

1. A detailed description of the property including address, TAPU details, technical conditions etc.
2. The actual price to be paid to the seller for the property. Please note that when the contract includes any "price" clause, then both the buyer and seller are liable to pay Stamp Duty of 0.75% of the value stated. However, mentioning the actual price allows you to secure your rights in case of a future legal dispute.
3. The details of the Bank Account of the seller, it should be a single account into which payments to the seller are to be made.
4. The details of the Bank Account of the professionals used, again a single account should be used for all payments to professionals.
5. The Payment Terms and Conditions, payments to the seller - including deposit, interim, final payments and payments to an Agent or Solicitor ought to be separately identified.
6. A statement emphasizing that the seller and the buyer will pay their own tax liabilities. Some sellers may try to force the buyer to pay all taxes including theirs with regard to the sale of the property. This is illegal.
7. The fees and commissions to be paid to the Solicitor or Agent, this will secure the buyer in the knowledge that they will not be involved in tax evasion caused by any professionals involved in the transaction.
8. Under what conditions and how any monies paid by the buyer to the seller will be refunded.
9. Force majeure conditions, for example:- what if a legal obstacle occurs in the future.
10. How current tenants, if, any, will be treated.
11. How over-due debts, if any, of the current owner, which are property related, will be addressed.
12. How existing fixtures and fittings, if any, will be handled.
13. Whether parties can give up the sale/purchase, and if so, under what conditions and what, if any, penalties will be incurred.
14. How to keep all parties regularly informed of on-going transactions.
15. How a Power of Attorney, if any, will be cancelled or amended, how other parties will be kept informed of this.
16. Detailed permanent contact information of all signature holders, to include official identification of all parties.
17. If one of the parties breaches the promises contained in the Contract, who will decide under what conditions a breach was realized.
18. How disputes will be sorted out.
19. The rights and responsibilities of the persons whose signatures appear on the Contract.
20. All Identity Numbers of Turkish nationals (TC Kimlik Number) who are to sign the Contract, the Bar Registry Number of the Solicitor being used and the Trade Registry Number of the Real Estate Company must be recorded.
21. Before signing the Contract it is necessary to have it translated into English and Turkish in the presence of a Sworn Translator.
22. It is essential that both English and Turkish versions of the contract are signed in the presence of The Notary Public and are then duly notarized to ensure that:

a. The people who are signing the Contract and their signature's are genuine
b. The Contract is in line with current Turkish laws and officially acceptable anywhere in Turkey.
c. The terms within the contract are binding for all parties. Residency It is currently, under Turkish Legislation, not necessary to apply for Turkish Residency to purchase property or land within Turkey.

A Tourist Visa will be issued on entry to Turkey, at a cost of £10, this is valid for 90 days. If, however, a person or persons wish to reside within the country for more than 90 days, it is necessary either to:
a. Leave the country and re-enter, in one day, by traveling to the Greek Islands of Kos or Samos by ferry, or returning to country of origin.
b. Alternatively an application can be made to the Turkish Foreigner Control to issue a Residents's Permit. A Resident's Permit can be obtained from 6 months up to 5 years.

Low-cost airlines such as Easyjet and Pegasus are operating over 20 weekly flights to Turkey for 2010

How to get to Turkey
Flight options to Turkey are excellent with scheduled, charter and a growing number of low-cost flights to Istanbul and the coastal airports of Bodrum, Dalaman and Antalya.

New Low-Cost Flights
For 2010 Easyjet are introducing 5 new routes to Turkey to add to their existing Gatwick-Dalaman and Luton-Istanbul services. The new Easyjet flights are:
•    Bristol-Dalaman
•    Bristol-Bodrum
•    Stansted-Dalaman
•    Stansted-Bodrum

Low-cost Turkish airline Pegasus has new direct flights from London to Bodrum and Dalaman; Manchester to Antalya and Dalaman, and Birmingham to Antalya and Bodrum.
Jet2.com has announced low cost seat-only flights to Dalaman from the airline’s new base at East Midlands Airport and Thomas Cook has added weekly flights from Exeter to Dalaman to its exiting services.

Charters & Package Flights
In summer, MyTravel, First Choice, Thomas Cook and Thomson have direct charter flights to Bodrum, Dalaman and Antalya from regional airports in the UK. Thomas Cook and Aegean Airlines have several weekly flights to Dalaman year-round.

Scheduled Flights
Turkish Airlines and British Airways have daily flights to Istanbul’s Ataturk airport, with onward connections with Turkish Airlines or other domestic carriers to the coastal airports of Izmir, Bodrum, Dalaman and Antalya. British Airways also have several flights a week from Gatwick to Izmir. Cyprus Turkish Airlines operate direct flights to Antalya, Dalaman and Izmir from Gatwick, Heathrow, Glasgow, Stansted and Belfast.
Turkish Domestic Flights
Half a dozen companies, including Atlas, Pegasus, Onurair and Sun Express, offer cheap fares on domestic routes between the main Turkish resorts and cities. Book online through the company websites.

Which Turkish Airport?
•    Izmir airport serves Cesme, Kusadasi and the north Aegean coast.
•    Bodrum airport serves Altinkum and the Bodrum peninsular.
•    Dalaman is the best for Marmaris, Dalyan, Gocek, Fethiye and Kalkan.
•    Antalya airport is the closest to Kas, Kemer, Belek, Side and Alanya.

Turkey set to rank within the world's top ten tourist destinations for 2008 with 25 million visitors.

Visas & Residence Permits
Tourist visas are issued on arrival in Turkey or for longer stays you can apply for residency.

Tourist Visas
If you’re visiting Turkey for short periods then you only need a tourist visa, which is issued on arrival for £10 and is valid for three months. Many people who want to stay longer simply leave and re-enter the country on a new tourist visa – the easiest way is a day-trip to one of the Greek islands. It is possible to leave and re-enter the country in this way as many times as you wish.

Residence Permits
If you plan to stay for longer you can apply for a residence permit at the local police headquarters, which usually takes 3-8 weeks. If you don’t own a property or work in Turkey you can get a “tourist” Residence Permit, which is valid for 6-12 months and costs about £135 for 6 months, plus about £30 for the permit book. You must prove you have savings of at least US$1,800. If you own a property, work or have been living in the country for more than 5 years you can apply for a full permit, which is valid for up to 5 years.

This currently costs about £200 for 1 year or £960 for 5 years, plus £30 for the permit book. Fees vary for other nationalities and may be subject to change.
A residence permit entitles you to live in the country but not work. To import furniture you need a residence permit to avoid paying import duty.

Turkey attracted 23 million tourists in 2007, up 18% on the previous year

Renting your Turkish property
Rental income can easily cover maintenance costs but don't rely on it to finance your property.

Holiday rentals
The Turkish holiday rental market has huge potential with over a million British holidaymakers visiting Turkey each year. The start of low-cost flights into the resorts, with Easyjet announcing a Gatwick-Dalaman flight for 2008, will also promote things. However, at present the rental market is less developed than in countries like France or Spain. Recent building has created a large pool of rental accommodation, with an over-supply in some of the resorts. This doesn’t mean it isn’t possible to earn a good income from rental - easily enough to cover the costs of maintenance and bills. But it makes it very important to choose the right kind of property in a good location, if rental is a primary concern. In resorts such as Alanya, Altinkum and Kusadasi, which are popular with families, apartments on complexes are the easiest to rent. While in Kalkan and Kas villas with pools offer the best rental returns. A resort like Cesme, which is popular with Turkish holidaymakers, is a good bet.

The rental season in the coastal resorts is May-October, with July and August the busiest months. Although rental earnings can cover the cost of maintenance and bills, it is very unwise to rely on it to finance a property.

Rental management & marketing
Many developers provide management services, including cleaning, maintenance and welcome baskets, for a set annual fee or a commission of 15-20% of the rental income. Good management is essential, particularly if you are not around yourself. Marketing your property is also important. Some specialist travel companies offer contracts for suitable properties in areas like Kalkan and Bodrum. But most owners choose to advertising in the local press or on the internet, while others rely on friends and family to spread the word.

Guaranteed rental schemes
Rental guarantees may be offered by some estate agents and developers in Turkey. Simply put, these guarantees are a commitment to return a percentage of the purchase cost of a property to the buyer each year for a fixed term. Ostensibly, the developer recoups this money by renting out the property. This sounds an attractive proposition, but rental guarantees should be examined closely.

Firstly, unscrupulous companies may simply be inflating the sale price of the property in order to cover the rental. Buyers should shop around carefully to see the cost of comparable properties in the same area. Find out whether the developer has an agreement in place with a travel company or lettings agent. If not, then how do they plan to find tenants and ultimately pay the guarantee. Examine the fine print of your contract to see who is actually guaranteeing you the money.

'Rental guarantees are marketed with alarming regularity,” says Paul Owen, CEO of the Association of International Property Professionals. “The simple rule is: if it is not in the contract, it's not guaranteed. Potential rental incomes are often reclassified by salesmen as 'guaranteed', though this is never in writing. Check the contract and recognise that no mention means no guarantee. Even rental guarantees in the contract should be scrutinised by an expert. Make sure you hire a lawyer to check them before you sign anything.”