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Purchasing Property in Turkey
As in every country, there are some rules and restrictions regulating and sometimes prohibiting foreigners to acquire property. And, there are important procedures that must be followed.
In order to ensure your buying experience is as professional and efficient as possible, Pino Design and Build can provide lawyers who specialize in foreign property transactions. As well as dealing with all aspects of property transactions, they also deal with inheritance and taxation throughout Europe, specializing in Turkey and Spain.
Dealing with the legal side of a property transaction includes:
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investigation of the titles
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all searches
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payment of taxes
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attendances on completion
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registration
Client’s money is kept in a Client Account and to comply with Law Society regulations, adequate indemnity cover is maintained in the event any errors are made to avoid further client expense. Pino Design and Build work closely with all Financial Institutions and can help you to find the right mortgage and help you to get the right deal.
Pino Design and Build also guarantee that your money is backed by our sister company in the UK, which has a book value of over £10 million. Keeping your money safe.
Rules and Restrictions Applicable to British Purchasers
When purchasing property in Turkey, the following points need to be checked before entering into a binding contract:
* whether there is reciprocity with the UK and Turkey.
* whether the property to be bought is within a military forbidden zone and/or a security zone.
* whether the property to be bought exceeds 30 hectares
* whether the purchase is being made by an individual or a limited company.
Will Writing
As the owner of property in turkey, it is advisable to make a Turkish Will. Pino Design and Build International staff will be pleased to advise you on this matter.
Letting your Property
Due to the fabulous climate in Turkey, it is possible to let your property for 52 weeks of the year. Rental income depends upon the size and location of your property. Pino Design & Build International will be available to advise you on the rental market and income you can expect. We offer 2 free golf membership for Greenbay Golf & Estate ,to all our customers to help them to rent the properties winter seasons to Golf Holiday makers.
Procedure for Acquiring Property in Turkey
When you have found a property and agreed a price with the Vendor, before you pay a deposit and sign any documentation you need to consult a lawyer. Legislation related to the sale and purchase of property is very strict in Turkey and no transaction will result in the transfer of ownership of any property unless all the procedural requirements are fulfilled. Short cuts or any over simplification are not recommended.
A sale and purchase transaction must be prepared by the Land Registrar and must be completed at the Land Registry. Transfer of the property may only be completed once it is inserted at the relevant page of the Land Title Log.
The following offers explanations regarding the various types of agreements which might be in question:
1. Contract signed with an Estate Agency.
Contracts signed with the Vendor’s Estate Agent to reserve a property do not bind the Vendor to sell the property. If the Vendor does not agree to sell the property despite such a contract, the Purchaser has no right to enforce the transfer of ownership. The Purchaser may only claim damages that he has incurred due to non transfer. However, in a case where the contract is signed with the Estate Agent and a deposit is paid, the Purchaser may not have the deposit refunded if he changes his mind.
2. Undertaking to Sell.
To reserve a property, the best method is to get an ‘undertaking to sell’ from the Vendor. However, this is an expensive way of reserving a property. This undertaking must be prepared by a Notary Public and must be signed by the Parties or their authorized Attorneys before the Notary Public. This contract will be in Turkish and would include the details of the Vendor and the Purchaser. It would give a description of the property, the price and any clauses and conditions. A penalty clause may be added to the contract against the risk of any of the parties waiving the contract.
The Notary Public charges due for this service is 1.3% over the purchasing price, In order to protect the rights of the Purchaser, it is necessary to register the undertaking with the Land Registry and make it public. The undertaking to sell should be registered with the Land Registry in order for it to be valid against the third persons. If not, the Vendor may sell the property to a third person and the Purchaser who has an undertaking, may not claim that third party to resell the property to him. The registration fee, due to the Land Registry is 0.54% of the purchasing price.
This registration is effective for 5 years. At the end of this period, the Vendor may request the cancellation of the registration if the property has not been sold to the Purchaser. If the Vendor does not fulfill this undertaking, the Purchaser may apply to the Court for the sale to be completed.
Proper Sale and Purchasing Agreement
The Vendor and Purchaser, or their appointed Attorneys must appear before the relevant Land Registry or Limited Company Share Transfer in order to sign and complete the sale and purchase transaction. An ordinary contract, which has not been signed before the Land Registrar, has no legal meaning. Purchasers usually provide a Power of Attorney to a Turkish Lawyer.
Because the Title Deed may not prove the identity of the last owner of the property, and because the title records will be in Turkish, a Turkish Lawyer needs to check the title records of the property before the completion to confirm that the Vendor is the last owner, and to ensure that the property is free of any charges or encumbrances. In case of a Limited Company share transfer, it is more straight forward – just transferring the share certificate in the presence of Notary Public.
Before appearing in front of the Land Registrar and preparation of the required sale documents begins:
The Vendor needs to apply to the Land Registry and declare his intention to sell his property to the Purchaser
The Vendor and the Purchaser must submit their identity cards or their passports, duly translated into Turkish and certified by the Notary Public, together with 2 passport size photographs.
If the Vendor or Purchaser is a legal entity
A circular signature showing that the person representing the legal entity is authorized to purchase or sell a property on behalf of the legal entity is required
The ‘operation certificate’ of the legal entity needs to be obtained from the relevant Trade Registry wherein it is registered and should be submitted
If the Vendor or Purchaser is represented by an Attorney
A Power of Attorney signed before a Notary Public and certified by an Apostle in the country of the relevant party with a certified Turkish translation, should be submitted to the Land Registry. A photograph of the Principal who issued the Power of Attorney, should be affixed to the Power of Attorney
The wording of the Power of Attorney is extremely crucial from the point of view that the Attorney would be able to start and complete the transaction before the Land Registry on behalf of his principal. Pino Design and Build will prepare the relevant and appropriate Power of Attorney for each Purchaser.
The Purchaser or his Attorney has to apply to the Land Registry together with the translated and notarized copies of his passport and map, (in 1/1000 or 1/25000 scales) of the property, subject to the purchase obtained from the relevant office.
In accordance with the previously mentioned legal restrictions created for foreign purchasers, the Land Registry sends a letter to the Army Headquarters who investigate whether the property to be purchased is located within a Military Forbidden Zone and/or the Security Zone. Confirmation is usually received from the Army in 2 months. Upon receipt of a confirmation letter from the Army Headquarters, by the Land Registry, the Vendor or his Attorney applies to the Land Registry to complete the sale-purchase transaction
The sale and purchase agreement – official sale agreement, which is exchanged before the Land Registrar or Notary Public depending the sale is either title transfer or share transfer would include:
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description of the property
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name(s) of the owner(s) and number of shares
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name(s) of the purchaser(s)
The price agreed by the vendor and the purchaser (this should not be lower than the value of the property declared to the Land Registry otherwise; both parties are jointly liable to pay the difference plus a fine.)
The sale and purchase declarations
A sworn translator and two witnesses are required for the completion of the sale when either the Vendor or the Purchaser is a foreign individual and not represented by an Attorney. The Land Registry delivers the Title Deed (Tapu Senedi) to the Purchaser after the official deed is signed by both the Vendor and the Purchaser and registers new ownership. This completes the official procedure and this is the actual moment when ownership of the property is legally transferred.
1. Property Tax
The new owner becomes the property taxpayer in the new year succeeding the registration of the purchased property in his name with the Land Registry. The tax value is reassessed every year and varies according to the location of the property. The property tax is paid in two installments each year. The first installment is due in May and the second installment is due in November.
2. Income Tax
Anyone who owns property in Turkey and keeps the ownership of the property for more than 4 years is exempt from paying income tax on the revenue obtained from the sale of the property. This exception is valid until 31 December 2008, but could be renewed.
3. Corporate Tax
Companies who sold their property and added any revenue to their capital within the same year were exempt from corporate tax. This exception was valid from 1 January 1999 to 31 December 2004. This exemption may have been renewed. If this exception has not been renewed, companies are obliged to pay the following:
33% of the difference between the purchase price and the selling price
18% of the value of the property in VAT
4. Land Registry Fees
In principle, both the Vendor and the Purchaser are responsible for 50% of the payment of the Land Registry fee. However, the fee can be paid by either the Vendor or the Purchaser in accordance with the agreement made between the two parties. The fee due to the Land Registry is 3% of the purchase price of the property.
Other Charges
In order to manage your budget, it is advisable to set aside a sum of money equivalent to between 10% and 12% of the purchase price of your property.
example1
| Property purchase | £69,000 |
| Water connection | £150 |
| Electricity connection | £150 |
| Turkish transfer tax | £4,830 |
| (7% on new properties and re-sale homes on completion) | |
| Notary fee | £897 |
| (1.3% for registering Title Deeds at Land registry) | |
| Pino Design and Build | £275 |
| Total | £6,802 |
Annual Costs
The annual costs for running a house or apartment in Turkey are considerably lower than in the UK and Spain. Total costs will be approximately £500 - £800 p.a. Costs vary according to the size of the property and how much it is in use.
example2
| Estimated charge for water | £100 |
| Estimated charge for electricity | £250 |
| Local rates | £100 |
| Community fees | £240 |
| House and contents insurance | £100 |
| Total | £790 |
Fiscal Representation
It is advisable for all non-permanent residents to appoint a local Turkish Fiscal Representative who will look after your Fiscal Responsibilities in your absence. Pino Design & Build International staff will be pleased to advise you of a local Fiscal Representative.