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Buying a Property in Turkey

Financing property purchases

The easiest, and most cost effective, way to purchase property in Turkey is with cash. If this is not an option then seriously consider raising the finance by releasing equity in your own home, as this also saves time and hassle. UK banks do currently not lend on Turkish property, so if you can’t raise the capital in the UK by any other means then your only other option will be to get a Turkish mortgage.

However, in order to be eligible for a Turkish mortgage, you must be resident in Turkey. All Turkish mortgages are arranged on a repayment basis – there is no such thing as an interest-only loan. You will also need a 30 per cent deposit, as the maximum loan-to-value lent by Turkish banks in 70 per cent. Also be aware that the term of a local mortgage will be over 15 years, 25-year loans are unheard of, and that there is likely to be a minimum loan amount of around £20,000 – and a maximum loan of £170,000. The good news is that you will probably be able to secure a fixed-rate deal for the entire length of the loan.

Turkish property: Fees and taxes

When buying a property in Turkey, allow roughly ten per cent of the purchase price for associated costs. This breaks down into estate agents fees of around three per cent, stamp duty of 1.5 per cent and legal fees of up to five per cent. If you are buying from another individual, you may also be liable for property transfer tax at 1.5 per cent. In addition, you must budget for land registration fees, notary fees and any translation services.

When you have completed, you will also need to arrange earthquake insurance in addition to buildings and contents. There is also an annual property tax and local environmental tax. Bear in mind that if you are planning to rent your property out you will have to pay income tax on any profits.

If you are selling a Turkish property that you have owned for less than five years then you will be liable for capital gains tax. If, however, you sell it after this period then you will be exempt. Inheritance tax ranges from one to 30 per cent, depending on the size of gift left.

Visas, residency and work permits

British citizens need a visa to enter Turkey. You can buy this once you have landed for a fee of £10, and it is then valid for multiple entries for a period of up to three months. Many people who want to stay for longer than three months simply leave Turkey and then re-enter on a new visa. This is particularly easy if you live in a coastal resort such as Bodrum, as you can simply go on a day trip to one of the Greek islands.

If you are wishing to reside on a more permanent basis however, it may be worth applying for a residence permit. You can do this at the foreigners section of your local police station, and it will take anything from two to eight weeks.

If you wish to work in Turkey, your employer will have to apply for a work permit which can be a lengthy process. If you are thinking of working for yourself once out there, then you must set up a Turkish Limited Company which can only be done through a local solicitor.

New-build versus resale properties in Turkey

There is a great deal of new-build property in Turkey, from one-bedroom apartments to six-bedroom villas. However, as tends to be the nature of new-builds today, most of this will be sold off plan. It is important that you buy off a reputable developer, as estate agents are a dime a dozen in Turkey, and there are many horror stories of people buying a property that has also been sold to someone else. There are enough good firms around though, and buying off plan may enable you to secure a home at a competitive price.

If you are buying a resale property, get an independent lawyer to check out the title deeds before signing anything – or handing over a deposit. There has been much confusion over title in Turkey, so you can never be too careful. Also, make sure that the agreed price is mentioned in all official documentation, as sellers may try to list a lower selling price to avoid tax. Do not agree to this – not only are there legal ramifications, but when the time comes to sell, if you can’t find a buyer willing to do the same thing, you may be hit with a tax bill on an amount that is larger than the profit you have actually made.

More pages

Page 1: Why buy property in Turkey?
Page 2: Financing property purchases
Page 3: Property in Turkey: Investment potential

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