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Turkish Property Legislation
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Ownership is anchored in article 35 of the Turkish Constitution. This article stipulates that anyone is entitled to ownership and that these rights can only be restricted by other legal stipulations. The restrictions may consist, for instance, of zoning schemes, restrictions applicable to foreigners, etc.
The ownership regulations are elaborated in the Turkish Civil Code, article 633. This mainly explains how ownership is acquired. For the purchase of property by a foreign person, the registration of the land is especially important. In Turkey there are regional directorates of the Land Registry Department, which are subdivided in provincial or district offices and they are all controlled by the state.
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Who
Can Buy?
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Most foreign nationals can purchase property in Turkey providing:
There is a reciprocal agreement between the government of Turkey and that of the purchaser. Such an agreement exists between Turkey and the UK. The intended property lies within the boundaries of a municipal area, i.e. town or village with more than 2000 registered inhabitants. The intended property does not lie within the confines of a military zone. These simple regulations are important.
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In
most European countries the buyer and seller go to a public notary
to have the property put in the name of the new owner. The public notary
is responsible for the correct settlement of this procedure. The public
notary is also responsible for the delivery, which often takes place
in the form of a ‘deed of transfer’ and the entry in the property register.
In contrast to this, the entry in the property register in Turkey is not performed by a public notary but by an official of the Property Registry Department. It is legally compulsory for both sides (the seller and the buyer) to be present at the entry. It is possible to authorise another person to do so but the authorisation requires a proxy deed. As a security measure, it is also advisable to authorise the sale through an official notary.
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The
delivery of the deed of transfer does not require the intervention
of a public notary in Turkey. The only applicable stipulation concerning
the delivery is that it takes place in writing. After the entry and
delivery the property register issues a proof of ownership which is
called ‘Tapu’. The ownership is only obtained at the moment that the
building(s), if under construction, has been completed and the full
amount has been paid. |
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Mainly there are no legal restrictions against foreigners regarding the acquisition of property ownership. However, the Village Act and the Military Prohibited and Security Areas play an important role. Article 87 of the Village Act denies the right to foreigners to ownership of property that is outside the centre of a village in case the cadastral division of this area had not been arranged yet or it may belong to the Ministry of Forest. Also, the act regarding Military Prohibited and Security Areas can be an impediment and therefore restrict the acquisition of property by foreigners if the property is located within a particular distance of military sites or strategically important areas.
The major legal restrictions mentioned above may in turn change or even be (partly) cancelled by more recent legislation which is closely related to the promotion of the economic position of Turkey or the adjustment of regulations and laws to EU or tourism promotions for foreigners etc
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THE NEW LAW
ON PURCHASE OF PROPERTY BY FOREIGNERS IN TURKEY
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When was the new law enacted?
The
Law on ‘purchase of property by foreigners in Turkey’ was enacted and
published in the Official Gazette on January 7, 2006. The new law envisages
the following:
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Who can buy?
Foreign real persons (individuals) and foreign commercial companies from countries with which there exist legal and de facto reciprocities in relation to property purchase can buy residential or commercial properties in zones covered by an Implementary Development Plan (1) or a Local Development Plan (2)
However, those companies, which are legal entities, can buy property provided that they operate pursuant to the special laws such as the Tourism Encouragement Law, the Oil/Petroleum Law, the industrial Zones Law, and the FDI Law. In addition, foreign legal entities other than the above mentioned commercial companies, such as foreign charities, foreign foundations and foreign societies, etc. cannot buy property in Turkey.
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What are the size limits?
The maximum size of total lands/properties that can be purchased by a real foreign person cannot be more than 25,000 m2. The Council of Ministers is authorised to increase this threshold to 300,000 m2 per person.
The maximum size of (cumulative) lands that can be purchased by foreign real persons in a province shall be capped by the Council of Ministers and this cap cannot be more than 0.5% of the total area of the whole province.
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Forbidden Zones
Foreign nationals and foreign commercial companies are not allowed to buy property in the military, strategic and security zones of Turkey. In other words, TAPU offices are supposed to check whether a property that is being purchased by a foreign national is within one of those forbidden zones or not.
The Council of Ministers is also authorised to determine specific zones to be preserved such as lands which are strategically very important in terms of energy, agriculture, mining, history, cultural, biological flora, and national security. Thus, foreign nationals and foreign commercial companies will not be able to buy property in those specially preserved zones.
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Previously Suspended Transactions
The new law also covers the applications for Title Deeds to TAPU offices in the period between July 26, 2005 when the previous law became void and the date when the new law came into effect.
TAXES AND FEES
The
new ownership must be registered with the local authority and the tax
offices within 3 months of the title transfer. The following are the
main taxes and fees that will affect the purchase. There is no restriction
in terms of repatriation of sale proceeds or income from the property.
There are other taxes that are not part of the initial purchase but
will affect the budget afterwards. These include homeowner’s tax, income
tax charged on rental income and inheritance tax.
Transfer tax:
Once the sale is completed, there is a transfer tax at 3% in total. The tax is based on the declared value of the property. Usually declared value is far lower than the actual sales price. Depending on the agreement, either buyer or seller can pay the amount, but the practice is that both parties equally share.
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Property ownership tax: There is a small amount of annual property tax approximately 0.3% of the registered value of the property. This tax is paid in two instalments.
Income tax: There is a small amount of annual property tax approximately 0.3% of the registered value of the property. This tax is paid in two instalments.
VAT: Property sales in Turkey
are not subject to VAT.
Notary Public Fees: The
scale of the cost is fixed by law and generally ranges from UK£100 to UK£250.
Property registry fees: A very small amount is required to pay for the registration (estimated as 50% of the Notary Public fee) and compulsory earthquake insurance depending on the area. However these figures can only be known once the registered value at the land registry is known. |
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INSURANCE
Depending on the location, the owners must take obligatory earthquake insurance provided by the government. Also the purchaser can arrange private insurance for fire other natural disasters etc. A lawyer can assist in arranging insurance on the property.
FINALLY
Buying real estate in Turkey involves many regulations. Not only must formal regulations be taken into account, but foreigners must also heed the various legal exceptions to acquire real estate. The zoning schemes, the antecedents of the selling party and the legal restrictions imposed by Turkish property legislation are some important aspects that must be approached objectively, reliably and professionally.
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