Mortgage Rates Information

Investor interest in the Turkish real estate market has been steadily on the increase, despite the downturn affecting various other world property markets. Not only is the investment market progressively growing, lifestyle purchases are gaining appeal from many European buyers.

Buying a property for either investment or lifestyle follows a very straight forward process, where additional incentives have been imposed by the Turkish government to further attract buyers. These incentives include the temporary lowering of title deed fees, along with the absence of capital gains taxes on properties re-sold after a specific time period.

Interest in Turkey’s sought after emerging real estate market has developed significantly with various benefits including pre-EU property prices, strong capital growth, economic stability and ideal buy-to-let market opportunities.

The payment of a holding deposit will be required once the property to be purchased has been selected. The holding deposit may vary between developers or agents, yet usually amounts to approximately €3,000 or £2,000. The holding deposit will remove the property from sales listings while the legal paperwork and due diligence is carried out.

Variations in payment schedules will occur between re-sale and off-plan properties, as often re-sale properties will require the buyer to move directly into the completion phase once the legal due diligence has been carried out. Once the due diligence has returned a satisfactory result for moving ahead with the sale, a reservation deposit will be paid. The reservation deposit will also vary between developments and can range between approximately 10% and 40% of the purchase price. Part of the legal fees may also be required at the reservation deposit phase.

The buyer’s representing solicitor will arrange the necessary military clearance that is required by all foreign purchasers in Turkey. Military clearance is simply required to ensure that the property to be purchased is not located within specific restricted zones, such as military land and other land protected for historical, cultural, or ecological reasons.

Once the military clearance has been obtained, the property title deeds will be ready for the official change of ownership in the local notary office. Upon completion of construction, the final payments for the property purchase will be arranged in the local notary office. This is the moment when the remaining payments for the property purchase are due, along with the remaining legal fees and the required associated purchasing costs.

Associated purchasing costs in Turkey are quite reasonable, amounting to approximately 5% of the property purchase price. The costs relating to the issuing of the title deeds have been reduced from 1.5% to 1% in an effort to assist the housing market during the economic downturn. Other required fees include Stamp Duty at 0.75% and the Notary Registration fees which are between 0.1% and 1% of the purchase price.

Legal fees will vary between firms and will be based on a percentage of the purchase price, often between 1% and 2%. Value Added Tax (VAT) will also be charged on properties with a surface area greater than 150m2, and is charged at 1% of the purchase price.

Other taxes that will be charged on property ownership in Turkey include residential real estate tax and rental income tax, with deductions available to assist with increasing the rental market. Capital gains tax is charged at 20% upon selling the property, although this tax is abolished if the property is owned for a minimum of 5 years prior to selling. This has been an excellent incentive by the Turkish government to discourage speculative buying leading to excessive, fast and unsustainable market growth.

Most nationalities are freely able to purchase property in Turkey, yet some nationalities will require a letter of intent to purchase, to be submitted from a legal representative. When unsure, checking with a local Turkish embassy or consulate will prove accurate and up to date information on various nationalities.

The mortgage market in Turkey is constantly undergoing reforms, bringing improved availability and interest rates to the public. Non-resident buyers are now able to obtain a loan from within Turkey to purchase property from both the re-sale and off-plan markets. Mortgages can be arranged with either fixed or variable interest rates, with many providers offering up to 85% of the property valuation price.

The growth and development of the Turkish real estate market amongst foreign investors has been largely attributed to the excellent realistic opportunities the market represents for pure investment, buy-to-let and lifestyle purchases. All of the factors relating to an ideal investment opportunity are present in the Turkish property market, ensuring stable growth opportunities for the long term outlook of the market.