Turkish housing is in great demand among Russians. According to statistics, Russians made the third highest number of real estate purchases by foreign investors in 2021, only Iranians and Iraqis made more. Investors often acquire housing on the Mediterranean coast, not only to preserve their capital, but also to generate income from renting in Turkey. In our article, we will explore whether it is possible to legitimately earn money through rental business, and how profitable real estate in Turkey can be.
Contents:
- How to legally rent a house in Turkey?
- The cost of renting a house in Turkey
- ROI in Turkey and taxes
- The difference between investments in residential and commercial real estate
- The cost of renting offices in popular areas
- Conclusion
How to legally rent a house in Turkey?
Recently, it has been easier to make money on renting housing in Turkey. However, 5 years ago the local authorities amended the law and now the owner, being an individual, cannot rent housing on his own. Only a legal entity or an organization with the appropriate license can do so. The criteria allowing an organization to sublet premises are as follows:
- The square meterage to be rented should be under the control and management of the organization, it is important that the number of beds do not exceed 30. It should be concluded that the rented premises are not one apartment, but several rooms or apartments. A hotel, an apartment hotel or a residential area that fits this description.
- The building on the rented premises must be equipped with a video surveillance system, all fire safety standards must be observed in accordance with regulations.
- The organization is obliged to inform the police about all tenants renting housing, and to submit their documents for temporary registration for the period of residence.
In case of non-compliance with the above criteria, a fine of TRY 10,000 will be issued to the organization. The same punishment threatens individuals who have decided to rent out villas, apartments and other properties on their own.
If an organization provides incomplete information about any tenants, including hiding the exact number of tenants, a fine of 5 thousand liras will be given for each unregistered person. In case of the non-payment of fines imposed or continuation of illegal activities, the organization (or individual) will face more serious sanctions, measures can include forced eviction from the country (for a foreigner) or even imprisonment.
What should foreign investors do? Such owners can also receive income from renting apartments in Turkey. There are several methods of legally subletting apartments for an individual:
- Long-term;
- Guaranteed.
Long-term rent implies long-term residence on a certain property for a period of more than 1 year. An agreement must be reached between the owner and the renter, which must then be notarized. In addition, all renters must be registered at the address of the rented housing in the Department of Civil Status of the Population and Citizenship under the Ministry of Internal Affairs of the Republic of Turkey. At the same time, the foreign owner must have a residence permit in the republic.
What is a guaranteed rental? When selling real estate, Turkish developers offer the buyer management services for the square meters sold. What does this entail? With a guaranteed lease, the developer searches for renters, then rents out housing, entering into an agreement and solving all problems in the process of renting housing. The owner makes a profit by paying only for the services of the management company.
The cost of renting a house in Turkey
The cost of renting a property depends on the following factors:
- Location.
- Area.
- Internal conditions of the room (availability and condition of furniture and appliances, repair condition).
- Proximity to the sea.
The real estate market offers foreigners the chance to buy apartments in Turkey in order to receive a stable income from renting their property in the future. Of course, for a selection considering liquidity, it is better to carry out a personal selection through real estate agency specialists. However, here are some examples of successful investments:
- The average rental price of a two-bedroom apartment in a new house in Alanya, with excellent maintenance, appliances and furniture, including all amenities in a residential complex goes for EUR 1,700 per month. At the same time, the apartments are located only 150 m from the sea. In the current market, an apartment like this will cost an investor an average of USD 160,000.
- The same apartment near the sea in Fethiye with a total area of 108 square meters, with a balcony and three bedrooms, will bring income its owner an average estimate of EUR 1,450 per month. The cost of one of these apartments is USD 260,000.
- A small apartment of 45 square meters with 1 bedroom near the sea in Antalya can be rented monthly for only EUR 400. The average price of an apartment of this nature in Alanya is EUR 69,035.
- Rental opportunities for a new furnished apartment with a modern finish, including 2 bedrooms and an area of 55 square meters in an elite new building in Mahmutlar, will earn you about EUR 1,100 per month. A new apartment in a modern residential area with the same parameters, according to an average estimate is presented on the real estate market for EUR 84,000.
If you are considering a house in Turkey for your own use and do not mind renting it out in your absence, then you will find a lot of interesting options. Such housing options are usually not rented for a long period of time, but there are exceptions:
- An elite spacious villa of 200 square meters with 4 bedrooms and a bathroom in each, a balcony, a terrace and a garden, in the cottage village of Bodrum on the Aegean coast can be rented on average for EUR 2,400 per week. A villa with these specs is for sale for USD 370,094.
- The average profit from a large mansion covering an area of 180 square meters with 3 bedrooms, a terrace and a private pool in Alanya, will cost EUR 3,500 for a whole month stay. This house will cost the investor USD 89,046.
- An investor can profit from renting a three-story private mansion in Fethiye with a total area of 110 square meters, housing 4 bedrooms and the same number of bathrooms, as well as a kitchen, living room, terrace, balcony and private pool at an average of EUR 5,700 per month. This option is perfect for large families or groups of friends. A mansion of this type can be bought for about EUR 140,000.
ROI in Turkey and taxes
The average annual income from renting apartments and villas ranges from 4% to 5%. At the same time, the owner of the housing must pay an annual tax. The tax depends on the amount of profit:
- Less than TRY 13,000 - the tax is 15%;
- From TRY 13,000 to TRY 30,000 – the tax is 20%;
- From TRY 30,000 to TRY 70,000 – the tax is 27%;
- Over TRY 70,000 – the tax is 35%.
The difference between investments in residential and commercial real estate
Some investors believe that it is more profitable to rent commercial real estate than residential:
- The profit from renting offices, shops and other commercial facilities is higher.
- The deadlines for the delivery of non-residential premises are longer, as business owners usually look for offices or retail premises for a long period of time, at least 2-3 years.
- The maintenance costs of the commercial premises are covered by the tenant, unlike the housing stock.
However, there are also negative aspects of this type of investment:
- High tax rate.
- Unlike housing stock, commercial real estate buyers need to have even more understanding of the market. To do this, you need to live for some time in the Republic of Turkey and conduct business here — if there is no such opportunity, you should find a good professional to select a liquid property.
- High costs for the purchase of commercial real estate. Of course, these costs may pay off in the future, since rental rates in the Turkish office real estate market are quite high.
The cost of renting offices in popular areas
The cost of renting offices depends on the location of the property, the area of the premises, the internal condition and maintenance of the office and the availability of parking.
- A small office with 2 rooms and a kitchen-dining room, with a total area of 60 square meters, located in a new office building in the popular Oba district in Alanya, with underground parking, can be rented for EUR 135 000 for a period of 2 years.
- An office with an area of 70 square meters on the secondary market without parking in the Muratpasa area in Antalya can be rented for an average of EUR 3,845 for 2 years.
- In another popular area of Antalya, Lara, you can rent a spacious office of 230 square meters, including all amenities, a tea area and 4 spacious rooms, with large panoramic windows for EUR 15,211 for a period of 2 years.
Conclusion
After reading our article, you have learned how to legally engage in rental business in Turkey: you can use the services of specialized organizations that have the appropriate license, rent apartments yourself through long-term or guaranteed rental. In addition, rental opportunities for real estate in Turkey bring an income of up to 5% per annum — a good indicator considering that prices for Turkish housing are still democratic.
Besides, the Turkish office real estate market is no less relevant today. When buying commercial real estate, an investor can count on good profitability from renting offices in Turkey.
Whatever your choice, the residential or commercial sector, market experts recommend seeking help from trusted real estate agencies. This way you will save time and money!