Today Turk.Estate has prepared for you a selection of legal news related to purchasing property in Turkey, its ownership, rental, etc. We will also discuss regulations that will come into force in the future and ideas that are currently being discussed.
Content:
- Citizenship by Investment – or Golden Visa?
- Introducing Areas Not Available for Residence Permits
- Refund of State Duty in Case of Refusal of Residence Permit
- Seizing the Moment to Profit from Daily Rentals, But Exercise Caution
- How can the situation end?
- And now we buy more carefully
Citizenship by Investment – or Golden Visa?
Firstly, the government has once again initiated discussions about altering the conditions for selling housing to foreigners, aiming to maximise the economic benefits for the country. For instance, there are considerations to introduce additional taxes or potentially replace the “citizenship by investment” programme with an analogue of the Golden Visa, which is offered by some other countries in exchange for significant investments in real estate.
Earlier, deputies from several parties proposed a general restriction on foreigners’ rights to purchase housing in Turkey. However, this bill was defeated and eventually forgotten. While it seems unlikely to replace the expedited citizenship procedure with a Golden visa soon (there’s a higher likelihood that the minimum financial “threshold” for obtaining citizenship by investment will exceed USD 400,000), potential investors should still consider this possibility. If you have already decided on the city, region and developer, do not delay the home-buying process for long.
Introducing Areas Not Available for Residence Permits
After the most popular areas for purchasing housing in several Turkish cities were closed to obtaining a residence permit, the number of applications for a meeting (to submit documents for a residence permit) subsided. Additionally, many foreigners with tourist residence permits were either unable to renew their visas or, for various reasons, chose not to do so, leading them to return to their home countries. The good news is that now you can secure a meeting slot (date and time) in the e-devlet system within a few days, even in the highly sought-after area of Alanya, as confirmed by residents.
There are also rumours that some areas are going to be “opened” again, as the maximum number of foreigners with a residence permit in the total population of the territory (by law, this is a maximum of 25%) has begun to decline in some places. Investments in the economy in the form of property purchases by Russians are still needed. Alas, these are still rumours that should not be relied upon. However, it’s worth monitoring the news from time to time. And if anything happens, quickly take advantage of the “opened door” by buying an apartment in a selected but previously closed area.
Refund of State Duty in Case of Refusal of Residence Permit
While the percentage of refusals for residence permits in Turkey has decreased, some applications are still rejected. For a long time, it was argued that the state duty paid for a residence permit in case of refusal is not refundable. However, as prices are rising,and if previously the amount of duty was small, now this amount is rather considerable. After consulting with lawyers, expats found a loophole - how to get the money back if the residence permit was not issued.
To do so, you will need:
- a certificate of refusal to issue a residence permit (the document can be obtained from the migration service, but be prepared for a possible long queue);
- a copy of the same certificate;
- a copy of the receipt for payment of the state duty (it’s better to take care of this in advance because the original is taken away when submitting documents);
- an application for a refund indicating the details of the applicant’s bank account.
The main thing is to have an open account at a Turkish bank. The next step is to submit all these documents to the tax office and wait for the refund.
Seizing the Moment to Profit from Daily Rentals, But Exercise Caution
The number of residences available for daily rent in Turkey has already reached tens of thousands. Prices start from TL 300 and go as high as – or, more precisely, during the summer season they went as high as – TL 60,000 per day for luxury villas in coastal regions, as recorded in Mugla. Simpler bungalow houses are priced between TL 4,500-8,000 per day.
Moreover, when it comes to apartments, homeowners often set prices lower than the cost of hotel rooms, thereby “snatching” the clientele from hotels. Thus, a kind of “black market” for daily rentals was formed. The authorities are closely monitoring this situation; the Ministry of Culture and Tourism, as well as the Ministry of Finance, will take measures to transition residences from the “black” market to the “white” market, making this segment more transparent. This is to ensure that owners do not evade paying taxes.
President of the Istanbul Chamber of Realtors Nizametdin Asha stated that the practice of daily rental of houses has an extremely negative impact on the market. This impact is not only due to price undercutting compared to hotel prices), but also because it creates a limited supply of available housing offered for rent on a long-term basis.
The “last straw,” perhaps, was the revelation at the beginning of autumn: a Russian national acquired 80 apartments in Antalya at once and began renting them out daily, effectively creating a whole “hotel” given the available number of residences. This complex of rental apartments quickly gained notoriety. Kaan Kavaloglu, President of the Association of Hoteliers and Tour Operators of the Mediterranean Region (Akdeniz Turistik Otelciler ve İşletmeciler Birliği (AKTOB), expressed in the media that housing sold to foreigners in Antalya, especially in Konyaalti and in Alanya, which is very popular among Russian speakers, is not used for its intended purpose - not as a “normal” home - and causes significant damage to the hotel industry.
Kavaloglu recalled that in a short period in the province of Antalya, nationals of other countries purchased 108,000 residences. He mentioned that a special report on this issue had been prepared and submitted to the Ministry of Culture and Tourism, stating: “Of course, it’s good for foreigners to come to Antalya and buy housing. However, 108,000 apartments were not sold to 108,000 different people. For example, one buyer alone purchased 80 units.” And this case is not a single example, explained the head of the Association.
Moreover, housing is often rented not even through Airbnb, but through friends and word of mouth. Therefore, industry players intend to tighten the rules: “We studied the examples of Portugal, Italy, Spain and the USA and drew conclusions. The corresponding text of the bill will be prepared jointly with the interested ministries in October.”
How can the situation end?
“If we are talking about large-scale investments, then we expect buyers to invest in other locations than the seaside.” Of course, it won’t be possible to force people to do this, but prohibiting short-term rentals of apartments purchased “in bulk” is quite possible. In particular, they are already discussing clearer requirements for short-term rental apartments (similar to those in hotels: requirements for hygiene, change of bed linen, towels, certain equipment, etc.). All apartments will need to be registered and owners will have to submit both financial reports and reports about guests. Violations may result in a large fine (the amount is currently being discussed), tourists may be evicted during the inspections and the apartment may be sealed. The property owner will have to defend their rights in a Turkish court.
In this situation, nothing is threatening for owners – both current and potential. We recommend staying informed about the situation and consulting with experienced specialists about renting out real estate.
And now we buy more carefully
Another precedent-setting decision was made by a Turkish court as part of the authorities’ efforts to eliminate the “price bubble” that had formed in the local real estate sector.
Taking advantage of rapidly rising prices, some unscrupulous realtors often attempt to sell apartments for much more than their real value.
For instance, one such fraudster has already been fined an amount of TL 349,000 or more than USD 12,800.
The realtor who listed a property in Mamak (Ankara district) became the “scapegoat” - deservedly so, however. The market value of the property was TL 2.1-2.3 million. The realtor asked for TL 3.87 million for the property, for which they paid the price when their fraud was discovered. However, by this time, they had already managed to successfully sell the property. An analysis of the transaction confirmed that considering the dimensions of the building, the number of bedrooms, the condition of the house - including its age - and location, the price was unreasonably high. This explains such a large fine.
Following the resolution prohibiting posting property listings from fake accounts of supposedly “owners” on specialised websites, the Ministry of Trade has increased verification checks. Deputy Trade Minister Mahmut Gürkan emphasised their commitment to resolutely suppress any actions aimed at disrupting the market balance.
Here, however, we offer potential investors the same advice as in the previous section of the post: contact experienced sales consultants who are well-versed in average real estate prices in a particular city and can guide you through the actual price tags of apartments to avoid overpayments.