Invest in a Turkish property delight

Sun, sea and scantily priced second-homes make Turkey a wise buy in the current financial climate. Laura Henderson reports.

Go back to the 90s and soon-to-be-hip Turkey was a classic bucket and spade and Lycian ruins experience. These days, creeping urbanisation has in parts taken its toll. Vast swathes of frontline, particularly around Bodrum and Marmaris on the Aegean coast, have been submerged in a tidal wave of identikit resort developments and ‘foam party’ nightlife. Mass-market tourism however, makes up just a tiny portion of the country’s meze of tourist offerings. Stray off the beaten track a little and there’s ample evidence that the real Turkish spirit lives on.

Since July 2003 decades-old legislation regulating foreign ownership was amended in a bid to lure foreign investment. Full liberalisation of property laws bit in 2005, backed by a comprehensive IMF restructuring programme, but it wasn’t until 2006 that grass-roots changes started to take full effect spurred on by EU accession talks and tourism hitting the top of the charts as the country’s highest export earner. These days, the country attracts a healthy 25m plus tourists a year, with UK visitor numbers alone, confirm ABTA, predicted to swell by 20% this year. “As emerging destinations go, Turkey has immense appeal to lifestyle buyers,” explains David Richardson of Property Sun Turkey. “Miles of unspoilt coastline, great weather and a fascinating culture all of which are fundamental to its long-term appeal. The cost of living is a further bonus - the pound’s relative strength against the Turkish lira making it 30% cheaper, which compared to Euro-zone old-timers like Spain and Portugal makes for an affordable holiday base.”

As with other emerging markets, high capital appreciation in recent years, coupled with grassroots growth in the independent tourism sector has delivered reliable results for buy-to-let investors. Prior to 2000, over 70 per cent of visitors were accommodated in package hotels. Now serviced apartments and private rentals are increasingly dominating the holiday mix. Over 60,000 of us have made the leap from holidaymaker to fully-fledged homeowner; direct flights to Istanbul, Bodrum and Izmir on the Aegean and Dalaman and Antalya on the Mediterranean fanning out the second-home network, with a new international airport in Alanya set to open this year.

Ambitious plans announced by the Culture and Tourism Ministry covering the next 15 years - the creation of tourist development corridors and several super-yacht marinas, is encouraging in these turbulent times: “It speaks volumes for the future potential of the destination which is still undergoing a slow-burn transformation. Five-star tourism infrastructure is underpinning the property market and intensive high-rise developments are being passed over for integrated, low-density projects, with a keen focus on maintaining the quality of the natural environment. From a buyer’s perspective, it’s exactly the kind confident approach they want to see in the current climate, before putting pen to paper.”

Investors to date have mostly gravitated to one or other of the first-phase hotspots along the Aegean and Mediterranean coastlines, among which Bodrum, Kusadasi, Marmaris, Antalya and Fethiye feature most prominently. Now, with infrastructure spreading its tentacles further down the coast, up-and-coming offshoots like Cesme, Gocek, Konakli and Alanya are now sharing the spotlight.

Property ownership does carry potential downsides. Buyers, for example, looking to cover their running costs through rentals should be aware that short-term rents are by no means year-round. The tourist season on Turkey’s Mediterranean and Aegean coasts is shorter than the western Mediterranean: the main season is between June and early September, with many coastal resorts closing down between October and April. Certain restrictions also apply to foreign ownership. “Land in Turkey is allocated a specific function according to the zoning schemes of the nearest town or village,”. “That means that if a plot deemed to be for agricultural use is offered for sale to an investor, legal repercussions surrounding the defined use of the land will inevitably arise. Issues surrounding secure property title have sometimes caught ill-prepared buyers out in the past. If you’re buying a resale property – it’s essential to appoint an independent lawyer to check out title deeds to ensure that the vendor has the legal right to sell and that there is no outstanding debt on the property. A lot of it boils down to just plain common sense, but it’s amazing how many people throw caution to the wind when they clap eyes on the property of their dreams.”

Buying in Turkey
Once a property has been selected and a price agreed, both parties may sign a preliminary agreement, with a deposit paid. Full checks are then carried out on the property and its title deeds (TAPU).

Buyers must register with the local tax office as well as providing the TAPU office with proof of ID and a copy of the current TAPU.

It is the responsibility of the TAPU office to make an application of purchase on your behalf. Once clearance has been given-buyer and seller sign a final contract in front of a public notary (or lawyers with powers of attorney), the balance is paid and formal title deeds are transferred to the buyer.

Fees & Taxes
Stamp duty 3 per cent – split equally between the developer and the buyer.
Legal fees up to 5 per cent
Estate agent’s fees up to 3 per cent
1.5 per cent of the purchase value is payable when transferring the title deeds.
In addition you must budget for land registration fees, notary fees and translation services – allow around £500.
Property tax, paid annually to the local government, is at a rate of 0.3 per cent of the declared value of the property. Revaluation of the property is conducted by the local government every five years.
Tax on rental income ranges from 15-35% depending on rental volumes (allowance before tax in sterling of approximately £4,000 before coming into lower rate of 15%).
If you sell your property within five years, you will be liable for Capital Gains Tax (CGT) of 15-35% depending on the capital amount

By Laura Henderson

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