Acquisition of Real Estate in Turkey by Foreigners
The construction & real estate sector is one of the largest contributors of the economic growth of Turkey during the period of the past 10-15 years. The legal regulations enabling and simplifying the acquisition of real estate by foreigners, urban renewal and large real estate projects together with high yield ratios also made a positive impact on the foreign investments that were made to the Turkish real estate market by the investors. Brief information will be provided below in relation to the legislation in respect to the acquisition of real estate by foreigners.
The Legal Restrictions
The reciprocity condition which was applied to foreigners’ acquisition of real estate was abolished via the amendment made to the Land Registry Law in 2012. Therefore foreigners may purchase real property and limited rights in rem in Turkey as per the Article 35 of the Land Registry Law provided that the legal limitations are complied with.
On the other hand, there is a limitation pertaining to the total area of land in relation to the acquisition of real property and limited rights in rem. Accordingly, total area of the purchased real property or limited right in rem is restricted to maximum 30 hectares of property in Turkey and cannot exceed 10 % of the total area of private of the said district/town.
The foreign commercial corporations which are established as per the relevant laws of their countries of origin can acquire real property and limited in rem rights within the provisions of special laws. Within this scope the acquisition may be effected as per the provisions of the Petroleum Law No. 6326, the Law on Encouragement of Tourism No. 2634 and the Law on Industrial Zones No. 4737.
Therefore, other foreign corporations such as foundations, associations, etc., are not permitted to acquire real property and limited rights in rem.
With respect to companies with foreign capital[1], acquisition can be made if it is in relation to scope of activities stipulated in their articles of association and shall be used for this purpose.
On the other hand, foreign legal and real persons may not acquire real property within Military Forbidden Zones, Military Security Zones and Strategic Zones unless the necessary permit is obtained from the relevant authorities.
The foreign real persons are required to submit the project that will be developed on the purchased unstructured real property (land, field) within two years to the related Ministry for approval.
The Application and Costs
According to the Turkish laws and regulations in force, transfer of ownership of a property is only possible via an official deed which is signed at the Land Registry Directorates. The deed also should be registered for the validity of the transfer of ownership.
Therefore, an application should be made and the necessary documents should be submitted to the relevant Land Registry Directorate. The documents may differ depending upon the purchaser being a real person, foreign commercial corporation or a company with foreign capital.
With respect to transaction costs, the tittle deed fee which is calculated according to the selling price, the capital fee which is determined locally and VAT in case of a commercial acquisition are required to be paid.
[1] The companies with foreign capital are defined as below:
– If the foreign investors hold, individually or collectively, 50 % or more shares of the said company,
– If the foreign investors do not hold any share of the said company, but have a right to assign or remove the managers of the said companies on the condition that the said company has a legal personality in Turkey.