Turkey to enter new era for foreign buyers

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ISTANBUL - A London-based property Web site announces the Turkish Government has realized that measures must be taken to relax property laws in order to attract much needed foreign money into the country’s property market.

TheM***Ch**nel.com, which is a property Web site founded in 1999 as an online resource for buying, selling and learning about property, stated that current rules governing foreign ownership of Turkish properties were fairly limiting, but that situation was about to change.

Turkey operates under the principle of reciprocity, which only allows foreign buyers to purchase Turkish property if Turks are allowed to buy homes in the buyer’s home country and these laws are currently prohibiting a broad spectrum of potential foreign buyers from purchasing property in Turkey, the Web site explained.

"When the global property markets were booming, European investors were pouring money into the Turkish economy in exchange for second homes and investment properties," said the statement released from the Web site. "Now, with the credit crunch putting off a lot of European buyers, Turkey is hoping to lure in cash rich Middle Eastern buyers."

Rules to be reviewed
The statement added: "As these Middle Eastern buyers are not currently permitted to buy Turkish property under the Turkish rules, it has been decided that the rules should be reviewed." According to the statement, the rule changes may also benefit those who already own property in Turkey as the country should be boosted by the injection of cash from new buyers, as well as broadening Turkey’s appeal.

"Turkey is also improving its infrastructure and accessibility, in a bid to appeal to yet more foreigners - both investors and tourists," said the statement. "The new airports under construction are expected to have a big impact on the level of tourism over the next few years." The Web site also showed Alanya as a new center of attention with its international airport.

www.hurriyet.com.tr/english/domestic/10566444.asp?scr=1

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www.telegraph.co.uk/finance/personalfinance/2802585/Turkey's-'new'-era-enticing-foreign-buyers.html

The market was closed until 2002 and mortgages appeared only last year. Now the dam has burst, says Harriet Meyer

Turkey is being tipped as the next fly-to-buy hotspot for Brits seeking a home in the sun at prices last seen in Spain, France or Italy many years ago.

Unlike more developed markets, Turkish law deterred foreign buyers until 2002 and only recognised the concept of mortgages on residential property in January, 2006. Now enthusiasts claim easier access and credit is fuelling rapid price rises.

But potential buyers must beware that conveyancing laws – and costs – do not end at Dover, so it is vital to observe local legislation.

The same goes for tax liabilities. Another issue is that Turkey is not a member of the European Union and the outcome of talks about it joining remains uncertain.

Despite all that, good weather, spectacular scenery and a rich cultural history have combined to attract rising numbers of British buyers each year; the total is thought to have tripled to about 14,000 over the past three years.

That has already pushed prices up by an average of 25 per cent a year over the past three years, according to David Cox of Property Frontiers.

Jack Hamilton, managing director of Parador Properties, emphasises that these increases had been from very low starting points and added: "Turkey represents exceptional value for money. With prices starting at just £40,000, the property market is booming."

British buyers have been flocking to the coastal resorts along the Aegean and Mediterranean seas – such as the fashionable Bodrum peninsula, Dalaman and Fethiye – as well as more traditional seaside towns of Kas, Kalkan and Altinkum.

A three-bedroom detached villa with private pool can still be bought for little over £100,000 in popular resorts like Antalya. However, it is important to be prepared for other costs associated with property purchase – and ongoing expenses – see bullet points below.

Even so, Cameron Deggin of Property Republic said: "Contrary to what people may think purchasing property in Turkey is a lot easier than in Spain as legislation is in place which favours foreign buyers.

"Before 2002 foreign nationals couldn't purchase property in Turkey, but this legislation has changed and now the Government is encouraging foreign buyers."

However, overdevelopment in some areas, access issues and rising prices mean buyers must do their homework before taking the plunge. Some experts fear valuations have risen so sharply in some areas that they may prove a bubble that will burst.

Mr Cox warned: "Prices cannot continue to rise at the same kind of rate in the more developed resorts like Bodrum, Antalya, Fethiye and Ismir. “Though there are still good investments to be made, these are not so easy to find as a few years ago.

"People are going to have to work a bit harder to find the good opportunities, and consider less-developed areas."

However, Mr Deggin argued that government money being put into building golf courses and ski resorts means some regions, such as Antalya, will continue to produce good returns for investors with all year round rental opportunities.

Demand certainly shows no signs of slowing, and with an improved road network underway giving access to areas of the coast previously off the market, buyers will have more choice.

Turkey's desired accession to the EU, along with the introduction of a mortgage system and the relaxing of foreign ownership laws has helped attract demand. But potential buyers who are hoping for bargain flights to their holiday homes may feel frustrated as no-frills flight operators such as easyJet are yet to service Turkey's coastal airports.

The leading low-cost carrier flies only to Istanbul. However, there are many low-cost charter flights into Bodrum, Dalaman, and Antalya airports, particularly in high season.

Mr Hamilton said: "A combination of good year round weather, a safe legal system, outstanding property prices and high standards of construction put it head and shoulders above the more aggressively promoted new markets."

Renting opportunities, particularly in the popular resorts and during high season, are good according to Mr Deggin.

He said: "It depends on where the home is but the better rental yields an investor can achieve in popular resorts in Bodrum and parts of Antalya are between 8 per cent and 9 per cent.

"This is mainly because the purchase price is low and the amount of tourists who visit. The population of Bodrum in winter is around 50,000, compared with the high season where it goes up to 1.2m.

"There are no restrictions on renting, and no restrictions as to what you can do with rental money – unlike certain countries where can’t get proceeds out of the country."

Case study: twins snap up a bargain
Despite already owning a holiday home in Spain, the Parsons twins decided to invest in a one-bedroom property in Turkey after being seduced by its budget price-tag.

Graham, a semi-retired electronics engineer, and Philip Parsons, a computer electronics draftsman, 53-years-old, bought a one-bedroom apartment in Didim for £35,000, in April last year.

Graham Parsons, from Wokingham, Berkshire, said: “It is hopefully a good investment, and my brother is a keen golfer which there is a lot of over there, so he is happy. "We were shown a number of apartments by Parador Properties, through whom we bought our home in Torreveija, on Spain's Costa Blanca, six years earlier."

The apartment is on the Royal Marina block and the Parsons hope to rent it out to family and friends. There are two communal swimming pools and a large balcony, with the beach a 10-minute walk away and Bodrum airport a one-hour drive.

He said: "We have no complaints as it was all very easy, with Parador Properties showing us a number of good quality properties within our price range.

"The additional costs only added about 7 per cent to the purchase price, although we still have to buy furniture, for which we are allowing £3,000.

"We are hoping it will go up in value and be like Spain was years ago as out property there has increased in value significantly.

Talking Turkey - extra costs
Initial costs of buying a home for €72,500 (£48,500) in Turkey

Property tax is about 0.5 per cent. Based on the sale price above, €362.50
National sales tax is 3 per cent, €2,175
Notary fees for obtaining power of attorney and legal translator, €175
Legal fees for preparing the title deed, registering the property sale and solicitors, €1,200
Connection charges for water, electricity, gas and drainage, €362
Owners' club fee for liaison with builders during the contruction period, legal representative and bank, €950
Total additional costs €5,224.50 or 7.2 per cent of purchase price.
Annual cost of ownership

Maintenance fee, payable to the owner's community association which pays for pool maintenance, lighting, security and garden area, €650
Council tax, about 0.5 per cent (varies depending on value and location), €362.50
Insurance, building and contents cover, €330
Electricity and water bills, €290
Total annual running costs €1,632.50 or 2.25 per cent of purchase price.

[angryumpire]

Its all very well opening up the property market to foreigners, but until the Government enforces the existing Laws regarding dodgy Emlaks,dodgy Tapu's,and rip off merchants, buying in Turkey is a minefield.
The Gov. should insist on buyers using a Lawyer, specialising in Property Deals, covered by Insurance for malpractice, and can then be sued for compensation if the deal goes sour.There must also be a system whereby the claims are sorted out within 28 days, and not 3-4 years, as is the case today.
This won't solve all the problems, but will certainly help.
Most ex-pats in Koycegiz know of someone having/ had problems buying property.

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Dec 15, 2008 10:22:21 GMT 2 angryumpire said:

dodgy Emlaks,dodgy Tapu's,and rip off merchants, buying in Turkey is a minefield.
Most ex-pats in Koycegiz know of someone having/ had problems buying property.

I agree, and I would also add builders or construction companies.