change in law effects foreigners purchasing property and land

[Mercimek]

Two days ago there was a Constitutional Court ruling which means for the time being Tapus cannot be transferred to foreigners, some of you may remember a similar ruling a situation a few years back. It is hoped that this is just a temporary situation which has arisen whilst new regulations are put in place. To read more on this there is an article in Today''s Zaman http://www.todayszaman.com/tz-web/detaylar.do?load=detay&link=139293 .

Obviously this is a huge blow to many at the start of the tourist season.

Linkback: https://www.enjoykalkan.com/forum/index.php?topic=1387.0

[alantj]

Tucked at the bottom of the article is a worrying snippet of information. Apparently foreign investment in Turkey in Jan/Feb dropped by 80% compared with last year. That is an amazing figure, what do all those potential foreign investors know that I don''t.   

Regards

Alan   

[clarborough]

I am no economist but wonder if the recession in the USA that seems to be spreading worldwide has something to do with the reduction in investment in Turkey that is mentioned in the article.

[Cosetta]

Given the closure case currently brought against the AK party, i.e., a judicial coup-d''etat, a foreign investment firm (forgot which) downgraded Turkish stocks and advised not to invest in Turkish and in Bulgarian stocks due to the current climate of political instability.  This, plus the general world financial climate, has contributed to the 2-month decline in inflow of foreign currency to Turkey.  The 80% decline refers only to Jan & Feb of 2008 compared to a year ago.

[rhythm]

The given reason why they stopped the transfer of a tapu to foreigners is because they are going to re-arrange the laws about the subject. According to what I have heard from friends and a bureaucrat who is in the field, there will be new zoning regulations and I believe that''s why they stopped it FOR A WHILE!!! (2-4 months) And unlike most of us would expect, the new laws will make the foreigner''s buying process in turkey easier and quicker, which eventually is expected to increase price of properties in turkey. -tips of the day-

Regards..

[alantj]

This is a pretty poor excuse, there is no reason why the existing scheme would have to be stopped to make it better.

We were trying to sell our existing property to raise money towards an even nicer villa in Kalkan. That plan has now gone out of the window, as given that the Kalkan market is driven by foreign investors there is little or chance of selling in the near future.

I doubt this will do anything for prices as a lot of people, myself included, don''t want our money tied up in assets that whether by mistake or design can become unsalable overnight. I also think it is worries about actions like this that explains the recent drop in foreign investment in Turkey, rather than more general ecomonic worries.

Regards

Alan

     

[alantj]

After looking at some more articles on the internet, it seems that the law change only effects foreign companies not individuals. So perhaps the article referred to at the start of this thread was wrong. Does anyone know for sure.

Regards

Alan

[Lantana]

As the Feds have pointed out, the current change in legislation affects all property and  land sales to all foreigners, anywhere in Turkey. The sales process has now effectively halted, so even someone who has paid in full for a property here but not yet applied for a tapu will be caught out by this legislation.
The Turkish Daily News gives an outline of the situation at www.turkishdailynews.com.tr/article.php?enewsid=102055

Enquiries at the relevant ministries to try to establish how long this state of affairs will continue have met with conflicting responses but the most optimistic guess suggests three months, pessimists are suggesting twice that period  - which effectively means that there will be no sales during this summer season.

It goes without saying that anyone currently in the process of buying in Turkey should not hand over any final payments until the situation is clarified and the new law not just agreed but on the statute books.
 Lantana

[Pete]

What puzzles me is why is there no mention about this on any of the Estate Agents Websites.

The phrase ''Buyer beware'' springs to mind.

[littlelin]

We got caught up in the last change of law in 2005. If some people are saying it''ll take 3 months then this would be a bit close to the recess of the Government for their summer holidays. They don''t return until September I think. We finally got our Tapu in Feb 2006 after being told by our agent it would be back end of July 2005. Anyone caught up in this will just have to be patient.

[Cruisecontroller]

As alantj pointed out, this has come about because of foreign companies which have bought up prime agricultural land and so that is why a court case is in process, to stop them doing it.  Add to this, we''ve noticed that builders are getting more and more greedy by bumping up the prices, hence you''ve got a glut of empty properties.  The Altinkum area is a prime example of this.  We would dearly love to buy in Kalkan but with prices as they are, it just isn''t viable which is why we are looking in the Altinkum/Kusadasi area this year.  Some friends of ours are buying in Akbuk and they are as far advanced with their purchase as they can be, they now await their Tapu(deeds).

Les

[hel66]

I''ve put it on another thread, but it seems more relavent here, theres a programme on bloomberg on Saturday about the Turkish economy

[Roxie]

Hi all,
Just had a friend buy a beautiful villa in Kalkan. To get round the problem the builder set up a company for him and this allowed him to get his Tapu.

[Cosetta]

Registering a house in the name of a company is done when there is no possibility of having the house tapu, and the company "owner" will pay annual taxes and fees as well as submit forms to keep the company active.  This is not a very economic or practical solution but in some cases there is little choice.

[Roxie]

Hi,
I would have thought so too but the builder paid the set up charges and is paying £20 /month to keep it going. Seems to be a matter of a few months before things are sorted out,but obviously the builder wanted paid and friend got his lovely villa and his Tapu.

[Pete]

Be very wary of setting up a company specifically for property ownership.

As Cosetta says, it will incur you in additional costs as you will have to file Accounts each year. If you rent, then this will be viewed as trading income and will be subject to corporation tax, if you draw a salary from the company then this will be viewed as personal income and again subject to tax. On top of all this you will have to pay Accountants Fees. As the property would be owned by a Company, which is viewed as a separate legal entity, you would in fact have to be a Director/Employee of that company, so if any change of ownership occurs, then you would have to resign as a Director and sell your share of the company to the prosective purchaser, and again probably pay Capital Gains Tax on any profits made, and also more Accountants Fees. You would also need to consider what would happen in the event of your death, how would your share in the company be transfered/liquidated. I also think (but am not completely sure) that a company in Turkey has to have at least one Turkish National as a Director, so you would never fully own your own property.

The other situation to avoid is placing the property in the ownership of an ''offshore'' company. Many people have come unstuck in Spain and Portugal having done this. As a result of the anti-money laundering legislation and EU directives, they have had to bring their properties back ''on-shore'' and register then in their own names, this has incurred them in great expense and they have had to pay the relevant countrys propery taxes again. Failure to do this would have resulted in massive fines and eventual confiscation of the property. I am not sure as to Turkey''s actual position on this, but with membership of the EU on the horizon they will most definitely align themselves to conform.

Pete

[kevincat99]

Hi Roxie
It all sounds very complicated - the basic question that your friend must / should have asked is why can''t I purchase this in the usual way and have a Tapu.
Very simple and straight forward - so why all this convoluted performance which no doubt as other posters have said will only have the potential to create problems in the future.
The builder may be paying some of the costs for now but for how long - also dormant companies need to file accounts and actually pay taxes each month [ not annually] which I think are 80 YTL and if it "trades" the cost about doubles + accountants fees etc .You usually only need a company if you are buying in the villages
What is the builder hiding you might ask 

[Roxie]

Hi All,
Sorry to cause a stir. It is impossible to complete in the normal way at the minute so you can''t get your Tapu.
All the best Steve

[Kalkankiwi]

Does anyone have an update on the situation regarding changing the legislation to allow foreigners to purchase? We have heard that it is still awaiting a final signature in parliament and that then there could be a very long delay while local districts work out who owns what when it comes to foreigners and whether the districts have already exceeded the 10% threshold.

Grateful for any news.

[marking]

What do you mean by 10% threshold?