Turkish real estate has garnered a handsome amount of attention from the investors and relocators all across the globe due to the cultural and recreational appeal coupled with the ‘Turkish citizenship by investment’ incentive from the Government. This has resulted in the advent of a large number of real estate agents into the market as well. Unfortunately, with the huge influx real-estate investors and agents in the markets, a few malpracticing entities have managed to infiltrate into the system as well. Because of the said malpracticing agents, some of the foreign buyers have been misguided with wrong information about the financial details and the procedures and have had to pay a huge percentage over the rightfully due amount. This problem has generated a negative word of mouth among the foreign real estate investors as well, which is detrimental to the reputation of Turkish real estate sector on the whole.
Fortunately, the government has decided to remedy the said issue by introducing a law, whereby, each foreign real estate investor shall provide a Property Appraisal Report prior to completing the transaction. The intent of this report is to protect the foreign real estate investors from any potential trickery. The report is also likely to mitigate the selling of property for more than the rightful value. The said law has been passed 2 years ahead of its planned implementation date owing to success in the pilot phase. Turkish General Directorate of Land Registry and Cadastre (TKGM) has introduced a new department within itself, whose sole function shall be to dedicatedly review the property appraisal reports. Following are a few implications of the said report:
- Sermaye Piyasası Kurulu (SPK) a Turkish Term that, in english, means Capital Market Board, is the authority that controls banks, stock exchanges and the capital movements in Turkey. The Appraisal firms are professional entities that are bound to follow the capital market regulations.
- The SPK approved appraisal report costs between $180 and $350. The buyers are to pay or transfer the said amount directly to the appraisal evaluation department within the TKGM. Should a real estate agent ask for more than the said amount or claim that they can perform the evaluation themselves, the investor should refrain from doing business with them.
- The Appraisal Reports shall remain eligible for three months after the stamp of validation from the approval department. Incase the business deal is cancelled or postponed, or the investor has had a change of decision in terms of buying different property, similar report can be used for approval. In the event of property being at an off stage or under construction, the cost shall be the estimated value of the property upon the complete execution of the project. The value mentioned on the total quotation of the appraisal report shall also be shown on the title deed documents.
- Once the signing off of the title deed is complete, the file shall be added to the Land Registry and Cadastre system for record keeping before being given back to the investors. For Istanbul, the process is likely to be completed within 3 days and for any other process, the process is likely to take 6 days.
The said procedure might be slightly cumbersome, but it is doable given the assistance of the right real estate agent. However, it is to be borne in mind that the benefits of investing in the Turkish Real Estate Market are plentiful nonetheless. The Turkish government is highly insistent on offering the foreign investors all the privileges with their bumper schemes such as residential permit or Turkish Citizenship by investment. Having all of that under consideration, now is as good a time as any to invest and settle in Turkey.