Purchase of Real Estate by Foreigners in Turkey
By Eda Coşar
ADMD Law Office, Istanbul TURKEY
In the past decade purchasing property in Turkey became very popular through holiday home owners and investors worldwide. The first time that it was permitted to foreign buyers to purchase real estate in Turkey was in the year of 1934 with the Property Act. At the present day the real estate market in Turkey is developing and becoming one of the prominent markets among the Mediterranean countries. The main purpose of this brief article is to explore the legal structure and the procedure of purchasing real estate in Turkey for foreigner.
The Legal Structure for Foreigners to Purchase Real Estate in Turkey:
Acquisition of a real estate in Turkey by foreign real persons and legal persons is regulated by the Statute No: 7782, dated July 3, 2008 and the Article 35 of the Property Act No: 2644.
Foreign individuals are permitted to obtain real estate in Turkey, that is to be used as a business office or as a residence and that is registered within the building development scheme or the localized building scheme, on a basis of reciprocity and in accordance with the legal requirements. The same conditions are in demand for the establishment of limited title related real rights.
The surface area of the real estate and the limited real rights which have the attributions of permanency and detachedness, that a foreign real person is permitted to obtain, cannot exceed 2,5 hectare. The Council of Ministers is authorised to determine the areas, that the foreign real persons and legal persons cannot purchase considering the national security and public interest because of the attributions of strategic importance, flora and fauna, irrigation, energy, agriculture, mine resources, belief and culture, on a proposal of the related public institutions.
On the basis of districts and counties, the foreign real persons can purchase up to the 10% of surface area of the real estate that is registered within the building development scheme or the localized building scheme and the Council of Ministers is authorised to determine a different percentage not-to-exceed such 10% percent.
Although there are minor exceptions for refugees and individual lacking citizenship, the general permission for foreign real persons is dependent on the main condition of the principle of reciprocity. Accordingly only the citizens of a foreign state that acknowledges the rights of Turkish Republic citizens and legal entities established in Turkey to purchase property are provided the same rights with equal conditions in Turkey as well in accordance with the Turkish Law. General Directorate of Real Estate announces the lists of reciprocity between Turkey and the other States for this purpose. The reciprocity principle has not been changed since the date that the Property Act was first came into force. However, the list of the countries that entered into the agreement of reciprocity with Turkey has been fluctuant. These lists are renewed, when the states authorise by the agreeements with Turkey to obtain real estate on reciprocal terms or their actual legal practice allows Turkish citizens the same rights.
As per Article 35 of the Property Act, the trading companies, that have legal personalities and are established in foreign countries according to foreign statutes, are permitted to obtain real estate and limited real rights on a real estate pursuant to special statutes. The relevant special statues are;
- Law No: 2634 for promotion of tourism
- Oil Law No: 6326
- Industrial Zone Law No: 4737
The Statutable Restrictions:
In addition to reciprocity limitations the following limitations apply:
- According to the limitation concerning the area, the complete area, which is under the ownership or officially under use of a foreign legal personality, is not allowed to exceed 25,000 m2. In addition to this limitation; in each area, the foreign individuals cannot own in excess of 0,5% of the whole area of this region.
- According to the limitation concerning the reciprocity principle; a foreign individual is allowed to purchase a property within the borders of Turkey only if the country, that the purchaser has the citizenship of, gives Turkish citizens the official authorization to obtain property under the equal conditions within its borders.
- The military exclusion and security zones and the zones that have a strategic importance pursuant to its agricultural qualities or the qualities related to energy resources are also appertained to legal limitations.
- The States cannot obtain real estate within the borders of Turkey other than for the purposes of embassy and consulate use based on international agreements.
Acquisition of Real Estate in Turkey by Syrian Citizens:
The real properties in Turkey that belong to the Syrian citizens, are the acquisitions in the time period before annexation of Hatay to the borders of Turkey in the year of 1939. After this date, acquisition of real estate in Turkey by Syrian citizens is allowed only with Court decisions and legal succession with the determination of cadastre.
Furthermore, since the year of 1966, Syrian citizens have no power of disposition as a proprietor on their real properties in Turkey that are under the administration of Turkish Treasury. According to a specific Statute titled “Mukabele-i Bilmisil”, the authority to administrate the real properties of Syrian citizens belong to the Finance Ministry.
Acquisition of Real Estate in Turkey by Greek Citizens:
The citizens of Greece are not permitted to procure landed estates that are in coastal or border areas, if they are not the hereditary proprietors. Acquisition of real estate in other areas within the borders of Turkey is possible for Greeks in accordance with the standard legal restrictions. The Greeks who are of Turkish decent, are permitted to acquire real properties in every area within the borders of Turkey except military and safety zones.
Acquisition of Real Estate in Turkey by Israel Citizens:
The real persons who are the citizens of Israel, are permitted to acquire real properties in Turkey only if they posess a residence permit valid for 6 months prior to such transaction based on reciprocity.
Legal Structure of Obtaining Real Estate by Turkish Enterprises with Foreign Capital:
The acquisition of real estate by enterprises with foreign capital participation is regulated by Article 36 of the Property Act No: 2644 that was created by the Statute No: 5782, dated July 3, 2008. Accordingly, the enterprises with foreign capital participation are permitted to acquire real estate or limited rights on a real estate in Turkey to carry out the activities that are specified in their Articles of Association. The same principal is valid for the transfer of the real estate to another enterprise established in Turkey with foreign capital participation and for the transformation of a company with national capital to a company with foreign capital participation through the share transfer.
Except for the provisions of Closed Military and Safety Zones Law No: 2565, dated December 18, 1981, the acquisitions of the enterprises with foreign capital participation in closed military zones, safety zones and the areas that have strategic importance are subjected to permission of Turkish General Staff and its authorised commandership. If this prior evaluation is affirmative, Governorship finalizes the application subject to the opinion of City Directorate of the Ministry of Industry and Commerce regarding the company’s field of activity determined in its Articles of Association.
The acquisitions in private safety zones are subjected to the permission of the governorship. The particularities that are dependent on the authorization of governorship are determined by the commission of the agents of governance considering the security of country and the convenience of the activities specified in Articles of Association.
In accordance with “Regulation Regarding Acquisition of Immovable Properties by Companies with Foreign Investment” published in Official Gazette No: 27052 at November 12, 2008, for the acquisition of real estate by aforesaid companies, it is necessary to apply to the Governorship that will evaluate the application. Outcome of the evaluation will be decisive in fulfillment of requests. According to Article 4 of the Regulation, companies that intend to acquire real estate property ownership and/or limited real property rights in Turkey shall apply to the City Planning and Coordination Department of the Governorships of the region that the property is located at along with the information and documents below:
a) An application petition regarding the purpose of inquiry and with the details of the real estate property;
b) A certificate of authority proving that the company is authorized to transact for the purposes of real estate and showing the authorized representatives of the company;
c) The name of the tax office that the company is registered to and the tax number of the company;
d) A certificate to be obtained from the Chamber of Commerce that the company’s headquarters is registered to showing the field of activity of the company stated in its Articles of Association and the names, titles, citizenships and shareholding ratios of the shareholders;
e) The notarized translations of the identification certificates of the foreign private individual shareholders and Certificate of Activities of the foreign legal entity shareholders that are approved by apostile procedure subject to Hague Convention October 5, 1961 or by Turkish Consulates;
f) The names, identification certificates and addresses of companies directors;
g) The balance sheets of the company for the last three years (if existing);
If the application of the company is for limited real property rights then documents stated in sub-paragraphs e), f) and g) items are not required to be submitted.
Following the application for acquiring real estate property, Governor’s office requests written evaluations from:
a) City Directorate of the Ministry of Industry and Commerce whether the real estate property acquisition inquiry is confirming with the field of activities of the company, the directorate shall answer to this inquiry by the Commission within 7 days;
b) General Staff of Turkish Army or its authorized Local Command whether the real estate in subject is located at forbidden military zones, or restricted military security zones and/or in strategic zones and if so, whether such inquiry could be allowed for or not, the General Staff or the Local Command shall answer to this inquiry by the Commission within 30 days;
c) General Directorate of Police whether the real estate in subject is located at private security zones, the Police Directorate shall answer to this inquiry by the Commission within 20 days, however if the real estate is located in the private security zones, the determination of whether such inquiry could be allowed for or not remains on the discretion of the Commission.
The content of this article is intended to provide a general guide to the subject matter. Legal advice should be sought based on specific circumstances.