Turkey, extremely popular with overseas real estate buyers, has adopted brand-new rules for obtaining a residence permit through purchasing housing and a law on short-term leasing. How will it work in practice? Market players are studying the new rules and delving into what is happening in the Turkish real estate market. Let’s answer the most exciting questions and consider thrilling events in the real estate business, as well as focus on Turkey property prices in 2024.
The current market situation
First of all, let’s assess the situation in the Turkish market. It is affected by inflation, higher prices and interest rates, as well as new rules for short-term rentals and residence permits. All these factors have reduced the number of foreign buyers in Turkey, and market players have been recording a decrease in demand almost since the beginning of the year. Meanwhile, the number of housing offers has increased in the local market.
Any market, Turkey is no exception, goes through certain stages: growth, stagnation, recession and growth again. The Turkish market has had crisis situations — in 2010 and 2016. As you have noticed, the markets recover on average within two years. One crisis has almost passed. Experts have a hunch that interest in Turkish properties will resume in the spring-summer of 2024. The reasons are common, but there are many of them:
• A mild climate,
• A warm Mediterranean Sea,
• A visa-free regime with some countries,
• No problems with property registration,
• The opportunity to obtain a residence permit, but for a lot of money.
It sounds like a cliché, but these are all advantages. Additionally, there are not so many alternatives to Turkey for foreigners — despite the market situation, citizens of other countries buy 700-800 or more properties in the country every month. The figures were much more modest three to five years ago.
Therefore, the most important thing is not to panic or worry about what is going on in the local industry. The excitement was followed by a natural calming and cooling, because 2022 was an anomalous year.
Real estate market prices in Turkey
Overseas buyers and investors are actively discussing their problems on the Internet. They say they are losing their investments. Short and sweet, this is not the case! Let’s have a look.
As mentioned above, the demand for real estate was abnormally high in 2021 and especially in 2022. During this time, prices in dollars and euros have more than doubled. Therefore, now the one who bought a housing unit a few years ago has not lost anything. According to the experience of some buyers and investors, anyone who wants to sell their property urgently, which means that they will have to raise the price as much as possible, will earn at least 30-50%.
It is important to note that prices are reduced only in the secondary market. You can find housing options in dollars and euros 20-25% below the peak values of 2022. Although there is a big spread, because each seller has his own situation, and he sets the price based on his private circumstances.
Nowadays, you can find a 1+1 option for €85,000-90,000 in an old housing stock in the centre of Alanya. However, you will not find apartments cheaper than €130,000-150,000 in the complexes commissioned in 2022-2023. And there are also offers of a similar layout for €180,000-200,000. At least, the developers are not cutting prices. Most of them have nowhere to hurry, they are busy building all over Turkey.
Changes in obtaining a residence permit
The rules for obtaining a residence permit by the TAPU (a title deed) have changed since mid-October:
• The minimum threshold for obtaining a residence permit has been increased to $200,000 in equivalent in lira at the exchange rate on the day of receiving the TAPU.
• The minimum property price is determined by cadastral (!) assessment, and not by expert, as before. As you know, the cadastral value is written in the TAPU, and taxes are based on its values. The expert assessment is indicated in the reports compiled by licensed experts to submit documents for TAPU registration.
• There remains a requirement for real estate: it must be located in an open area.
It is important to note that the “Cadastral value of $200,000” rule is valid only for those who purchased properties after October 16, 2023. Who issued the TAPU before this date, this innovation does not apply to him.
• If the TAPU was issued before April 26, 2022, neither the estimated nor the cadastral value affects the granting of a residence permit under the TAPU. This means that you can apply for a residence permit without any additional documents.
• If the TAPU was issued between April 26, 2022 and October 16, 2023, the property must be located in an open area and have an expert assessment of $75,000 (for large cities) or $50,000 (for towns). The vast majority of owners can meet these financial requirements..
Raising the threshold has become a kind of filter: it is important for Turkish officials that wealthy people receive a residence permit. The main thing is that the time for obtaining a residence permit is reduced. Applicants receive the cards within three weeks. These innovations did not affect prices in any way. In any case, the developers did not adjust the proposals to the new rules.
Rental innovations
The Turkish authorities adopted Law No. 7464 “On the use of residential premises for tourism purposes” on November 2, 2023. The law regulates the procedures and principles of short-term property rental for less than 100 days. This does not apply to long-term contracts.
It is important to note that the new rules will apply to contracts concluded on January 1, 2024, but many nuances remain unclear. Only general facts are revealed:
• The lessor must obtain a license from the Ministry of Culture and Tourism. To do this, he needs to collect a package of documents, including a report from the fire service and a number of other authorities confirming that the property is suitable for leasing. He needs to obtain a license whether the residential complex has a similar document or not. If not, see the following point.
• The owner must obtain the consent of all housemates that the apartment will be rented out for short-term rent. If someone does not agree, the rental permit will not be issued.
• A management company with the appropriate license can rent out your property in elite projects with developed infrastructure. In this case, the sublease ban does not apply.
• You can rent out your property through Group A travel agencies certified by the Association of Turkish Travel Agencies.
• It is necessary to register tenants in a special KBS system. Only legal entities — real estate agencies or management companies — have access to the system. The guest must be registered within three days after moving into the property.
What about short-term rentals? The law says: “A short-term lease is considered shorter than 100 days.” If the rental period exceeds 100 days, you must sign a long-term contract. This is good — the long-term lease was set for six months some time ago.
Experts note that the innovations will not affect the prices of new buildings. They are influenced by other factors: the cost of land and construction costs. By the way, the Turkish Institute of Statistics reported that construction and labour costs had increased significantly by the end of the third quarter. Therefore, price reductions are out of the question.
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