Information about buying new property in Turkey

Buying a property in Turkey can be as safe as buying a property in England, but if this information is to serve its purpose we must explain the potential pitfalls. If you go about the purchase in the right way it is not dangerous. The same or similar dangers arise when buying a house in England. If you are in any doubt look briefly at a textbook on English conveyancing and all of the horrible things that have happened to people in England! You do not worry about those dangers because you are familiar with them and, more importantly, because you are shielded against contact with most of them by your solicitor. The same should be true when buying property in Turkey. Ask your lawyer to advise you about any issues that worry you.

This does not mean that buying property in Turkey is at the same as buying a property in England. There are many differences. Buying a property in Turkey will, almost certainly, involve treading a more rocky road than would be the case if you were buying a property in say Spain or France. There are a number of reasons for this.  Basically, if you are buying a property in Spain or France there are several million foreign people who have been there before you. Those pioneers 20 years ago familiarised the local officials, lawyers etc with the process of selling property to foreigners. Over the last 20 years those processes have been refined and almost everybody you come into contact with will have already dealt with dozens if not hundreds or thousands of foreign buyers. It is not like this in Turkey. Only a few hundred British people currently own a home there. You may be the first foreign buyer that the official has ever dealt with. Add to this, the fact that the legal and administrative systems are less developed and less sophisticated than those in Western Europe, the fact that the 'profession' of Estate Agent it is totally unregulated, there are very few established estate agency firms but very many that have opened in the last year or so to capitalise upon the explosion in sales.  Business practices and culture are very different from those in Western Europe and that comparatively few Turks outside Istanbul and Ankara speak fluent English and you will see that the process of buying property in Turkey cannot, at present, be as simple or as smooth as the process of buying property in France.

For many people this is a huge attraction. The countryside is still unspoilt. You can still buy property near the coast at very reasonable prices. There is still a true local culture. The downside is that we have to put up with the issues of non-compliance with the law, non-compliance with planning regulations, cavalier attitude as to contracts and black money.

This should not put you off buying property in Turkey. It is a wonderful, cultured and a spectacularly beautiful country. It has a huge potential for the growth of property values in the same way that property values in Spain exploded over the last 20 years. The cost of living is very cheap. So, whether you're looking to buy property for a holiday use, retirement or as an investment Turkey is worth a very careful look.

Where to Invest

Almost all investment in residential property made by foreigners is made in the strip of coast in the south of Turkey stretching from Cesme in the west to Alanya in the east. Within this strip there are the ‘cheap and cheerful’ destinations and more focused and upmarket destinations. An example of the former would be Alanya where there is significant building taking place. The second would be exemplified by places such as Bodrum, Marmaris or Fethiye – all of which provide a marina type environment and a focus on sailing and the sea.

The postive aspects of buying a propety in Turkey is that it has become very popular with both British tourists and buyers seeking something more exotic and less expensive than Spain.  The same applies to Germans.

The market is fairly new but growing rapidly. Sales to British people are up from a few hundred to over six thousand per year in 2004. There has been significant growth in capital values, exceeding 15% per annum in a number of places. The capital values are still much lower than the values of comparable properties in Spain. Whilst values will probably never grow to the same level as values in Spain, the differential should close allowing for further capital growth. Because property development is so new many of the best sites are still available. These always do well long term. The cost of living in Turkey is very low, so making it a popular destination for British pensioners who can live very well on their pensions.

Some negative aspects of buying a property in Turkey is that it is 4.5 hours flying time from the UK (and in the winter if you have to travel via Istanbul), making it too far to go for weekends, so reducing the letting potential. The climate is not as good as Spain, being colder in the winter and much hotter in the summer.

Turkey is not yet a member of the European Union.  One advantage of this is that the increases of the value of property that normally accompany joining the EU have not yet happened.

The government of Turkey is a pro-western Islamic government in a country which, by its constitution, must remain secular. Nonetheless, some people worry about investing in the Middle East.

Turkey is in an earthquake zone, as is most of the Eastern Mediterranean.   

Why Turkey?

We think the 10 main reasons are:

1. Turkey has been "discovered" by the British. Tourism from the UK has increased from a very low level in the 1980s and 90's to over 1,000,000 per year. This is only a very small part of Turkey's overall tourism, which amounts to about 13 million visitors per year. The majority of this tourism, both from Britain and other countries, is concentrated in the South West coast of Turkey, in the area from Alanya in the east to Izmir in the west. This is also the area where the vast majority of British people are buying property. I came. I saw. I bought.

2. Turkey is outstandingly beautiful. The South West coast of Turkey rivals anything elsewhere in the Mediterranean

3. Turkey is not frightening! Many clients I have spoken to have, initially, been concerned about buying property in a country where the majority of the population is Moslem. They have soon discovered that these worries are without foundation. Although the population of Turkey is overwhelmingly Moslem, the constitution of the country provides for a secular state. Religion operates in the background.  In the big cities and in the tourist part of the country, were it not for the mosques, you would not know the religion of the people you met. Local people drink. Boys and girls walk hand-in-hand. Women dress in the Western fashion. Many women -- and, in particular, younger women -- work in conventional employment.

4. Turkey is exotic.  The local culture which was such an important part of attracting people to Spain has been all but destroyed in the coastal regions, leaving a bland international ghetto. Most people who buy property abroad value the cultural diversity -- but want, at the same time, to enjoy Western levels of service, comfort and security and the home comforts and facilities they have come to expect at home. Turkey offers this balance.

5. Turkey is an inexpensive place to live. Depending upon where you live, the cost of living will be between 30% and 50% lower than in Britain. 

6. Turkey is also an inexpensive place to buy property. It is less inexpensive than it was a year or two ago as good property has been rising in value at anything up to 50 per cent per year, but it remains much cheaper than compatible places such as Spain. Typically a two-bedroom apartment on the Costa del Sol will cost £150,000. In Turkey, large two-bedroom apartments are currently available in less fashionable locations at about £30,000 and in the fashionable beachfront locations for £70,000.

7. Turkey is a low crime society.

8. Many people believe that they will make money by investing in Turkey. They remember what happened to property prices in Spain when tourism and property ownership exploded in that country. Houses bought for £5000, barons sold for £50,000. Properties growing in value at up to 25% a year – and for many years. They think that they are at the beginning of the curve in Turkey and that prices are likely to grow rapidly over the next 10 to 20 years. Certainly, people who have invested over the last year or two have made substantial sums of money.

9. Turkey is ready! The fears of buying in Turkey have now largely been dispelled i.e the political, economic and religious uncertainties.

10. Many buyers have been getting a little tired of Spain. Spain has a great deal to offer but many people think that it is now overdeveloped and that it needs to recapture some of the "Spanish-ness" that originally made it so different and attractive. Fashion has not been kind to the Spanish. A few years ago, if you told friends in the pub that you had a villa in Spain their reaction was "WOW!". Now it is more likely to be a yawn! Telling your friends that you have a house in Bodrum or Fethiye still has the desired effect. For these and other reasons, there has been a vast increase in demand for property in Turkey.

Finding a Property in Turkey  - The Need for Preparation

Why? At the moment we are in a property "boom". This is not just in Turkey. It is, in most popular areas, a seller's market. Property – and, in particular, attractive, well-located and well-priced property – sells very quickly. A few years ago it was fairly simple to go to Turkey, look around, see a few properties and then come back to England to ponder which to buy. Today someone doing this would be likely to find that the house they wanted to make an offer on had sold to someone else in the few days since they saw it. As a result of this people who are serious about buying property in Turkey should do some research and make some preparations before they go on a visit to look at property. When they go on a visit they should do so with the intention that, if they see something that they really like, they will make an offer and commit themselves (at least in principle) to the purchase whilst they are still in the area. What preparation should you make?

What preparation should you make?

Understand the System

The system of buying property in Turkey is, not surprisingly, different from the system of buying property in England.   The most important thing to remember is that buying a property in Turkey can be just as safe as buying a home in England – providing that you take the right professional legal advice and precautions when doing so. If you do not take such advice there are many expensive traps for the unwary.

Select an Area

You cannot scour the whole of Turkey looking for a property. Turkey is more than four times bigger than the UK.  No area is perfect. No area has the best climate or the finest beaches or the best food or the cheapest prices. It is all a question of personal preference. Yet there is, behind it all, a logical process of selection that, if used sensibly, can help you choose an area – or, more likely, eliminate others.

Which Area is Right for You?

In the end, the choice of location and type of property is down to personal preference. You are probably buying a home in Turkey because you have been reasonably successful in life. One of the rewards of such success should be the ability to do as you please. It is too easy to forget, as you become immersed in the detailed planning for the purchase, that this whole exercise is supposed to be fun. If you want to throw reason to the wind and buy the house of your dreams there is nothing wrong with doing so – provided you understand that this is what you are doing. After all, who really needs a villa overlooking the Mediterranean? Having said that, approaching the choice of area and type of property on a rational basis means that you are less likely to buy entirely the wrong property in entirely the wrong place. It is amazing how often the obvious is not obvious in the heat of battle or at the peak of your enthusiasm to buy that "bargain" rundown cottage in the middle of nowhere.

Getting to know the areas

The way that is most fun – and undoubtedly the best – is to travel extensively and to get to know the areas both in summer and in winter. The need to know them in both seasons cannot be over emphasised.

Some summer resorts close down almost completely in the winter months. The climate, which was so agreeable in June, can be bloody awful in January. The place that was a tranquil twenty minute drive from town in May might well involve a two hour nose to tail ordeal in August. Very few people know the whole of Turkey well. It is so huge that it is unreasonable to expect someone buying a holiday or even a retirement home to do so.

If you like a particular place and would like a home there does it matter that somewhere else there might be a place you like just as much or even better? Most people therefore select the area to live from the areas they already know plus, perhaps, another couple that they have read about and decide to visit before making their final decision.

A fair substitute for an initial visit is a bit of reading. General guides to Turkey can give you a reasonable feel for what a place will be like. Follow that up with some more specific reading about the areas that interest you, television programmes etc and you will be ready for a productive exploratory visit. Libraries, the Internet and the Turkish Ministry of Tourism are good sources of information.

Most people know within a few minutes of arriving in a town whether it is somewhere they would like to live. A two-week self drive holiday, using some of Turkey's wonderful inexpensive small hotels, can therefore cover a lot of ground. Take a large-scale map or motoring atlas. Be a vandal. Write your comments about the places you visit on the page. Otherwise you will never remember which was which. Buy some postcards to remind you of the scenery or take a video or digital camera. Pick up a copy of the local paper for each area. Even if you do not speak Turkish it will give you some idea of what goes on in the area and also supply details of local estate agents etc. Visit the local tourist office, if there is one, for more information about the area and an idea of what goes on throughout the year. Look in estate agents window and make a note – again on the map – of the sort of prices you will have to pay for property of the type that interests you. But don't go inside. Make it an absolute rule that you will not look at any properties. If you do you will be caught in the classic trap of focusing on bricks and mortar rather than the area. What matters most is the area where you are going to live. There are nice houses in every area. Provided the initial look at prices doesn't make you faint, if you like the town mark it with a big tick and move on to the next place. If it is not for you, mark the map with a big cross and, likewise, move on.

Once you have short-listed your two or three most likely places visit them in both summer and winter. Spend a little time there. Make contact with estate agents and look at property to your hearts content. Generally, when going to see property you will be accompanied by the estate agent. If you are dealing with a private seller (i.e. someone who is not using an agent), when you do finally go looking at property, take a mobile phone.  Property in rural Turkey can be nearly impossible to find and it can save much gnashing of teeth if you can phone and ask for directions. It is also courteous to telephone if you are delayed en route.

Do you want to let the property?

There are two types of people who decide to rent out their home in Turkey. There are those who see the property as mainly, or even exclusively, an investment proposition and there are those who are buying what is, predominantly, a holiday home but who wish to cover all or part of the cost of ownership from rental income.

For the first group this is a business. Just as in any business, the decisions they take about where and what to buy, how to restore the property and what facilities to provide will be governed by the wish to maximise profit. The second group will have to bear in mind most of the same considerations, but will be prepared to compromise (and so reduce potential income) in order to maximise their enjoyment of the property as a holiday home. Just where they draw the line will be determined by their need to produce income from the property.

The choice of the right area is vital if you wan to let your property successfully. Whichever group you fall in, you are most unlikely to cover all of your expenses and both capital and interest repayments on a large mortgage from letting your property, however efficiently you do so.

Make a Preliminary Selection of a Type of Property

This is not always as obvious as you might first think. Once again the application of common sense can help inform your decision but, mercifully, the human spirit often ignores such considerations. If you, or your spouse, falls in love with an abandoned homestead (çiflik) in the middle of the countryside whereas reason tells you that you ought to be looking for an apartment near an airport you will probably buy the çiftlik. And you will probably enjoy every minute of owning it. This does not mean, however, that it isn't worth spending a little time thinking about the type of property that would suit you best before you travel to Turkey to look at buildings.

Buying an inappropriate type of property can prove very expensive and, worse still, can put you off the whole idea of a property abroad. As well as helping you to focus your ideas, thinking about these issues will help you give any estate agents a clear brief as to what you are looking for. This will help them help you and avoid your time being wasted by them showing you totally inappropriate properties. Always discuss your requirements with the local agents who are helping you find a property rather than dictate those requirements to them. They may well say that what to are asking for is not obtainable in their area – but that something very similar is, and at reasonable cost. Do not be afraid to change your mind. It is quite common for people to start off looking at rural properties for restoration and to end up deciding that, for them, a new property is a better bet.  If you do change your mind you must tell the estate agents you are working with. Better still, you should be discussing your developing views with them and getting their confirmation that what you want is "doable".

Buying an Apartment - Advantages & Disadvantages

Advantages

• Lock it and leave it.
• Apart from turning off the water and electricity no preparations are required for either arrival or departure.
• Someone else looks after the repairs. All major repairs to the building and major maintenance are likely to be the responsibility of the community of which the building is a part. Of course, you have to pay your share of the expenses but someone else will arrange it all.
• Apartments can offer better security. You will not be on a site that is isolated and, potentially, prone to burglary or squatters. Many apartment blocks have a security guard, especially as wages are low.
• There may be attractive communal gardens and facilities.
• You may have the use of a shared large swimming pool, tennis courts etc. These cost a lot of money to run and can be prohibitively expensive for someone using their property for only a small part of the year. They are a great advantage if you want to let your property.
• The cost of upkeep is generally lower than the cost of maintaining a house.
• You have ready made neighbours who can, for example, turn on the electricity before you arrive and put some milk and bread in the refrigerator.
• Apartments are generally less expensive than houses.

Disadvantages

• You will have immediate neighbours, who can prove noisy.
• Until recently, sound installation was not very good.
• You may not be a lot of storage space.
• There may be no private outside area.
• You will, at best, have an underground car parking space some distance from your front door.
• You will have to pay your monthly or annual contribution to the cost of the general maintenance of the block where you live.
• There can be "politics" involved in the administration of your community. If people cannot agree what they want or if some people do not pay their share of the expenses then it can get complicated.Your lawyer should check out the arrangements before you buy.
• Some people view Apartments as down-market

Buying a Villa - Advantages & Disadvantages

Advantages

• Space
• Private garden, terrace or pool area
• Private garage?
• Distance from neighbours, though not always as much as you might expect.
• Image

Disadvantages

• You will have immediate neighbours, who can prove noisy.
• Possible lack of security.
• Higher maintenance costs – particularly if you have extensive gardens or a pool.
• Worry about what is going on when you are not there.

General Rules

Despite the fact that everything depends on your personal circumstances, there are some rules of thumb that we have, over the years, developed as a starting point for making a decision.

Retirement Home

First work out your likely retirement income and expenditure. You may need some advice and guidance when doing this. If the income is in excess of your likely expenditure, buy the nicest house that you can afford. This will, typically, be a detached house or villa. Make sure you have plenty of space - including storage space, good heating and air conditioning.

If your income is likely to be a little tight, decide how much you would like to divert from your home into investments in order to supplement your income. You will probably need to take advice at this point. Buy the best house you can afford with the balance. This is, of course, a question of compromising between your ongoing income and the quality of your accommodation. You will, usually, be happier with a smaller house in a suitable area rather than moving to buy a bigger house in a less suitable area.

Holiday Home

If you can afford a detached villa or you have young children, try to buy a villa. For most other people an apartment makes a more sensible choice of holiday home.  In either case, where possible buy a property that has a substantial store room or cupboard in which you can lock your possessions when you are allowing others to use the property.

Investment Property

When buying an investment property you need  to decide whether you are buying with a view to a quick sale (perhaps even before the house is built) or whether you are buying to let.  The choice of property is critical to the success of the venture. If this is purely an investment property, which you will not be using for your own personal use, remember that the best buy might be a property that you would not be seen dead in. Although this is logically true - and many people have made a lot of money following this rule - most people are more comfortable with what they like and most people, in any case, will use the property themselves from time to time. Choosing a property that you like means that you will be marketing it to people like you. This is likely to include your family and friends, which can make life easier. It can also provide some fun as you market by networking in new circles.  The sort of house you would buy to let is likely to sell on well.

Buy now, move later?

Think about both your current and future requirements. In Britain, we are used to moving frequently. We buy a house to suit our present needs and, as they change, we sell it and buy another. This is a very expensive thing to do in other countries, but is not too dear in Turkey. The move (buying and selling) could cost you about 8% of the price of your new home. The saving from having a property that has cost you less and is cheaper to run could make this worthwhile – particularly as it will have given you the time to decide precisely where you would like to live and precisely what type of property you would like to live in.

Space

Most people underestimate the space they will need in their home overseas. This is because they underestimate how popular they will become once they have a villa in Bodrum or Marmaris! The combination of your own accommodation needs, the needs of visitors and the requirement for storage space means that, if the budget permits, it is worth thinking of buying one more bedroom than you first contemplated.

Heating

The south of Turkey has, generally, a much warmer climate than the UK. Even here, though, there are many days in winter when it can be as rainy and cold as in Manchester. Some form of heating is essential for such days, however few they may be. Piped gas is rare, non existent in many areas. Bottled gas is too fiddly to be genuinely convenient. Installing large tanks for Gas can be costly and problematic from a town planning point of view. Solid fuel has all the drawbacks we forgot about 30 years ago. Solar heating – particularly solar water heating - works well in sunnier areas but cannot be relied on as the sole form of heating. For many people this leaves oil and electricity as candidates. Look out for combined heating and air conditioning units. These operate as heat pumps and can be very efficient. Remember that, in rural and small town Turkey, electricity cuts are commonplace, the lessening in both frequency and duration. It will come as no surprise to learn that they come when you most need the electricity! Take advice. Don't just assume that what was best in England will be best in Turkey. Whichever you choose, installing a good centrally controlled heating system will be money well spent. This is particularly so when you are building a new house, where the extra cost can be very small.  Adding proper heating to the specification for a new property adds very little to the price. This is much cheaper than doing it later. If you are buying a resale property then it is much more convenient to install the heating system before you move in.

Air conditioning

Air conditioning still has the reputation of being a luxury item although it is becoming more the norm in office properties. Some of us think that giving in to the heat and turning on the air conditioning is "sissy". Summertime temperatures in southern Turkey can get very high. Peak temperatures can reach 40°. This is relatively rare and, the some reason, 40° in Turkey does not feel nearly as hot as 40° in Spain. Nontheless, this is seriously hot. We recommend that everyone buying a home in southern Turkey should install at least some minimal air conditioning. With predicted global warming summer temperatures are likely to rise. However macho you may be, if the 2 a.m. temperature is 30ºC (86ºF) and you cannot sleep it is hard to deny the value of air conditioning. You may not need it often but when you do you really need it. For people buying a home for retirement, or with elderly relatives who will visit, it is worth remembering that, as we get older, we gradually lose our ability to adjust to extremes of temperature. A temperature that is unpleasantly hot for a 55 year old can be life-threatening for a 90 year old.  Most people who live in Turkey permanently do not use their air conditioning all of the time. This is partly because they get used to the higher temperatures and partly because they use other forms of cooling. Think about through flow ventilation. In other words, look for a property which has both front and back windows. Look for a property with high ceilings. It is not by accident that old houses incorporated this feature. Think about a house a short distance inland in the hills, where you will be likely to benefit from some breezes. Think about installing ceiling fans which can often provide enough cooling in a way that is more pleasant than the use of air conditioning. Despite doing all of this, however, do buy some air conditioning for use on very hot days.

Fix a Budget

Fix a budget for the operation. What is the maximum that you are prepared to spend to end up with a house ready to live in? Include the cost of purchase, any essential repairs or improvements and the taxes and fees payable. If you are buying a new property or one that does not need major repair this is fairly simple. If you are buying a house in need of repair fixing a budget is clearly more difficult. You will always under estimate the cost of the repairs. No job ever finishes exactly on budget! That is as true in Turkey as it is in England.

Climate

Most British people buying in Turkey are motivated, in large measure, by the thought of a better climate. What is "better" depends on your personal perspective. Remember that temperature and rainfall charts do not tell the whole story. Wind, lack of shelter, altitude and other factors can greatly influence your perception of the climate, which is what really matters. A place where it rains for 200 days per year will seem wetter than a place with the same amount of rainfall but where it only rains for 60 days. Figures can also conceal substantial daily variations.

Getting There

Second only to climate in most people's decision process should be the question of access to the property.

• How will you travel there?
• How will your family and friends travel?
• How will you get about whilst visiting?

There is interesting research in the tourist industry that suggests that if visitors have a journey of more than 1 hour by road at either end of their flight, 25% will not bother to travel. More than 1½ hours and 50% won't bother. This may not concern you but it is worth bearing in mind as far as family and friends are concerned. It is even more relevant if you are thinking of letting your property.

Although it is theoretically possible to travel to Turkey by land or by a combination of land and sea, the vast majority of people arrive by plane. At the moment there are few low-cost airlines operating into Turkey and you will miss some of your old favourites such as Ryanair, easyJet etc. To compensate to this, you will find carriers you have not heard of. Companies such as BEA. Excel and Pegasus use the major southern airports. In any case, cheap fares are not always cheap! Sometimes, particularly if you need to travel at a particular time and cannot arrange your travel either a long way in advance or right at the last minute, BA & Turkish Airlines (THY) can offer competitive prices and take you to more mainstream destinations.

Not all places in Britain are equally served when it comes to flying to Turkey and not all places in Turkey are readily accessible. However there are now regular flights to Turkey from Manchester, Birmingham, Teesside, Edinburgh, Cardiff and the main London airports. This situation is likely to change for the better.  Prices are comparable with flights to the Canary Islands, which are of a similar length and distance. These same southern airports are serviced by most of the main tour operators and their charter airlines. The these flights generally operate only in the summer months (April/May to October). Most people, however, will at the moment travel with Turkish Airlines -- particularly if they fly from London. They offer several flights a day from London to Istanbul. From Istanbul you fly on to your final destination. Be warned that this can sometimes mean an overnight stay in Istanbul. Prices are competitive with other airlines. 

Flying time to Istanbul is about four hours from London. It is about 4 – 4 ½ hours flying time to the southern airports of Bodrum, Dalaman and Antalya.

Summer Travel (April/May – October)

During the summer months there is a wider range of air travel options available. If you are travelling to the southern airports you will generally look to the low-cost airlines or charter operators unless you wish to travel via Istanbul, which adds several hours to your journey. During the summer months with flights are available from many UK airports.

Winter Travel

Currently, travel to southern Turkey during the winter months is more complicated. This is a reflection of the newness of the Turkish property market. The tourist season for tour operators it is generally limited to the period from April to October and, until recently, there was a little demand outside that period. This has changed. There are now quite large numbers of resident foreigners in Turkey. They and their relatives travel regularly during the winter months. The owners who have bought property in Turkey in the last couple of years also use their properties during the winter months, either for their own personal use or to let of the property. Very often, when the writer is travelling from Istanbul to southern Turkey, the majority of passengers of the aeroplane are foreigners. New high quality 'resort hotels' have also opened. These offer a year-round tourist season. These factors, in combination, are likely to lead to of direct winter flights from the UK to the southern Turkish airports in the short term future. Look or initial departures from Manchester/Liverpool and London.

Getting around once you have arrived

Once arrived in the Turkey, most people will travel by car. They either hire a car or own their own Turkish car, which they leave at the house or (better) in the airport car park waiting for their next visit. All of the main car hire companies and many local car hire companies operate in Turkey. It is worth doing a careful price comparison. Surprisingly often the cost of insuring, taxing and maintaining your local car plus airport parking and the depreciation of its value can amount to nearly as much – or more – than renting a new, clean car on each visit. Renting also means you can choose the type of car you need for that particular visit. Look to cheap, local car hire companies as well as the big names, who sometimes have surprisingly good deals available.

Be aware that, particularly on the south coast of Turkey, travelling between A and B always takes a lot longer than you would anticipate in Britain. Most of the roads are a single carriageway. Many are twisty. All have slow traffic including animal drawn traffic. The result is that average speeds are low. Be particularly careful driving at night, when the presence of often unlit animals and tractors on the road can make travelling exciting! Istanbul must be one of the most frightening places in the world to drive. There is constant high-density traffic. Drivers appear not to follow any rules. The man who shows fear is lost. Nowhere else in the world have I been passed in the fast lane of a dual carriageway by a man in a (hand powered) wheelchair!

Other towns and cities are much better and should not put off the average driver. Just be extra careful – and don't expect signals! Public transport in major Turkish cities is nonexistent or extremely poor. In the holiday destinations there are more plentiful buses and ample cheap taxis.

Decide on Ownership

Who should be the owner of your new property? This is the most important decision you will have to make when buying a property. Because of the combination of the Turkish and British tax systems getting the ownership wrong can be a very expensive mistake indeed. It can lead to totally unnecessary tax during your lifetime and on your death. Even on a modest property this unnecessary tax can amount to tens of thousands of pounds.

There are many ways of structuring the purchase of a home in Turkey. Each has significant advantages and disadvantages. The choice of the right structure for will save you possibly many thousands of pounds of tax and expenses during your lifetime and on your death. Because, in Turkey, you do not have the total freedom that we have in England to deal with your assets as you please on your death the wrong choice of owner can also result in the wrong people being entitled to inherit from you when you die.

This is a particular problem for people in second marriages and unmarried couples.

The options

Sole ownership

In some cases it could be sensible to put the property in the name of one person only. If your husband runs a high-risk business, of if he is 90 and you are 22 this could make sense. It is seldom a good idea from the point of view of tax or inheritance planning.

Joint Ownership 'as individuals in common'

If two people are buying together they will normally buy in both their names.

In most of continental Europe — but not in England — this is the usual way in which individuals tend to buy property. It means that if, for example, a husband and wife buy a home a part (usually half) of it will belong to the husband and the rest will belong to the wife. Your half is yours and your fellow owner's is theirs. On your death your half will (subject to the requirement of your matrimonial regime – see below ) be disposed of in accordance with Turkish law (see below). A person who owns in this way, even if they own by virtue of inheritance, can usually insist on the sale of the property. So if your stepchildren inherit from your husband they could insist on a sale of your home. If you decide to buy together then, in certain cases, it can make sense to split the ownership other than 50/50. If, for example, you have 3 children and your wife has 2 then to secure each of those children an equal share on your death you might think about buying 60% in your name and 40% in your wife's name. It is very important to seek clear advice from your lawyer about the form of ownership that will suit you best, both with regard to the consequences in Turkey and the consequences in England.

Joint ownership of property

This is the system most commonly adopted in England. Under a joint ownership scheme the buyers — say husband and wife — each own the property in such a way that on their death the property automatically passes to the surviving owner. The transfer is generally tax free. Joint ownership (in the English sense) of property in Turkey is not possible.

Adding your children to the title

If you give your children the money to buy part of the property and so put them on the title now you may save quite a lot of inheritance tax. On your death you will only own (say) one fifth of the property rather than one half. Only that part will be taxable. It may be such a small value as to result in a tax free inheritance. This only works sensibly if your children are over 18. Of course, there are drawbacks. For example, if they fall out with you they can insist on the sale of the property and receiving their share.

Putting the property in the name of your children only

If you put the property only in the name of your children (possibly reserving for yourself a life interest – see below) then the property is theirs. On your death there will be little or no inheritance tax and there will be no need to incur the legal expenses involved in dealing with an inheritance. This sounds attractive. Remember, however, that you have lost control. It is no longer your property. If your children divorce their husband/wife will be able to claim a share. If they die before you without children of their own, you will end up inheriting the property back from them and having to pay inheritance tax for the privilege of doing so. A life interest is the right to use the property for a lifetime. So, on your death, your rights would be extinguished but your second wife or partner, who still has a life interest, would still be able to use the property. Only on their death would the property pass in full to the people to whom you gave it years earlier. This device can not only protect your right to use the property but also save large amounts of inheritance tax, particularly if you are young, the property is valuable and you survive for many years. As ever there are also drawbacks, not least being the fact that after the gift you no longer own the property. If you wish to sell you need the agreement of the "owners", who will be entitled to their share of the proceeds of sale and who would have to agree to buy you a new house. If you wish to do this you must structure the gift carefully. Otherwise it could be taxable at once in Turkey.

Limited company

For some people owning a property via a limited company can be a very attractive option. You own the shares in a company, not a house in Turkey. There are various types of company. The company could be English, Turkish or based in a tax haven. Ownership in the form of a limited company can have a number of advantages — mainly because the company never dies and because when you sell the house you can sell the company (and so the house it owns) instead of transferring legal title to the property. These steps can save tax. Ownership via a Turkish company also allows you to proceed with your purchase without waiting for the ‘military permission’ needed for an individual foreign buyer – which can take several months. To balance against this is:

1. the cost of setting up and maintaining the company
2. the risk of being assessed by the British tax man, as enjoying a "benefit in kind" from the company by virtue of your right to use the property. This could be taxable at your highest British tax rate. The value of your benefit is likely to be assessed as the rental value of the property for the period during which you were entitled to occupy it – not the period during which you actually did occupy it. If it is available for your use all year round this could be a lot of money. I will return to this important point later.

Turkish commercial company

Ownership via a company will mean that the income from letting the property is taxed in the way usual for companies – basically, you pay tax only on the profit made. This can reduce your tax bill. There can be marginal advantages of land ownership through a company rather than an individual. These are for tax reasons. Taxation applies principally to two aspects of income from land: income from rental and gains resulting from profit on re-sale of the profit, i.e. capital gains. Under Turkish tax law, individuals will be taxed on these two sources of income under the income tax rules. The rate of tax applicable to such income will depend upon the individual’s total income tax liability. Income tax rates for income sourced other than through employment range from 20-45%. Corporate taxation is levied on company income at a rate of 30%. Withholding tax payable on dividends means that the effective rate of corporate tax is 37%. Additionally, companies may offset against their tax liability certain expenses such as start-up costs, previous year's losses, depreciation of fixed assets and certain other items that are more generous than the items permitted to individuals.. The downside is that selling a property owned by a Turkish company is much more difficult than for an individual, more paperwork and permissions are needed. Ownership in the form of a company also gives rise to certain expenses. Accountancy, filing tax returns etc. It also has other advantages – primarily the ability to buy property without obtaining the military permission needed by a foreign buyer. Some properties will not be granted such permission – so buying in this way can expand the range of property available to you. On other occasions the Seller will not wait the several months needed to obtain the permission. If you are thinking of buying through a company for this reason, seek legal advice. Buying through a Turkish company always gives rise to a host of potential problems as well as benefits. The plan needs to be studied closely by your advisers so that you can decide whether it makes sense in the short, medium and long term.

UK company

It is rare for a purchase through a UK company to make sense for a holiday home or single investment property. This is despite the fact that the ability to pay for the property with the company's money without drawing it out of the company and paying UK tax on the dividend is attractive. Once again you need expert advice from someone familiar with the law

Offshore (tax haven) company

This has most of the same advantages and disadvantages as ownership by other types of company, but with additional expenses and drawbacks. For someone tax resident in the UK and using legitimate UK tax paid money it is likely to be of little interest. A 93 year old buying a £10,000,000 property, or someone who wishes to be discrete about the ownership of the property might think the price is a small price to pay for the avoidance of inheritance tax or privacy respectively. Someone who is not tax resident in the UK and who has offshore funds might think about buying in this way. Needless to say, anyone thinking of buying through an offshore company should take detailed advice from a lawyer familiar with the law of both countries.

The use of trusts

As a vehicle for owning a property trusts are of little direct use. In Turkish law, the concept of the trust is much more restricted than either the UK or other European countries. Some people will, however, want to take this opportunity of restructuring their affairs generally by means of a trust. Such an arrangement can prove very beneficial for both asset protection and tax reduction. Trusts are usually quite expensive to set up and so are usually only of interest to people buying higher value properties or where they have substantial savings and investments — say, as a rough guide, over £350,000. They are particularly useful if you are thinking of living overseas. The trust will usually own through the medium of a limited company.

Which is right for you?

The choice is of fundamental importance. If you get it wrong you will pay massively more tax - often many thousands of pounds – than you need to, both during your lifetime and on your death. The tax consequences arise not only in Turkey but also in your own country. For each Buyer of a home in Turkey one of the options set out above will suit him perfectly. Another might just about make sense. The rest would be an expensive waste of money. The trouble is, it is not obvious which is the right choice! You need in every case to take advice. If your case is simple so will be the advice. If it is complex the time and money spent will be repaid many times over.

Get an Offer of Mortgage/Finance

These days, with very low interest rates, more and more people borrow at least part of the money needed to buy their home in Turkey. Even if they don't need to do so, for many it makes good business or investment sense. If you want to borrow money to finance your purchase it is better to get clearance before you start looking at property. Turkish mortgages are at the moment rare for foreigners purchasing property in Turkey, though they can be available for certain foreign residents and finance can sometimes be available for Turkish companies buying property in Turkey. For most people, the most common method of raising mortgage finance for Turkish property purchase is through re-mortgage of a property in the UK.

Think about how you will pay a deposit

If you are going shopping for property you will need to have access to some money to pay for it. As we will see later you will normally need to put down either a reservation deposit of £2000 - £3000 or a preliminary deposit of 10% or more of the price of the property.

How should you make this payment?

Some estate agencies, particularly those operating from Britain, will ask you to take a bankers' draft for the likely amount of any deposit. Fortunately there are few of these. We do not like this idea. It is ideal for the estate agent and the seller but, we believe, puts the buyer under subtle but unnecessary pressure to spend the money on something. Happily, the usual way of paying the deposit is still via a British cheque for the £ Sterling equivalent of the amount needed. This is a simple and effective method of payment.

There is, however, a further option that people are increasingly using. This is to leave the amount likely to be needed as a deposit with their specialist lawyer in the UK. Then, when you have found the right property and the estate agent is asking you to sign some form of contract, you can tell him that it is your lawyer who has the money. You will sign the contract as soon as he has approved it. The lawyer will then transfer the funds into the estate agents bank account by electronic transfer. The lawyer should be able to check a contract faxed to him whilst you wait and be able to tell you that its terms appear reasonable, and that any necessary special clauses have been included. He will also be able to tell you the nature of the contract you are signing (formal offer, reservation, option or full contract) and explain, briefly, its legal effects.

This has a number of advantages. It can take a lot of pressure off you. It makes it very hard for the agent to persuade you to sign a document, which has – in every case – far reaching consequences without getting it checked. From the agent's point of view it means that he will receive the cleared funds within a couple of days rather than the two or three weeks it can take for your British cheque to pass through the banking system and be cleared into his account. This preliminary check by the lawyer, though useful, is limited. He will not have seen proof of title or planning consents. He will not have inspected the detailed documentation relating to the construction of a new building. He will not have been able to carry out any checks on the property. But it is a great deal better than nothing. This really only works well if you have made contact with your lawyer before you go to look at properties as he will need to understand something about your circumstances before being able to give sensible advice about, for example, the special clauses needed in the contract or who should be named as the buyer of the property.

Buying a Property in Turkey

General Procedure

The general procedure when buying a property in Turkey seems, at first glance, similar to the purchase of a property in England and very familiar to anyone who has bought a property in continental Europe. Sign a contract. Do some checks. Sign a Deed of Title. This is deceptive. The procedure is very different and even the use of the familiar English vocabulary to describe the very different steps in Turkey can produce an undesirable sense of familiarity with the procedure. This can lead to assumptions that things that have not been discussed will be the same as they would in England. This would be a wrong and dangerous assumption.

In most cases, for a new property, the basic procedure is this:

1. Sign a RESERVATION CONTRACT. This takes the property off the market for a limiited period - say 30 days. You will usually pay a holding deposit of, say, £2,000.

2. Your lawyer makes enquiries as to the property. These will include a TITLE SEARCH to ensure that the person trying to sell the property to you actually owns it (often they don't!) and a PLANNING SEARCH to ensure it has planning permission. Depending on the nature of your case, other searches may be needed.

3. Your lawyer reports his findings.

4. If all is well, you sign a PRELIMINARY CONTRACT of purchase. This commits you to the purchase and you pay over a deposit, typically of 30% of the price.

5. As the building work continues, stage payments are made.

6. At the end of the building work a HABITATION CERTIFICATE is issued, certifying that the property is fit to be lived in and complies with the terms of the building licence.

7. A FINAL PURCHASE CONTRACT is signed at the Land Registry and your title is registered.

Along the way there are, of course, other steps to be taken. Normally a POWER OF ATTORNEY will be needed. Military permission to buy a property is required. In some cases a company will have to be set up. Taxes must be paid. But these are the main steps. The steps will be different if you are buying a resale property or if you are buying either a new or a resale property via a Turkish limited company.

Work on the basis that the system is totally different from what you are used to.

See a Lawyer

It will save you a lot of time and trouble – as well as a lot of money – if you see your lawyer before you find a property. The International Law Partnership LLP, will be happy to discuss this with you.

There are a number of preliminary issues that can best be discussed in the relative calm before you find the house of your dreams rather than once you are under pressure to sign some document to commit yourself to the purchase.

These issues will include:

• Who should own the property, bearing in mind the Turkish and British tax consequences of ownership and the inheritance law in both countries. This step alone is likely to save you thousands of pounds in totally unnecessary taxes.
• Whether to consider mortgage finance and, if so, how best to arrange it.
• Whether to have the property surveyed.
• What to do about buying the currency needed to pay for the property.
• If you are going to be living in Turkey, sorting out the tax and investment issues that will need to be dealt with before your move if you are to get the best out of both systems.
• What will the process involve? Should you sign a reservation contract? Should you sign a preliminary contract? Should you sign a notarised agreement? Should you buy in the name of a Turkish company? Should you give power of attorney to the agent?

Only UK lawyers who specialise in dealing with Turkey will be able to help you fully. Your normal English solicitor will know little or nothing of the issues of Turkish law and a Turkish lawyer is likely to know little or nothing about the British tax system or the issues of English or Scots law that will affect the way the transaction should be arranged. The lawyer may also be able to recommend estate agents, architects, surveyors, banks, mortgage lenders and other contacts in the area where you are looking. A physical meeting is still the best way to start an important relationship. It has a number of advantages. It allows you to show and be shown documents and to wander off more easily into related topics. Most importantly, it is usually easier to make certain that you have each understood the other in a face to face meeting. But, these days, "seeing" your lawyer does not need to involve an actual meeting. If it is more convenient to you it could be done by telephone conference call, by videoconference or over the Internet.

Choosing a lawyer

The Notary Public ("Noter")

The notary is a special type of lawyer. He is in part a public official but he is also in business, making his living from the fees he charges for his services. Notaries also exist in England but they are seldom used in day to day transactions. Unlike many European countries however, the notary is not an essential figure in the Turkish conveyancing system. His prime importance is in the attestation and registration of contracts and documents other than the title deed itself.

Turkish lawyers (“avokatlar”)

Most Turkish people buying a property in Turkey will not use the services of a lawyer. They will more likely rely upon the estate agent (who essentially represents the seller) unless there is something unusual or contentious about the transaction. If you do use a Turkish lawyer it will be an Avukat. Turkish lawyers are 'lightly' regulated. There is little practical redress if they make a mistake. Turkish lawyers do not generally have designated client accounts (protecting clients funds in their possession) or professional indemnity insurance (protecting clients in the case of negligence on their part). Few have any real experience of property transactions, which are not in Turkey really seen as part of a lawyer's work. Lawyers there see themselves much more as court lawyers or lawyers dealing with commercial contracts. Few Turkish lawyers speak or write fluent English. Nonetheless there are good Turkish lawyers, who can offer assistance when buying a property. Get recommendations from people who have already used their services.

English lawyers (solicitors)

English people will often require advice about inheritance issues, the UK tax implications of their purchase, how to save taxes, surveys, mortgages, currency exchange etc which is outside the scope of the service of the Notary. They should retain the services of a specialist UK lawyer familiar with dealing with these issues. The Buyer's usual solicitor is unlikely to be able to help as there are only a handful of English law firms with the necessary expertise.

One, of course, is The International Law Partnership LLP.

© The International Law Partnership LLP