Sunday, February 13, 2022

A new rule has seen the light of day!

A new rule regarding the purchase of real estate in Turkey has seen the light of day.

The rule means that buyer when applying for the title deed transfer must enclose a so-called “exchange certificate”, which documents that the public evaluation value of the property has been exchanged from foreign currency into Turkish lira.

The certificate is issued by the Turkish banks and must be handed in at the local land registry office along with all other required documents related to the transfer of the title deed.

In practical terms, this means that the buyer of a property in a Turkish bank account must exchange the registration value from foreign currency - typically Euro or Dollar - to Turkish lira.

The bank then issues the exchange certificate which is then submitted along with all other documents.

There are still some ambiguities about this process, but below we will explain the two most common scenarios for you as a buyer.

Likewise, we will answer some of the most frequently asked questions.

In the examples we will be using a property with a public evaluation TRL 750,000, corresponding to around 50,000 Euros.

- You have a Turkish bank account

Here you can send 50,000 Euros to your Turkish bank account, exchange for Turkish lira and get the certificate issued.

If the property must be paid in Euro, you can exchange back to Euro after the exchange certificate has been issued.

- You have no Turkish bank account

In that case a representative can do the exchange on your behalf. If you have given a 3rd party such as your real estate agent a power of attorney to be able to complete the transaction on your behalf, he or she can also complete the exchange.

In that case, you will send 50,000 Euros to your representative / broker who will complete the exchange and have the certificate issued on your behalf.

How much does this bill of exchange cost?

Once the exchange has taken place, the bank issues the certificate free of charge. In most cases, it will be necessary to exchange the Turkish lira back to Euro, as payment of the property usually takes place in Euro. 

Here there will be a loss due to different exchange rates on selling and buying foreign currency as well as a government exchange fee of 0.2 percent of the total sum.

Please note that the 0.2% government exchange fee is paid only when exchanging from Turkish lira to Euro, not when exchanging from Euro to Turkish lira.

Why has this exchange certificate been introduced?

Without drawing undocumented conclusions, it is clear to everyone that this is part of a series of measures taken by the Turkish government across all sectors in an attempt to strengthen the weak Turkish lira.

How long have you known about the introduction of this certificate?

This new regulation was introduced without prior notice on Monday 24th of January. Even the land registry office in Alanya knew nothing, and for several days it was not possible to apply for deeds, just as all ongoing title deed transaction processes were terminated.

Who does this new regulation apply to?

Currently only when a buyer is of foreign (none-Turkish) nationality the exchange certificate must be submitted.

I am thinking of investing in a holiday home in Alanya, how does this affect me?

The exchange certificate is just one of several required documents when buying a holiday home in Alanya.

At 2Base Estate Agency we are assist all of our buyers in completing the title deed transaction process from A to Z, and the exchange certificate will be issued with help from us in line with all other required documents and certificates required when purchasing a property in Turkey.

I'm in the process of buying a property in Turkey, what should I do?

There are many ongoing trades that have been affected by this new rule, and we are already in dialogue with our buyers and sellers about this.

In some cases, the buyer will already have a bank account in Turkey, and we can arrange an exchange via this account.

In other cases, we as the buyer's representative, will be able to carry out an exchange and thus have the certificate issued.

Like everyone else in the industry, we are annoyed that no notice was given before the introduction of this new requirement. 

However, we are used to and very experienced in solving small bumps along the way so that our sellers can have their home sold, and the buyer can take over their new holiday home to the benefit of themselves and their loved ones.