It was written on 31 August 2017. The law and practice in Turkey change all the time. Our guides are updated as frequently as possible - typically every three years - but may be out of date.
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This guide is about buying off-plan property. By 'off-plan', we mean any property which you buy before it has been physically completed and where you pay more than 10% of the price before you take delivery of the keys and legal title.
Property in the course of construction but where you pay no more than a 10% deposit until it is delivered to you is treated as 'new' property. See our Guide to Buying New Property in Turkey.
For more in-depth information about the process of buying a property in Turkey, please read our Guide to Buying a Property in Turkey.
In the boom years of the property industry in Turkey - roughly from 2002 to 2007 - buying property ‘off-plan’ was extremely fashionable and extremely common.
This is because people were persuaded that there was money to be made by doing so. They were told that prices were rising so quickly that, by the time the property was finished, it would be 20% more expensive than it was today and - in any case - you probably wouldn't be able to find a newly built property to the exact specification that you wanted.
All this was true whilst the market rose sharply but, when the roundabout stopped, a lot of the people who had bought off-plan properties found they were in trouble as the developers went bust in droves and prices tumbled.
Sometimes – all too often - they lost all the money they had paid.
There is still a market for off-plan property, but this is mainly in Istanbul rather than in the coastal towns.
From the buyer's point of view, there are three main benefits to buying an off-plan property.
The first is the potential to benefit from rising prices in the way described above.
The second is that you can often negotiate changes to the standard specification with the builder. For example, you may want your bedroom to be a little smaller and your bathroom to be a little bigger or to convert one of the bedrooms into a dressing room or to have a separate dining room rather than a large kitchen-diner.
The third is that you should have a better range of properties available to you, in a sellers' market, than you would if you waited for the properties to be finished. By that stage all the ones in the best locations or with the best views could well have been sold.
From the seller's point of view, there is one massive advantage. He can use your money to build the property. That saves him a lot in project finance costs - typically, perhaps, 20% per annum in many cases.
There are few disadvantages from the seller's point of view, but from the buyer's point of view there are several:
Most people are not good at interpreting plans. This is particularly so if the plans are measured in metres and they are used to dealing with feet and inches!
Your large living room can turn out, in reality, to be very poky.
Your contract will, no doubt, contain certain clauses setting out the quality of work and the quality of the fixtures and fittings you can expect but they're usually too vague and often open to debate. It is not uncommon for you to feel that what you have been delivered is inferior to what you were shown or promised. This may give rise to certain rights on your behalf but it is always time consuming and inconvenient to have to deal with this sort of situation.
This is even true where you have been shown a property as a show house and think you're buying an identical unit. Surprisingly often, your contract will not refer to the show house by saying that what is delivered to you must be equal in size and quality to the show house.
It is quite common for building projects to be delayed. Sometimes this is because the builder misjudged the time needed to complete the project and sometimes it can be for reasons outside the control of the builder such as strikes at the port or the non-availability of some essential components.
In the worst cases these delays can go on for months.
It is very important that your contract should contain a completion date and a clause stating that builder will have to pay you compensation if he goes beyond this date (unless it is for reasons beyond his control) and that if he goes beyond a fixed later date you will have the right to cancel and have all your money returned to you.
If the builder goes bust before he finishes work on your house, you will have a whole host of problems. Even if you're protected by the law and you don't lose any money, getting your house finished will usually take months and a lot of time and effort. This is because other builders are usually reluctant to get involved in half-finished projects because they never quite know what they're going to find and so how much it is going to cost to finish the work. Unfortunately, when developers go bust they often start cutting corners and so the new builder can find that work that is apparently finished is substandard and has to be done again.
The worst-case scenario if your builder goes bust is that you could lose all the money that you've paid to him up to that point. You become just a regular creditor of the company and, when it's put into liquidation, you - like all the other creditors - may only receive three cents on the euro or ten cents on the euro.
Fortunately, in Turkey you are protected against this risk in the way described below but you will almost always find that, if the builder goes out of business, you will face some additional cost and some loss.
You will, in addition, face all the issues that face any buyer of any new property.
The law does not give any specific financial guarantees to people buying property off-plan in Turkey. There is no limit to the amount of money that the builder can take from you before the property is built, and there is no arrangement where money taken has to be placed in protected bank accounts or in some other way guaranteed so that it is safe in the case of a disaster.
Stage payments are usual in the case of a purchase of an off-plan property in Turkey.
These are payments made as the building work progresses.
This is usual in the case of off-plan properties.
A typical schedule for payment would be:
Other payment schemes can be agreed.
If you want to take out a mortgage on an off-plan property, you will have a cash-flow problem.
No bank will lend you money to pay for the stage payments. They will insist on waiting until you get the legal title to the property and then, at the same time as you get that title, they will release the mortgage money to you and take the protection of a registered mortgage (legal charge) over the property.
This is because, until that point, they cannot have any security for the loan they are making to you. You don’t own it so you can’t mortgage it to them.
You will, sometimes, be able to obtain a mortgage if the developer is able to give you an interim legal title to the property. This is the kart irtifak tapu or Deed of Sale.
The main special step that your lawyers will need to take on your behalf if you’re buying an off-plan property is to make sure that, when it is built, you will be able to get a habitation license for the property. Without this you will not be able to live in it or rent it out.
If the construction of the property has been properly licensed by the municipality and it is built in accordance with the construction licence, you should be able to obtain a habitation licence without difficulty but, all too often, builders make changed to the design without getting the necessary approval. In these cases, it can be difficult or even impossible to obtain your habitation licence. This is especially a problem if the size of the property has been increased.
Buying property off-plan was incredibly popular. It is now less so but it is creeping back into the system.
There is nothing wrong with that and buying off-plan does allow you to choose exactly the property you want in exactly the place you want but you do need to make sure that your lawyer is protecting you by putting all of the necessary clauses into the contract and that all of your payments are going into escrow or guaranteed by an insurance policy.
|Turkey Country Guide
Essential facts and figures about Turkey
|Buying a Property in Turkey
A thorough guide to buying a house in Turkey
|Buying a New Property in Turkey
Things to think about if you're buying an new property
|Buying a Commercial Property in Turkey
Things to think about if you're buying an off-plan property
|Renting a Property in Turkey
What you need to know if you're renting a Turkish property
I hope you have found this guide useful. If you need any further help, please contact me.Başak Yıldız Orkun 31 August 2017
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