- within Strategy, International Law and Tax topic(s)
Although the acquisition of real estate by foreigners in Türkiye has been possible for many years, such transactions are subject to certain rules and procedures. In addition, where certain conditions are met, the acquisition of real estate may also enable the acquisition of Turkish citizenship. Therefore, it is important to assess the applicable rules and the obligations to be fulfilled prior to the transaction in the real estate acquisition process. This information note summarizes the basic legal framework applicable to the acquisition of real estate in Türkiye by foreign natural persons, foreign legal entities, and foreign-invested companies, as well as the main procedural requirements and practical considerations commonly encountered in practice.
Pursuant to Article 35 of Land Registry Law No. 2644 (the “Law”), natural persons who are not citizens of the Republic of Türkiye and/or commercial companies having legal personality, which are established in foreign countries under the laws of their respective countries, subject to the provisions of special laws, may acquire real estate and limited rights in rem over real estate in Türkiye (the “Foreigners” or “Foreigner”). Subject to compliance with the restrictions prescribed under the Law and the relevant secondary legislation, Foreigners are permitted to acquire all types of real estate, including residences, workplaces, plots of land and agricultural land. The reciprocity requirement previously applicable to the acquisition of real estate by Foreigners was also abolished by the amendment introduced in 2012.
In addition, foreigners who are determined by the Ministry of Environment, Urbanization and Climate Change (the “Ministry”) to have acquired real estate in the amount of at least USD 400,000 or its equivalent in foreign currency, provided that an annotation is entered in the land registry records stating that such real estate shall not be sold for at least three years, may acquire Turkish citizenship by a Presidential decision, subject also to the other conditions set forth under the relevant legislation. For more detailed information on this matter, please refer to our information note titled “Overview of the Acquiring Citizenship through Real Estate Invesment” available here.
Legal Framework and General Principles
Under the Law, the rules governing the acquisition by foreigners of real estate or limited rights in rem over real estate in Türkiye are determined by the President, taking into account the foreigners who may acquire real estate in Türkiye based on (i) their nationality, (ii) the existing international bilateral relations with the countries of which such foreigners are nationals, and (iii) national interests. In any event, the total area of real estate acquired by foreign natural persons may not exceed 10% of the surface area of the relevant district subject to private ownership, nor 30 hectares per person throughout the country. The President is also authorized to increase these limits up to twofold and to impose additional conditions in terms of country, person, geographical region, duration, number, ratio, type, nature, surface area and quantity.
In the event that unbuilt real estate, such as plots of land, fields, vineyards and gardens on which no structure is located, is purchased by foreigners, a project suitable for the nature of the relevant real estate must be developed and submitted to the approval of the relevant Ministry within two years. Projects approved by the relevant Ministry, with their commencement and completion periods determined, are sent to the land registry directorate where the real estate is located, in order for the approved project to be recorded in the declarations section of the land registry. Whether the approved projects are implemented within the prescribed period is monitored by the relevant Ministry.
In any event, Foreigners may acquire real estate or limited rights in rem over such real estate, without prejudice to the restrictions imposed under the legislation concerning special security zones and military security zones. In particular, real estate located within military prohibited zones, military security zones and special security zones, as well as real estate that is closed to acquisition by foreigners pursuant to the relevant legislation, may not be acquired by foreigners.
Real estate acquired by Foreigners in any manner contrary to the legislation, or real estate which, although duly acquired, is subsequently
determined by the relevant Ministry and the relevant administrations to be used contrary to the purpose of acquisition, as well as real estate for which the required projects are not implemented within the period determined by the Ministry, and real estate and limited rights in rem acquired through inheritance in breach of the surface area limitations prescribed under the Law, shall be liquidated and converted into cash if not disposed of by the right holders within the period to be granted by the Ministry of Treasury and Finance, which shall in any event not exceed one year, and the proceeds obtained shall be paid to the right holder.
Pursuant to the regulations that entered into force on 1 February 2023, where the same real estate is acquired by more than one foreigner under co-ownership, i.e. ownership in shares, each shareholder may not separately apply for Turkish citizenship on the basis of their respective share. In this respect, multiple foreigners may not apply for Turkish citizenship on the basis of purchasing different shares of the same real estate, for example, the same independent section.
Foreign Invested Companies
Pursuant to Article 36 of the Law, companies with legal personality established in Türkiye, in which foreign natural persons, legal entities established under the laws of foreign countries, or international organizations hold 50% or more of the shares, or have the authority to appoint or remove the majority of the persons having management rights, may acquire real estate and limited rights in rem only if such acquisitions are made for the purpose of carrying out the activities set forth in the articles of association of the relevant Turkish-incorporated company.
In parallel with this principle, the same rules apply in the following cases:
- where the aforementioned companies directly or indirectly become shareholders in another company established in Türkiye, if the ultimate shareholding ratio of the foreign investor in the company invested in is 50% or more; and/or
- where foreign investors directly or indirectly acquire 50% or more of the shares of domestic-capital companies owning real estate, or where the shareholding ratio of foreign investors in existing foreign-invested companies owning real estate reaches 50% or more as a result of a share transfer.
Foreign-invested companies falling outside the scope described above are treated in the same manner as domestic-capital companies in terms of the acquisition of real estate or limited rights in rem over real estate.
The use of the acquired real estate is monitored by the governorates at certain intervals on the basis of the land registry records. Real estate and limited rights in rem that are determined to have been acquired or used in breach of the applicable rules shall be disposed of by the owner within the period granted by the Ministry of Treasury and Finance. Otherwise, they shall
be liquidated and converted into cash, and the proceeds shall be paid to the right holder.
Exception Regarding Blue Card Holders
Under Turkish Citizenship Law No. 5901, requests by natural persons who were Turkish citizens by birth but lost Turkish citizenship by obtaining permission to renounce citizenship, i.e. “Blue Card” holders, and their descendants up to the third degree, for the acquisition of real estate or limited rights in rem over real estate in Türkiye are finalized in the same manner as those of Turkish citizens, without being subject to the restrictions applicable to foreigners.
Overview of the Process and Main Procedures in Land Registry Transactions
In light of the foregoing, provided that there is no legal impediment, the land registry procedures to be carried out in parallel with the commercial transactions relating to the acquisition by a Foreigner of real estate or limited rights in rem shall be initiated. Applications within this scope may be made by the current owner of the real estate or their authorized representatives directly to the relevant land registry directorate, together with the mandatory information and documents listed under the Law and secondary legislation and in compliance with the time periods set forth therein. Such applications may also be made through the Alo 181 Call Center, by obtaining an appointment via the e-Appointment system of the e-Government application, or by directly creating an application through the Web-Land Registry platform.
In addition, through the Your Key Türkiye portal established by the General Directorate of Land Registry and Cadastre, or through the Investment and Finance Office portal, foreigners are provided access, in six languages, to up-to-date information, application methods and procedures regarding the acquisition of real estate in Türkiye by foreigners.
Application and Transaction Documents
In order for land registry transactions to be carried out, the following information and documents must be submitted completely and duly, and the relevant process must be followed up, depending on the type of transaction:
- Identity document or passport: The identity verification of foreign natural persons is carried out on the basis of a foreign identity document or passport issued by the competent authorities of the country of which they are nationals and which has not expired. Such documents must be submitted to the competent authorities at the time of application. Notarized sworn translations of identity documents and passports issued in alphabets other than the Latin alphabet must be submitted.
- Identity Declaration Form: A fully completed copy of the “Identity Declaration Form” provided in […] with a photograph attached is required.
- One photograph of the owner of the real estate and two photographs of the purchaser: Where there is more than one owner, one photograph must be submitted for each owner. The photographs must have been taken within the last six months and must be 6x4 cm in size.
- Valuation report regarding the real estate: Inall saletransactionsconcerning therelevant real estate where foreign natural persons are party to the transaction as purchasers, a valuation report showing the current market value of the real estate and prepared by a valuation company in accordance with international valuation standards must be submitted (the “Report”). The main points to be taken into consideration in this respect are summarized below:
- The Report is valid for three months from its date of issuance. If the same real estate becomes subject to a similar transaction again within this period, a new Report is not required. However, if it is understood from the land registry that there has been a change affecting the value of the real estate, such as a change of property type, dedication to road, or establishment of an easement right, a new Report is requested regardless of the applicable
- With respect to the relevant acquisition, the related land registry transactions and other administrative procedures, all statutory financial obligations that may arise, particularly land registry fees and taxes, are determined and collected in accordance with the relevant legislation. In addition, in the cases prescribed under the relevant legislation, a valuation report is prepared for the purpose of determining the market value of the real estate, and such value must be shown in the official deed serving as the basis for the land registry transaction in table
- If there is/are structure(s) on the real estate, for the purposes of the value to be determined under the Report, if such structure(s) are physically completed on site, the value of the real estate as of the transaction date must be reflected; whereas, if the construction of such structure(s) is ongoing and a condominium easement has been established thereon, the value of the real estate that will arise upon completion of such structure(s) must be
- The submitted Report(s) are scanned online in order to be transferred to the Land Registry and Cadastre Information System (TAKBİS), are not physically retained, and the original is returned to the relevant person following such
Authorization document regarding representation, if the transaction is carried out by a representative: Documents relating to representation, such as a power of attorney, guardianship decision or authorization document, must be submitted. If the transaction is carried out on the basis of a power of attorney issued abroad, the original or certified copy of the power of attorney must be submitted together with its translation.
In applications by foreign legal entities for the acquisition of real estate, an up-to-date signature circular showing the company officials and their authority to represent and bind the company, or an authorization document issued in the year in which the transaction is carried out, showing the company officials and the scope of their authority to represent and bind the company and expressly including their authority in relation to the relevant acquisition, must be submitted. The original of such document bearing an apostille annotation and its certified translation are required; where there is no apostille annotation, certification by the Turkish Consulate in the relevant country is required.
The relevant authorization document must include the phrase “Foreign-Invested Company within the scope of Article 36 of Land Registry Law No. 2644”, and an application must be made to the Provincial Directorate of Planning and Coordination of the Governorate together with the documents required under the relevant legislation.
As for foreign-invested companies falling outside this scope, their authorization documents must include the phrase “Foreign-Invested Company outside the scope of Article 36 of Land Registry Law No. 2644”. Such companies are treated in the same manner as domestic-capital companies, and their requests are finalized directly by the land registry directorates within the framework of the general principles.
With respect to foreign-invested companies, it is also mandatory to submit the letter of conformity to be obtained regarding special zones.
- Compulsory earthquake insurance policy: For residences, workplaces and structures used for such purposes, a compulsory earthquake insurance policy issued by insurance companies against damage that may occur due to earthquakes must be submitted.
- Title deed orvillage/neighborhood, map sheet, parcel, building and independent section information: The title deed of the relevant real estate, if available, must be submitted.
- Sworn translator: If there is a party who does not speak Turkish, a sworn translator must be present for all transactions to be carried out in person.
- Real Estate Current Value Certificate: An up-to-date certificate obtained from the relevant municipality showing the real estate current value with respect to the current market value of the real estate must be attached.
Foreign Exchange Purchase Certificate (“FX Purchase Certificate”) Requirement
As a principle, the consideration relating to the acquisition by foreigners of real estate in Türkiye must be paid in foreign currency; however, with respect to this payment method, an obligation has also been introduced to convert the
relevant foreign currency through the Central Bank of the Republic of Türkiye (“CBRT”). In this respect, before the acquisition transaction is carried out by the foreigner at the land registry directorate, an FX Purchase Certificate must be submitted, showing that the foreign currency corresponding to the acquisition consideration, based on the foreign exchange selling rate applicable on the transaction date for the equivalent of USD 400,000, has been sold to the CBRT through a bank operating in Türkiye.
Conclusion and Assessment
As summarized above, the acquisition by foreigners of real estate or limited rights in rem over real estate in Türkiye is possible within the frameworkofthe Lawandtherelevantsecondary legislation; however, such transactions are subject to various restrictions and additional obligations with respect to certain matters, including nationality, the surface area of the relevant real estate and the payment method. In this context, the legal regime applicable to such acquisitions involving a foreign element differs depending on whether the relevant party is a natural person, a legal entity or a foreign-invested company. In particular, although a company may be foreign invested, since it is established under Turkish law and has Turkish legal personality, it is not considered a “foreign legal entity”. Therefore, in terms of the acquisition of real estate, it is subject to the same provisions as any other Turkish company.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
