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TRTurkey Real Estate - Mandatory expert opinion for determining the value of real estate in Turkey
According to the circular of the general directorate of the land register and land registry office (Tapu ve Kadastro Genel Müdürlügü - TKGM), for all transfers in which foreigners act as buyers or sellers, the mandatory preparation of a valuation report is specified, which shows the actual market value of Turkey property.
The expectation is that the new regulation will strengthen the confidence of investors and will increase thereby the mark value Turkey. It should be avoided in particular that foreign buyers of Turkey real estates with high prices and false promises and or intransparent data are over-indulged. Beyond that in the past the wage costs - which constitute with the building about half of the total costs - were often not declared.
Value appraisals for Turkey real estates have a validity of 3 months
A similar regulation existed in the past when applying for Turkish citizenship, if certain value limits were exceeded in the Turkish real estate acquisition of foreigners (formerly $ 1 million, the current figure is $ 250,000). With the new initiative this regulation applies now starting from 4.03.2019 for all transfers of real estates occupied in Turkey to foreign citizens. According to the circular of the TKGM, a once prepared valuation has a validity period of three months from the date of issue. If the valuation bases change within this period, a new expert opinion is requested.
For buildings under construction, the expected value is calculated after completion. The sales price stated may not be lower than the value stated in the expert opinion. If the selling price of the Turkish real estate is higher than determined by the expert opinion, the selling price is decisive. According to the current legal situation, appraisals may continue to be prepared exclusively by appraisers certified by the Turkish Financial Market Authority (SPK - Capital Markets Board of Turkey, http://www.cmb.gov.tr/).
From 2022 valuation reports for real estate obligatory for everyone
According to TKGM, the new regulation will be mandatory from 2022 for all transfers of real estate in Turkey, regardless of the nationality of the buyer or seller. The beginning of the smaller range of transfers to foreign citizens serves to prepare the nationwide introduction. The construction sector as one of Turkey's key industries is to be further professionalised and made more transparent. Sustainably acceptable prices and a transparent cost base are aimed at increasing confidence in the "Made in Turkey" brand. Many well-known Turkish construction companies are building project developers abroad, especially in the Middle East and Russia. The increased quality of recent years and a clear view of costs have brought the Turkish construction industry a number of orders abroad.
Our assessment
The valuer must be certified by the Financial Market Authority and vouches for his name (usually larger service companies). The cost of the appraisals for real estate with a value of e.g. € 50,000 is about 2,000 Turkish lira (currently about € 330) and is therefore limited. The obligatory submission of the expert opinion to the land registry office prevents the widespread practice of stating a value below the actual sale price - and thus an impermissible reduction of the real estate transfer tax. In principle, the new regulation has the potential to increase the transparency of transfers in Turkey. We therefore welcome the introduction of the regulation and expect that it will contribute to strengthening Turkey as a real estate location. Foreign citizens in particular will be provided with a sound database on which to base their decisions.
Further information will follow (as of 02.03.2019).