Lawyer in Turkey: March 2019

Thursday, March 14, 2019

Obligation for Property Valuation in Turkey

The Turkish real estate market is dealing for years with unregistered money circulation. Herewith the government is missing a lot of tax rates, due to the fact that investors are not giving up the fair market value with property transactions. The reason therefore is that the legal transfer fees are calculated on base of the purchase amount that the parties declare independently at the title of deed office. And that's the point where it goes wrong. Actually the basic indication for the purchase value is the municipal current market value, but often the municipal market value differs from the fair market value.

Besides the lost tax rates, the buyer is often the victim of unrealistic purchase amounts, with the result that Turkey can not create a stable trade name on the international real estate market.

So far the imposed measures proved to be ineffective. That is the reason why the Ministry is  introducing the obligation of a valuation report starting from 4th of March 2019! Before the deed of purchase and delivery can take place, a valuation report with the fair market value of the object must be established by a recognized valuation company, which will serve as the basis for calculating the property transfer fee.

The regulations are laid down in a Land Registry Regulation by the Ministry of Environment and Urban Development (TKGM). In accordance with this regulation, the procedures of purchase and sale of a property will have to deal with a recognized valuation office that has been approved by the government, the so-called "SPK lisanslı uzmanlar".

With this new regulation, all foreign investors will be subject to the mentioned conditions.  The established valuation report has a validation period of maximum of 3 months from the date of issue. Obtaining a new valuation report within those 3 months is not necessary unless there is such a change to the property that will have an effect on the value. In case of buildings who are under construction, the value will be based on the details of a completed object.

The purpose of the government may be clear, but the remain main question is; whether the intervention of a recognized valuation office will actually benefit the foreigner. On the other hand, it is certainly a fact that the intervention of an recognized valuation office will considerably delay the ownership transactions in a country where the economy is running very fast.

For more information and guidance on your real estate sale or purchase, please contact us.