NOTE: This post does not detail instructions on foreigners buying property under their names only.
Recently, my Turkish wife and I set out on buying an apartment in Istanbul. For those who don’t know, real estate prices in Istanbul only go one direction: up.
But it’s not always that easy. This post is intended to help people look deeper and realize that buying a flat — even if you or your Turkish spouse have citizenship — is not so straightforward.
We had (and have) been looking for a good opportunity to buy for the past couple months. With the exception of a property in a site (condominium complex) in Ayazağa (near Maslak), we have been looking on the Asian side, near the coast: from Kadıköy and along the Bağdat Caddesi corridor to Maltepe. We had a limit: a total price of about 300,000, and we would be taking out a home loan.
Tips when searching for flats
Sahibinden’s real estate search page with criteria.
It’s all on Sahibinden. Sahibinden.com has a great filter which includes price location, floor, building age, accepts credit, etc. Emlakçılar (real estate agents) say that other sites, such as Emlakjet and Hurriyet emlak, are passé. Often the place an emlak will show a flat on Sahibinden just to get you to call them. They often have more flats on offer that they don’t advertise.
Look for a newer building (5 years old or less). While older buildings can present great opportunities if they are in good locations (and if you have the connections, time and money to fix them up), newer ones are what Turkish people want. Older construction in this town is mostly done by unskilled muthaitler (unskilled builders) who looked to build and sell as fast as possible, so there are issues with plumbing, heating, etc. In older buildings, these could turn into big headaches.
Sock your money away in dollars/euros. Pretty much a no brainer here. Even the AKP “stability” that was supposed to give the lira boost only lifted the exchange rate of a few kurus to date. The lira is weak. Plus, interest rates are high. High interest rates and a weak currency are a bad sign for the economy.
Have a solid down payment. Shoot for at least 30 percent. Why? You don’t want to pay interest out the nose, and banks usually won’t accept less anyway.
Konum, Konum, Konum! (Location, location, location): Kadıköy, Beşiktaş, Bostancı, Şişli, Levent. Unless there is a major economic crisis, these places will always hold there value and will always be desirable areas to live in. An older, dark 300,000 TL flat in Kadikoy may be better investment-wise than a two-floor brand new flat in distant Sancaktepe. Plus, you can rent it in about 5 minutes to a rich student or young professional.
Look for possible kentsel dönüşüm opportunities (loosely translated as “urban renewal”). Kentsel dönüşüm is when a builder approaches the owners of flats in a building (or visa versa) and offers them a new building. In other words, they offer to knock down the old building, build a new one, give them a new flat in place of their old one, all the while paying the owners’ rents in temporary apartments during construction. What’s in it for the
You could make a pretty penny on getting your older building knocked down with kentsel dönüşüm — if you can wait a while!
construction company? They get at least few flats of their own (they make the new building bigger than the old) to sell at premium prices. You get a new flat worth a lot more than your old.
My friend Fidan did this. She notes, however, that this can take a long time if the building is big. In her case, all 32 owners in the building had to agree on which construction company and which features they wanted in their new flats. “I waited for three years, then it took two years to finish the construction, even though they said it would take one”. However, at the end of the day, she got a flat worth 450.000 whereas the previous one was valued at 250.000. It now brings in 2000 in rent.
When you get serious
Type of title. Ask the owner and agent about this. The type of title in newer flats — called kat mulkiyet — is a better type of title because it states that the owner owns exactly the flat she purchased, including square meters and the floor its on. Most flats older buildings have kat irtifakı titles, which means you are guaranteed a certain percentage of the building as a whole, but it’s not a reflection of the finished building plan. Kat irtifakı titles can usually be changed into kat mulkiyet deeds. All newer buildings are divided into kat mulkiyet titles. More on this here (in Turkish).
Negotiate the agent’s fee. They say their fee is 5 percent of the sale cost, which is generally split between buyer and seller, but this can be negotiated down to around 1 to 2 percent of the sale cost.
Negotiate the apartment’s price. Ask for 15 to 20 thousand lower than the asking price and go from there. Don’t be afraid to walk away. The agent has come that far and he wants your business.
When choosing a mortgage plan
Pay it off reasonably quickly. You are not going to make money if you rent here anyway, as you can in many places in the States, for example. The rents just aren’t that high. For a 300,000 TL or less place with a 30 percent down payment, you are looking at at least a 2500 TL per month payment, and the rent you could make on a place is unlikely to exceed 1500 TL (if it could, the house would be worth more than 300,000!).
Negotiate the interest rate. Find the bank with the lowest rate online as a start, but go around to different banks to see what kinds of fees they charge (inspection, earthquake insurance, etc.). If you want to stick with the bank you do your banking with, find the lowest possible interest from another bank and ask your bank to match. This is Turkey, after all.
So what about us?
At the end of the day we found a fully and newly renovated apartment in Küçükyalı. We had looked at three apartments in a couple hours. We negotiated the price from 275 to 267. We
The missing column (kolon) that doomed our home purchase is circled in blue to the left.
negotiated the emlak fee a bit (but probably could have gone lower than 5,000). We got approved for the loan on condition of the inspectors approval. The inspector came to the home and scrupulously inspected the flat and others in the building.
His decision? A column that was crucial to the structure of the home was removed by the builder! While we were saddened that we didn’t get a nice rennovated home at a good price, we were relieved that we didn’t put ours and our renters’ lives at risk.
Fate, destiny, kismet, kader, whatever you want to call it. We decided the missing column was a sign. We want to pursue other areas, namely our graduate studies.
This was our lesson in Turkish economics from the school of real life.