20 | TURKISH OUTLOOK WORDS | Basak Yildiz
BUSINESS
www.opp.org.uk | JUNE 2012
property and revised articles 35 -36 of the Code of the Land Registry. The new law, accepted by the
parliament on 3rd May 2012, was published in the offi cial gazette (no: 28296) on the 18th May 2012 as law number 6302. This change means that the
reciprocity principle - previously meaning that only citizens from countries which allow Turks to buy in their countries can buy in Turkey - will be cancelled. Instead, the Council will be given a wide-ranging authority over which countries’ citizens will be permited to buy. It will consider the social, economic and political affairs within the countries when deciding. The reciprocity change has been
made, mostly, to try to target buyers from Russia, China and the Middle East, by making it more attractive for them to invest in Turkey. It shows that the Turkish government is trying to keep pace with the balance of economic power sliding from developed economies to developing countries.
Another prominent change in article 35 is the increase in the size of the land that foreign individuals’ can
Reaching to the East T
he Turkish government has explored ways to increase overseas acquisitions of
acquire in Turkey. Under the previous law the limit was only 2.5 hectares. However, the new law has increased this to 30 hectares (about 75 acres). The Council of Ministers has been given the fl exibility to increase the limit to 60 hectares. The Council is also authorised to “stop, reduce or change purchases by overseas buyers in the interests of the country”.
“The areas affected can be foreseen as the Aegean and Mediterranean coasts, and Istanbul”
Purchases of land without any
buildings already on it are now bound by a two-year time limit, during which time a development project for the land is to be submitted to the relevant ministry. Following the approval of the project with the confi rmation of commencment and completion dates, the project should be registered at the Land Registry. The project shall then be reviewed by the relevant ministry, to see whether the deadlines are met. The change in the law will also help prevent projects that never had the aim of being completed in the fi rst place - scam projects. The Government
will take an active role in auditing investments. “Land without any buildings” also
applies to agricultural land. According to the previous law, such land could not be purchased by non-nationals. This led to overseas individuals setting up inactive Turkish companies to get around the law. However, the new law gives foreigners the opportunity to acquire this type of land provided that a project will be developed there. Should the investors not meet the time-limits or other limitations set out in this law, the buyers’ rights shall be forfeited (within a year) by the Ministry of Finance. If the owner does not sell the rights, the conversion shall be completed by law and the value received shall be paid to the owner. Acquisitions of companies set
up under Turkish law by overseas shareholders or companies has also been re-arranged. By the new law, non-national investors must possess at least 50% shares of the company, or shall have the authority to appoint or remove people managing the it. In accordance with this, foreign shareholding companies can acquire property or establish rights over property in compliance with their permitted activities, as mentioned in the Articles of Association.
Turkey’s passing of a new law to encourage non-national property buyers is a hot topic this month. Lawyer Basak Yildiz from Bodrum-based law fi rm Orkun & Orkun takes a closer look at how the new legislation could effect the industry in Turkey, and in particular, how it could entice investors from the East.
Basak Yildiz is a lawyer at Orkun
basak.yildiz@orkunorkun.com
All the above changes, particularly the release of the reciprocity principle, seem likely to attract the targeted markets. Sector spokesmen are already saying that Arabic-country citizens have started group buying in Istanbul. After the changes, the areas affected are expected to be the Aegean and Mediterranean coasts, as well as Istanbul.
After the boost in 2005-2006, Turkey got into a very fl at period in its property market, caused mainly by the global recession. Although Turkey steered out of the recession with minimum damage, the effect of the crisis was quite noticeable on property market. The crisis in developed economies could not be under-estimated, due to Europe being a leading international element for the sector in Turkey.
Now read: Bringing Turkish delight – OPP pro- fi les Turkish agency Turkey Property Centre and looks at their plans to targeting the new markets opening up. Page 46.
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