Buying property through installments is considered one of the adopted systems in Turkey, starting from purchasing clothes and essential household items to buying cars and real estate. Today, we will discuss the details of the installment system in general and how to buy property in Turkey through installments for those who wish to own property in Turkey but feel that their budget cannot afford to pay the full price at once. The most important question is: Do foreigners have the right to buy property through installments in Turkey?
The real estate installment system is based on the principle of owning property through a deferred sales contract, where the buyer is required to pay an initial down payment, usually ranging from 30% to 50% of the total property value. The remaining amount is paid in installments through bank receipts that are transferred monthly from the buyer’s account to the seller’s (construction company’s) account over a year, two years, or more, according to the pre-agreed terms specified in the signed contract between the parties.
This convenient installment payment method is not limited to Turks only but also applies to foreigners from nationalities eligible for property ownership in Turkey, whether they are Arab, European, American, or others. However, it is important to note that the property ownership document (title deed) cannot be obtained before the full payment of the property price. Consequently, the property will remain registered under the name of the construction company at the Land Registry and Cadastre Directorate until the full payment is made, and both parties must go to the relevant directorate’s branch to complete the property transfer procedures.
What guarantees that the construction company will transfer the ownership to the new buyer after completing the installments?
The contract is the law between the contracting parties, and real estate purchase contracts in Turkey are authenticated and certified by a notary public. They are originally signed by both the buyer and the seller, and each party keeps their original copy. The contract stipulates that the purchased property was acquired through installments, specifying the amount of the down payment, monthly payment amounts, payment methods, bank account numbers, and every detail, whether small or large.
Therefore, neither party can violate any of the contract terms, as it would subject them to legal accountability. On the other hand, the buyer is obligated to make monthly payments according to the agreed terms, with evidence of transferring the monthly installment from their account to the construction company’s account through receipts.
When the buyer transfers the final installment payment of the property value, they need to contact the construction company with all the receipts since the first transfer, along with the signed contract, and then proceed with the representative of the construction company to the branch of the Land Registry and Cadastre Directorate to complete the title deed and property transfer procedures legally.
It is worth noting here that the contract signed at the time of purchase allows the new owner to use the property for living purposes or renting if it is ready for occupancy. However, they cannot sell it as it remains under the name of the construction company.
Does the value of the property purchased through long-term installments increase if the exchange rate fluctuates?
The answer is no. The construction company is committed to the amount recorded in the contract, whether in local currency or in dollars. For example, if the property value is 415,317 Turkish liras, this amount remains unchanged after deducting the down payment and paying the remaining installments over the years. If the down payment is 50%, its value would be 207,658 Turkish liras, and the monthly installment would be 8,652 Turkish liras if the agreement is to pay the remaining installments over two years, meaning 24 months.
Note: The value of the property stated in the contract is only the amount that makes it payable as the price of the apartment and does not include taxes such as property transfer tax, value-added tax (if applicable), and other taxes and fees.
Why do construction companies resort to this type of sale, and what are the benefits?
Construction companies that are building properties aim to sell a certain number of apartments in their project to generate the necessary financial liquidity that allows them to continue construction and deliver it on time. Therefore, they seek to sell at least 30% of their apartments during the construction period and collect financial amounts, either in cash (the full price of the apartment) or through installment payments (one-third or half the price of the apartment).
It is important to note that as the construction progresses, the prices of the apartments increase. Buyers who purchase an apartment based on the project plan or at the early stages of construction do not pay the same price as those who purchase the apartment after several months and several floors have been added to the building. The price of the apartment continues to rise until the construction is completed and the apartments are ready for delivery. This creates a significant gap between those who purchased the property based on the project plan and those who purchased it when it was ready for delivery, sometimes resulting in the price doubling.
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