Acquisition of Turkish Citizenship through Property Purchase

Turkish Citizenship through Property Acquisition has become an advantageous method. With the legal regulations introduced in 2018, foreign nationals who meet certain criteria are now entitled to acquire Turkish citizenship through property purchase in Turkey. This regulation offers significant opportunities for both investors and foreigners who plan to reside in Turkey. However, there are several important conditions and procedures that must be observed during this process.

Those seeking to obtain Turkish citizenship through property acquisition must purchase real estate within a specified value range and fulfill the relevant legal requirements. The purchased properties must comply with certain criteria, and the title deed transactions must be conducted according to specific rules. Additionally, there are significant commitments, such as the obligation not to sell or transfer the property for a certain period after the acquisition.

In this article, we will examine in detail the process of acquiring Turkish citizenship through property purchase and the legal regulations that must be followed during this process.

1. Acquisition of Turkish Citizenship through Property Sale Promise Agreement

As briefly mentioned above, prior to the amendments made by the Presidential Decree No. 418 published in the Official Gazette on 07.12.2018, foreigners were only allowed to purchase completed properties with condominium ownership. However, with the new changes introduced, foreigners are now allowed to apply for Turkish citizenship by purchasing properties in ongoing construction projects, provided that the conditions outlined below are met. These conditions are as follows:

• The property must have condominium ownership or construction servitude (Kat İrtifakı) established on it,
• A minimum amount of 400,000 USD or its equivalent in foreign currency or Turkish Lira must be invested in cash,
• A promise to sell agreement (sales agreement) must be made before a notary public for the property, and
• This agreement must include a commitment that the property cannot be transferred or deregistered from the land registry for a period of three (3) years, and this commitment must be annotated in the land registry.

In order to better understand the aforementioned change, it is necessary to explain the concepts of “condominium ownership” (Kat Mülkiyeti) and “construction servitude” (Kat İrtifakı) in Turkish Law:

Construction Servitude refers to the ownership right of a building that is not yet completed. It is a type of easement associated with the share of land, and according to the provisions of the Turkish Condominium Law No. 634, it is automatically converted into condominium ownership upon the issuance of the building usage permit based on the approved project.

Condominium Ownership, on the other hand, refers to the ownership right established on buildings that are completed and have obtained a certificate of occupancy (Iskân) for the relevant property.

After the completion of a building with a construction servitude, the contractor applies to the relevant municipality for an inspection regarding the compliance of the construction with the approved project. The municipality’s relevant departments inspect the construction on-site and verify its compliance with the approved project. Once this inspection is completed and if the building is in conformity with the project, the municipality issues a “Building Usage Permit” or “Certificate of Occupancy” (Iskân).

In this context, purchasing a property with a construction servitude has some disadvantages. For example, after the issuance of the servitude title deed, the contractor may complete the building in a way that deviates from the approved project. In this case, the person who purchased the property could face the following consequences:

• The building, constructed in violation of the approved project, may be demolished by the municipality or the governorate, following a decision by the municipal council or the provincial administration council.
• If common areas such as parking lots and storage spaces cannot be included in the apartments, other rightful owners may obtain a demolition decision concerning the property.

Additionally, when banks issue housing loans, they require that properties with construction servitude must have a building usage permit. Therefore, even if the apartment is constructed in compliance with the project, purchasing a property that has not received a certificate of occupancy (Iskân) always carries a risk.

In light of all the above, properties with construction servitude pose higher legal risks, while properties with condominium ownership provide a stronger legal foundation. For this reason, it is crucial to thoroughly examine all potential risks before purchasing real estate.

2. Procedures and Principles Regarding Applications for Real Estate Acquisition

In order to determine the procedures and principles to be followed in real estate acquisition applications, the Ministry of Environment and Urbanization, the General Directorate of Land Registry and Cadastre, Foreign Affairs Department, has issued several circulars to date. These circulars are as follows: Circular No. 2017/8 (1779) dated 25.11.2017 (repealed), Circular No. 2018/10 (1789) dated 19.09.2018 (repealed), Circular No. 2018/12 (1791) dated 15.10.2018 (repealed), Circular No. 2018/14 (1793) dated 10.12.2018 (repealed), and the most recent Circular No. 2019/5 (1799) dated 30.05.2019.

In this context, the most recent procedures and principles to be applied at land registry offices, as determined by the guide attached to the Circular No. 2019/5 (1799) published on 30.05.2019, will be examined under the following headings.

2.1. Legal Basis

Three (3) amendments were made to the regulation, which came into effect on 12.01.2017, 19.09.2018, and 07.12.2018. According to these amendments:

• For properties purchased between 12.01.2017 and 18.09.2019, the value of the property/properties must be at least 1,000,000 US Dollars.
• For properties purchased on or after 19.09.2018 and for properties subject to a promise of sale after 07.12.2018, the value of the property/properties must be at least 400,000 US Dollars.

2.2. Legal Restrictions Applicable to Foreigners When Purchasing Real Estate

According to Article 35 of the Land Registry Law No. 2644, as amended by Law No. 6302, which came into effect on May 18, 2012, the reciprocity requirement for foreign nationals acquiring real estate in Turkey has been abolished. In this context, Turkey has granted the right to acquire real estate to citizens of 183 countries without requiring reciprocity. Citizens of these 183 countries may purchase real estate and acquire limited property rights, subject to the following legal restrictions:

• Foreign nationals may acquire real estate and limited property rights (including mortgages) up to 10% of the total area of the district that is subject to private ownership. The Council of Ministers is authorized to double these limits if deemed necessary.
• A foreign national may acquire a maximum of 30 hectares (approximately 300,000 m² or 3,223,000 ft²) of real estate and limited property rights nationwide. The Council of Ministers is authorized to double these limits if deemed necessary.
• The relevant property must not be located in military restricted and security zones. This information is provided by the land registry offices and is part of a standard system.

2.3. Nature of the Real Estate

• Foreign nationals, subject to the legal restrictions mentioned above, may acquire any type of real estate (residential, commercial, land, agricultural land) in Turkey. However, if foreign nationals purchase an undeveloped property (land, agricultural land), they are required to submit the project they intend to develop on the property to the relevant ministry (Municipality, Provincial Directorate of Agriculture) for approval within two years.
• Promise to sell agreements, which are to be drawn up before a notary, are only possible for properties with condominium ownership or construction servitude.
• The property must not be registered in the land registry under the name of the foreign national (including the foreign national’s spouse and children). Furthermore, the property must have been transferred after 12.01.2017 by the foreign national, their spouse, and children.
• The property must not be registered in the name of a legal entity (company) in which the foreign national is a partner or manager in the land registry.

2.4. Number of Properties

There is no restriction on the number of properties that can be acquired through sale or subject to a promise of sale.

If a foreign national purchases multiple properties either simultaneously or at different times, the total value of these properties must be at least 250,000 US Dollars, and each property must have a restriction stating that it cannot be sold for at least three (3) years.

2.5. Determination of the Value of the Acquired Property/Properties

When determining the value of the acquired property, each of the following three types of values must individually meet the required amounts of 1,000,000 USD or 250,000 USD, as specified in the Regulation for the relevant dates:

(i) The total sale price(s) stated in the official deed and/or the value(s) specified in the promise of sale agreement, and

(ii) The total value(s) stated in the valuation report, and

(iii) The total of the payments shown in the bank receipt as evidence of the transfer of the payment amount.

Before acquiring the property, a real estate valuation report indicating the market value of the property must be prepared by real estate appraisal firms authorized by the Capital Markets Board (“CMB”) and the Banking Regulation and Supervision Agency (“BRSA”). The valuation report submitted during the acquisition application must be dated no more than three (3) months prior to the application date. This valuation report will remain valid until the completion of the transaction.

If no real estate valuation report has been obtained before the property acquisition, a valuation report prepared based on the acquisition date of the property/properties will be required.

Under the previous regulation, it was required that the sale price stated in the official deed could not be lower than the value in the valuation report. Now, however, the requirement is that both the sale price stated in the official deed and the sale price in the valuation report must individually meet the required amounts of 1,000,000 USD or 250,000 USD on the relevant dates, but there is no longer a condition that the sale price in the official deed must be higher than the value in the valuation report.

In the case of acquiring properties from incomplete buildings, the valuation report must indicate the value of the independent section if it were completed.

2.6. Payments to be Made Through the Bank

• With the Circular 2018/12 (1791) issued on 15.10.2018 (now repealed), the submission of a bank receipt for the transactions has become mandatory for the first time. Therefore, for sale transactions conducted before this date, the submission of a bank receipt should not be required.
• For transactions or promise of sale agreements made after 15.10.2018, the transfer/payment of the sale amount must be conducted through a bank. In this context, the payment made by the buyer or relevant persons to the seller’s or relevant persons’ account must be evidenced by a bank-approved receipt (including remittance, EFT, or blocked check with receipt). In the case of international transfers, the receipt for the account from which the payment was sent must also be submitted.
• The date of the receipt may be after the sale date in the transaction. However, for promise of sale agreements, the date of the receipt must be either before the notarization of the agreement or, at the latest, on the day of the agreement’s notarization. If payment is made after the notarization of the promise of sale agreement, the receipt will not be considered as a “cash” payment.

2.7. Determination of Exchange Rates

The following principles apply when determining the exchange rate:

• Bank Receipt Rate: If the property’s price is paid in Turkish Lira (TRY), the equivalent amount in US Dollars is determined using the Central Bank of the Republic of Turkey’s (“CBRT”) effective selling rate on the last business day before each payment date.
• Official Deed (Sale) Rate or Promise of Sale Agreement Rate: To determine the equivalent of the official deed (sale) price or the Turkish Lira amount mentioned in the sale agreement in US Dollars, the effective selling rate of the CBRT on the last business day before the date of the application for the transaction or before the notarization of the promise of sale agreement is used. However, if multiple receipts with different dates are submitted, exchange rate discrepancies may arise in determining the equivalent amount in USD of the official deed (sale) value or the TL amount in the promise of sale agreement. In such cases, the effective selling rate of the CBRT on the last business day before each payment date is applied to calculate the equivalent value of the official deed (sale) amount or the TL value specified in the promise of sale agreement in US Dollars. These amounts must not be lower than the total receipt amounts that meet the required 1,000,000 USD or 250,000 USD as set out in the regulation.
• Real Estate Valuation Report Rate: In the real estate valuation report, the equivalent value in US Dollars of the property’s Turkish Lira value is determined using the CBRT’s effective selling rate on the last business day before the report date. If the valuation report is prepared after the sale transaction, the effective selling rate of the CBRT on the last business day before the application date for the transaction is used to determine the equivalent USD amount.

2.8. Mortgage and Lien

• It is possible to conduct a sale with an existing mortgage or lien on the property.
• In the case of acquiring a property with a mortgage through a sale-mortgage transaction, the value required is determined by subtracting the loan amount from the sale price, and the remaining amount must meet or exceed the required amount as specified in the Regulation.

2.9. Installment Sales

With the newly introduced regulations, it is now possible to purchase real estate on an installment basis, provided that the property is acquired after 19.09.2018, and each installment payment is made after this date. Installments made before 19.09.2018 will not be considered. The value of the installments in US Dollars is calculated based on the effective selling rate of the Central Bank of the Republic of Turkey on the date of the transaction.

2.10. Three-Year Non-Sale Restriction on the Property/Properties

A restriction will be placed on the property’s registry stating: “In accordance with Article 20 of the Regulation on the Implementation of the Turkish Citizenship Law, the property will not be sold for three (3) years from the date of this annotation, and/or the promise of sale agreement will not be transferred or canceled for three (3) years from the date of this annotation.”

3. Documents Required to Obtain the Certificate of Compliance:

• Valid passport and a notarized Turkish translation of the passport
• Four (4) color passport-sized photos
• Official deed or notarized real estate promise of sale agreement
• Real estate valuation report
• Bank-approved receipt confirming the payment made by the buyer or relevant persons to the seller’s or relevant persons’ account (Remittance, EFT, or blocked check receipt)
• Annotation that a restriction will be placed on the real estate for three (3) years in the relevant land registry office, stating that the property will not be sold
• Applications are evaluated by the Ministry of Environment and Urban Planning, General Directorate of Land Registry and Cadastre, Foreign Affairs Department. Applications without any deficiencies will be processed within seven (7) business days.