Significant Amendments in Capital Movements Circular
In January and July 2022, significant amendments have been made in the Capital Movements Circular (“Circular”) by the Central Bank of the Republic of Türkiye regarding the acquisition of real estate in Türkiye by foreigners.
Recently, there has been a noticeable increase in housing sales to foreigners in Türkiye. Purchase of real estate in Türkiye has become very attractive and profitable for foreigners due to reasons such as the opportunity to acquire Turkish citizenship through the purchase of real estate, the significant depreciation of the Turkish currency against foreign currencies and therefore the increase in foreign exchange rates. As a consequence, the provision of the Circular regarding immovable assets has been amended.
1. Foreigners are obliged to make transactions in foreign currencies for the purchase of real estate.
It has become obligatory for foreigners to make payments in foreign currency for the real estate they purchase in Türkiye. The amount deposited in foreign currency in the bank is sold through the bank to the Central Bank of the Republic of Türkiye with a justification before the title deed transactions. After the sale, the price of the real estate is paid to the seller in Turkish Lira.
In preliminary contracts for real estate sale, the obligation to pay applies only to the portion that is prepaid.
2. In return for deposit of the real estate price in FX to the bank before the sale of the real estate and sale of this amount by the bank, the bank will issue a document to be presented to the land registry named “Foreign Currency Purchase Certificate” for foreign real persons.
It is obligatory to submit the “foreign currency purchase certificate” to the land registry during the procedure of purchase of the real estate.
Required information in the foreign currency purchase certificate is name and surname of the person on whose behalf the foreign currency is exchanged, passport number or foreigner identification number, immovable parcel number and the US dollar equivalent of the FX purchased.
Also, an expression indicating that the transaction was carried out in accordance with Article 13 of the Circular must also be added in the statement.
3. Foreign real persons residing abroad residing abroad will only be able to use loan in foreign currency to finance their real estate purchases in Türkiye. The amount obtained with the loan in foreign currency will be sold to the Central Bank through the bank and the credit amount will be deposited in Turkish lira into the seller’s account.
4. It has become obligatory for the financial leasing agreements on the purchase of real estate to be made with foreign residents to be issued in foreign currency and for the payments in foreign currency to be linked to the foreign currency purchase certificate.