Turkey’s appeal as a buy to let destination shows little sign of fading. The number of foreign investors buying property in Turkey has risen 66% since 2013 according to Turkey’s statistical institute.
So how do you join the growing number of investors renting out property in Turkey?
How much rent can you expect to receive?
These are just some of the questions we hear from investors so here is some advice we have put together to guide you through.
How you decide to manage your investment property in Turkey will depend on whether you are staying in Turkey long term or you just want to buy a property and manage the process from your home country and treat it as a holiday home or pure investment.
If it is the latter, then you will probably hire a property management company based in Turkey to take care of everything from paperwork to dealing with tenants and furniture, if the apartment or house is being let furnished.
The advantages of using a property manager based on the spot include:
• The security of having someone keep an eye on your investment property
• They will speak the local language
• You can delegate all the administrative tasks connected with the management of your property
• A property manager can deal with long term or short term lets
Opting to manage property by yourself in Turkey may not be the best option if you are new to the culture. Property agents can and do go out of business and you can often be left dealing with developers who don’t speak your language.
Depending on the number of tasks handled by the property management company, the typical charge is one month’s rental. So if you rent out a property for 750tl a month then you will need to set aside that amount to cover the fee which is charged annually.
Setting the rent
As in the UK or any other Western European country, it is wise to have a contract drawn up to make sure you are legally protected if anything goes wrong. You should also take a deposit from the tenant to cover for any damage or repairs which is usually one month’s rent. The tenancy agreement should include the amount of monthly rent and where applicable, things like pool maintenance.
To set the rent you will need to have a clear idea of typical rents in the immediate area and likely demand. The condition of the property is also important. If the property is furnished to a good standard in a modern development, then you may be able to charge slightly more in rent.
Just like in any other country, however, you will need to research rental demand carefully before investing to make sure the investment is profitable.
A good property manager can handle the deposit, research the local rental market and deal with any issues that may arise during the tenancy including tenants who miss payments.
One major benefit of letting property in Turkey is that it is common for renters to pay up to 6 months in advance rather than one month in advance in the UK. It is also common practice for tenants to pay another 6 months after they have agreed to proceed with renting a property.
If you have bought your property as a holiday let investment, then the management of the property will be geared towards holiday makers who may only stay for 1 to 3 weeks. You should charge a fee (typically around 40% of the total) to keep the property available then ask them to pay the balance at least 3 weeks before they arrive in Turkey.
This will at least give you time to re-advertise the property if the rental is cancelled.
Tax on rental earnings in Turkey
You will be expected to pay tax on your rental income in Turkey just as you would in the UK and register with the local tax office on transfer of title. You can either manage your accounts and tax returns yourself or hire an accountant familiar with Turkey’s tax rules on property income.
Other points to consider when investing property in Turkey
In many ways renting out a property in Turkey is fairly easy compared to other countries. There are well established tenancy laws but also some possible drawbacks which include:
• There are no credit checks as there would be in the UK
• Laws are generally pro-tenant
• It can take 1 to 1½ years to evict a tenant if they choose not to agree and have abided by the terms of the tenancy
• A tenant is not obliged to move out at the end of a fixed term lease. They must be notified at least 15 days before the lease expires or it automatically extends for another 12 months
Turkey offers excellent value for money over comparable location in Europe. As long as you have the main points covered and hire a reputable property management company to look after your investment, then there is no reason why Turkey can’t offer a profitable investment opportunity.
For more information on the ins and outs of buy to let in Turkey watch the video: