Following a ruling by the Constitutional Court to ban the sale of immovable property to foreigners residing in Turkey, property sales to foreigners came to a halt as of yesterday since the government has not made the necessary amendments to the relevant law.

The decision will affect sales in the southern regions in particular, real estate agents told the Turkish Daily News, noting that Turkey's image abroad is tarnished.

“We prepared the necessary regulations last month and sent them to the Prime Ministry; however, it was late,” said Zeki Adlı, deputy director of the Turkish Land Registry Directorate. “Thus, property sales to foreigners will stop across the country until new regulations are enforced.”

Finance Minister Kemal Unakıtan told reporters that a new regulation to lift the ban is underway. Unakıtan said he has already signed it together with other ministers.

Missed deadline:

The decree of annulment regarding two regulations of the Deeds Law, which regulates property sales to foreigners, was first published in the Official Gazette on Jan. 16.

The Constitutional Court rejected revisions to Turkey's Land Registry Law last year after a legal appeal was brought forward by the main opposition Republican People's Party (CHP).

“The act increases the legal limit – which is 2.5 hectares – 12-fold, thus the law is immoderate enough to liquidate the effectiveness of the limitation,” according to the legal basis of the law.

The government missed a three-month deadline to alter the legislation after the court's ruling was published. The Turkish Land Registry Directorate prepared a new bill and sent it to the government, but the bill could not be enacted before the deadline.

“The bill entitled the cabinet to be the authority for property sales between 2.5 and 30 hectares. Now this authority has been annulled. We sent the new regulation to the Prime Ministry on March 3," said Adlı. 

Unfortunately, it could not be enacted and the issue was out of their control, Adlı said, "A political enactment will reach a final decision about the property limits set to be sold to the foreigners in every city.”

January data indicates that a total of 60,351 immovable properties on an area of 37,125,330 square meters were sold to 70,336 foreign nationals in Turkey. British citizens topped the list, owning 4,867,676 square meters of land, daily Milliyet reported yesterday.

“Real estate agents operating in holiday resorts would be greatly harmed,” Ali Arslan, a real estate consultant at Deniz 24 Emlak in Antalya, told the TDN. “The tourism sector will also be affected by the act the most since it will lead to a decrease in the number of tourists, especially when we consider that the tourism season is about to start.”

Allowing foreigners to purchase or sell property not only boosts the market, but it also ensures the influx of foreign currency, according to Mehmet Deniz, founding partner of Deniz 24 Emlak.

Foreign companies founded in Turkey and people with dual citizenship will be exempt from the act. The new regulations will assess the building plan, instead of the city area, on the basis of which a certain limit will be determined, the Anatolia News Agency said yesterday.

Threat of bankruptcy:

“It is now almost impossible for those foreigners with 10-15 percent of their debts remaining to get their [title] deeds,” said Ahmet Şengel, chairman of Şengel İnşaat, which conducts construction projects in Kuşadası, on the Turkish Riviera. “They will ask us to return their money now that we cannot give them their deeds. We cannot sell the remaining houses to local customers since the real estate sector has been going through a stagnation period for some time.”

The companies, which construct and sell properties just to foreigners, will go bankrupt if the ambiguity continues, Şengel added. “We have almost killed our real estate sector.”

The new act might harm Turkey's reputation abroad, said Berker Yörükoğlu, a representative of Talip Yörükoğlu Emlak in Antalya. “The revival of the real estate sector after this act will take one to two years, during which the land, house and construction prices will drop,” he added.

“There will be also a decrease in the influx of foreign currency. This will damage the economy, which has already been going through a tough time.”

On the other hand, Berrin Gökalp, owner of Milenyum Emlak in Antalya, said most of the property sales to foreigners took place abroad. Foreigners buy their property before they come to Turkey, since sales to foreigners take three to four months here, Gökalp said.

“Thus, I do not think that the new act will affect real estate agents in Turkey much,” she said.

Carol Nelson, owner of Carol Nelson Real Estate Agency in Istanbul, said her business will not be affected simply because not many foreigners are buying property in Istanbul. "This will affect the south [of Turkey] more," she said.

"All the expatriates are coming here to work for a few years, so they are renting. Those who are buying have been here for years."

Johan Vos, partner of Tay-Partners Emlak in Antalya, said he wasn't surprised. "Every year something seems to disturb our business… every year there's something,” said Vos. “People are afraid they might not get the house deeds and are waiting."

Vos explained that it takes more than three months for people to get their title deeds, so this Parliamentary-induced wait is just a drop in the bucket. He does not expect the restriction on sales to foreigners to last more than a few weeks to a month, but "You never know," he said.

“We had the same problem two years ago… and only the strong real estate businesses survived.”

*Betül Çal from Antalya and Damaris Kremida from İstanbul contributed to this report.