New regulations on acquisitions of property by non-Turkish citizens

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RECENT DEVELOPMENTS

The Central Bank of the Republic of Turkey (the “CBRT“) made significant changes to Article 13 of the Capital Movements Circular (the “Circular“), which sets out the principles applicable to the acquisition of real estate. With the amendments to the circular, the CBRT has introduced additional provisions to the requirement of payment in foreign currency for acquisitions of property by non-Turkish citizens Please refer to our legal alert regarding the foreign currency payment requirement for acquisitions of goods by non-Turkish citizens here.

What do the additional provisions provide?

  • The initial payment obligations under the Promise of Sale Agreements to which non-Turkish citizens are party shall be fulfilled in foreign currencies.
  • Payment obligations arising from contracts for the sale of goods and promises of sale to which non-Turkish citizens are parties cannot be enforced through legal mortgages (kanuni ipotek), except for debts to public institutions.
  • Real persons residing abroad who are not Turkish citizens can only finance their real estate acquisitions in Turkey by using foreign currency loans. The bank will deposit the loan amount in the seller’s account in Turkish liras.
  • Among the leasing contracts to be concluded with natural persons residing abroad and not Turkish citizens, those relating to the acquisition of real estate can only be drawn up in FX and the payments to be made in FX will require a purchase document in FX.

Conclusion

By these modifications, the circular clarified the uncertainties relating to the requirement of payment in foreign currencies for the acquisitions of goods of non-Turkish citizens.

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