New Regulation about Currency Exchange for Foreign Buyers in Their Property Purchases
With the new amendment made in the law, foreigners now have to exchange foreign currency in the Turkish Lira for their real estate purchases. When purchasing a property, foreign buyers first should send their funds to a Turkish Bank in order to convert their currency to the Turkish Lira.
This transaction should be done through a Turkish bank. The currency must be exchanged in the amount of the whole payment. Then, the bank will give buyers a Foreign Exchange Document (Döviz Alım Belgesi).
Buyers will present the document to the Land Registry Office as proof that they have converted the currency into Turkish Lira before the property purchase is made. The effective date of the regulation is January 24, 2022. A foreigner cannot buy a property without a Foreign Exchange Document as of this date.
The document must contain the following information to be accepted by the Land Registry Office:
- Name and surname of the person on whose behalf the currency is exchanged
- Passport number or ID number
- US Dollar equivalent of the foreign currency purchased (TL equivalent is always included.)
- The statement of “This transaction is carried out within the scope of "Article 13 of the Circular on Capital Movements".
The exchange of foreign currency must be made by the buyer and seller of the relevant real estate to be sold, their proxies, or representatives. For example, the buyer can first send his/her currency to the seller's account, and then the seller makes the exchange transaction at the central bank through the bank.
You can handle the process by giving a power of attorney. The critical point here is that the document must be taken before the sale transaction.
The Central Bank of the Republic of Turkey only accepts USD, Euro, or Pound Sterling for currency exchange on property purchasing.
The other currencies should be converted into one of the monetary units mentioned above as a first step. The transition of the Dollar, Euro, or Pound to the Turkish Lira will be the second step of the process.
It will not be valid if buyers change their money in the currency exchange office or exchange it in person for real estate purchase transactions.
Is Currency Exchange Compulsory in Citizenship Transactions?
Regardless of the reason, obtaining Foreign Exchange Document is compulsory for all real estate purchases to be made by foreign buyers.
To add, in citizenship transactions, the Directorate of Land Registry and Cadastre request the document and the approved bank receipt showing that the amount has been sent to the account of the seller.
Foreign buyers must present the payment receipt (money transfer from the buyer to the seller) together with the document before the sale transaction. It can be also submitted before the commitment process or the issuance of the conformity document at the latest.
But, in any case, it must be submitted to the Land Registry Directorate before the sale process.
Are the Payments Made Before the Effective Date Valid?
Payment receipts made before the effective date will be accepted in transactions. There is no need to issue a foreign exchange document for these transactions.
But, the approved bank receipt must be submitted to the land registry office for these payments. Payments made by other methods cannot be accepted, such as payment in person.
As presented by Bayram Tekce, the Chairman of Tekce Overseas, this amendment will not be affecting the current sales process or the prices. By working professionals, property buying in Turkey is still a safe and easy process.
For more information about the regulation, you can look at the guidebook here.