Were there strict rules governing how foreigners could buy property, I asked? Surely I couldn’t buy a house with cash? “Yeah. Of course you can, of course you can, if you’ve got cash it’s even better for yourself,” Dawson said. “If you’ve got cash the company (Artev) will look after you, if you can pay cash, you can reverse maybe 3%-5%.” However, the Turkish embassy’s guide to buying property makes it clear that all monetary transactions over the equivalent of £3,000 must be made through banks, financial agencies or the post office.
On tax, Arman said simply: “In Turkey, there isn’t any.” It was a claim supported by Dawson. “See, that is another reason, John, why people are investing in Turkey. To get away from the taxman in England.” Banks, she said, turned a blind eye to regular cash deposits — for example, rental payments. The Turkish embassy’s property-buying guide makes it clear that owners must declare and pay tax on their rental income.
Continued on page two...()Arman claimed that another form of tax dodge also occurred regularly. By underdeclaring the value of their homes, vendors reduced transfer tax for the purchaser and saved cash themselves. “Officially, we have to pay the tax, but nobody declares the exact value — always they declare under a certain amount,” said Arman. “Everybody does it,” agreed Dawson. The Turkish embassy warns that owners who underdeclare the value of their property face severe penalties in Turkey.
In just minutes, Dawson and Arman had both casually pointed out how easy it was to break local laws and breach anti-money-laundering regulations. They also failed to mention that foreigners were unable to complete and register property transactions in Turkey at present. The country’s title-deeds legislation was temporarily suspended earlier this year after it was challenged in the country’s constitutional court. Foreign buyers can shop for property, sign contracts and put down deposits, but they must wait until a new law is passed later this year before completing and registering their titles.
Last week Ocean Estates said that Murat Arman had only been in his job for two weeks and added: “If mistakes have been made through well-meaning overenthusiasm then they will be corrected so that Murat can learn not to make the same mistake in the future.”
When asked about Arman’s sales talk, which seemed to encourage breaking local laws, Ocean Estates’ lawyers replied: “ company policy is that no advice is given on financial matters generally, including tax or money laundering regulations. Such enquiries are referred to independent lawyers. Our clients are not aware that any such advice is being given” and they “do not condone illegal activity”.
After she had showed me round the lakeside development, Dawson said the Turkish property market was a “no questions asked” culture. “They don’t question you, there’s no question.” She added: “You’re putting money into this country. We’re all helping each other. It’s like a huge business venture. For a buyer, for a seller, for construction companies, for agents.”
This casual attitude to tax and financial regulations is all too familiar to those who have watched the development of the Costa del Sol. Mark Stucklin, of Spanish Property Insight, which monitors the Spanish market, said: “The conditions are perfect for Turkey to become a huckster’s paradise. If buyers want to avoid the kind of disappointment some have suffered in Spain, they should research very thoroughly every company they deal with.”
John Howell, who runs John Howell & Co, a leading London overseas property law firm, said: “The ‘free and easy’ nature of the Turkish market is part of its charm, but it also poses dangers. Many things that buyers may be asked to do are illegal and, while the agents may tell you that ‘everybody does it’ and ‘nothing bad will happen’, there will come a time — probably soon — when the Turkish authorities take action and your misdeeds could cost you dearly. Ocean Estates are probably no better or worse than many, many other agents there. Buyers should never take anything an agent says at face value and should always take legal advice.”
Ocean Estates’ lawyers said last week: “Our clients will always introduce the developer's sales representative as being the expert on a project and being the person to answer any questions in relation to the project. However, our clients would not expect the developer’s representative to give financial or legal advice, just as it would not expect its own employees to do so. For such advice, the potential purchaser is advised, quite rightly, to obtain independent legal advice. That is company policy.”
Before I left Turkey, Arman took me on a tour of more off-plan developments, this time at the harbour town of Gulluk, where cigar-chomping local developers were buying up every spare plot of land for three-storey, high-density developments. I was urged to put down a deposit, as the properties were selling very fast.
Afterwards, Dawson suggested we meet “to discuss future developments”. At a new scheme called Lakeside 2, a 300-home development, she confirmed a discount of up to 5% was possible if I bought in cash. “If you want to pay cash, certainly there’s some legroom. We’ll certainly look after you anyway.” Again, she failed to mention that transactions over £3,000 must be made electronically. She urged me to spend £2,000 reserving a villa. “If you want to get on the ladder and start making some money, now is the time.”
Last week, Ocean Estates responded: “To the best of Ocean Estates’ knowledge Artev only accepts payments from clients via credit card or bank transfer in order to avoid the possibility that they, intentionally or unintentionally, condone tax evasion or the breach of international money laundering laws. Ocean Estates do not condone money laundering activity.”
In the car on the way back to the airport, I suggested that what Dawson liked best about Bodrum was that it was a market where “anything goes”. She grinned. “We have a lot of people who bought in Spain in the old days who are coming here now to buy. They know the market is right here now.”
I pointed out that Spain’s laissez-faire approach had led to overcrowding, illegal building and environmental degradation — not to mention money-laundering and the mis-selling scandals revealed earlier this year in The Sunday Times. She shrugged. “I hope that does not happen in Turkey. I am hoping that it doesn’t and even if it did, it’s not going to be for many years yet.” With that, she headed back to the office to meet the next group of Britons who had just arrived to buy a home on “the new Costa del Sol”.
- The Turkish embassy’s guide for foreign property buyers is available online at www.turkisheconomy.org.uk/buying_property.html
On the Market
A three-bed, two-bath villa has a large open-plan kitchen, sitting room and terrace and is set in a garden, surrounded by old oak trees. Just 50 metres from the sea, it is part of a complex and is for sale for £65,000 with Avatar International, 08707 282 827, www.avatar-international.com
In Gundogan, a half-hour drive from Bodrum, a two-storey house has three bedrooms, two bathrooms and a balcony. Close to the beach, and with a shared garden, it will be sold unfurnished. It is for sale for £80,000 with Turkish Homes, 0845 331 2644, www.turkish-homes.com
