Tourist leasing of apartments in Turkey, in general, means that the owner prepares the furniture for his apartment and then rents it to tourists, whether locals or foreigners, for several days or weeks. This type of leasing is characterized by very high returns compared to annual leasing.
For example, an apartment that may have a 4% annual rental yield without furniture and 6% with furniture can reach a tourist rental yield of over 14% annually if calculated and rented out for most of the time.
This high return is not a problem for the government if taxes are paid correctly and regularly. However, if the owner of the daily rental property pays taxes and covers the costs of marketing and maintenance for his apartment, the high return may not be available, and it could be reduced by half. That's why the vast majority of owners of tourist apartments do not pay taxes in order to maintain the high return.
In the past, unlicensed apartments for tourist leasing were dealt with differently by each municipality, with some allowing it and others prohibiting it. However, with the issuance of the new law that will be implemented starting from 01/01/2024, the system will be unified and will include the following:
In order for the owner of a property to be able to lease it for short-term contracts (less than 100 days), he must:
1-Obtain a commercial license from the municipality that allows him to lease this property for tourism purposes. A sign indicating that this property is designated for tourist leasing must be displayed.
2-Obtain approval from all apartment owners in the building to allow the owner of this apartment to lease it for short-term tourist contracts (less than 100 days).
3-The number of apartments designated for tourist leasing in any building should not exceed 25%, even if the entire building is owned by one person.
Notes:
- Contracts that are organized for less than 100 days must be exclusively for a licensed apartment from the municipality as mentioned in point one.
- Owners of apartments who may try to circumvent this law by writing contracts for more than 100 days and then renting the apartments for a shorter period will be monitored. They will be allowed only four official contracts per year, and any violation will result in a fine of one million Turkish liras imposed on the apartment owner.
Why was this law issued?
- Tourist leasing poses an unfair competition for hotels, as it can offer prices that are less than half the price of a hotel in the same area if we compare a tourist rental apartment to a hotel. This causes significant harm to local and foreign investors in the hotel industry.
- Owners of tourist apartments do not pay taxes for renting their apartments, which further increases the unfair competition gap between hotels and tourist apartments. At the same time, it means a loss of tax revenue for the government that could have been collected if unlicensed tourist apartments did not exist.
- Many apartment owners have illegally furnished their apartments for tourist rentals. Even if most days of the year remain vacant, renting the apartment on a daily basis in dollars remains more profitable than a long-term lease with a local tenant who pays in Turkish lira. All of this is in violation of the law as long as there is tax evasion.
Is this law in the interest of investors or not?
Any new law will undoubtedly bring benefits to a certain group of investors at the expense of others. If you truly want to build a safe and stable investment in Turkey and believe that all the campaigns carried out by different countries around the world, whether economic or tarnishing the image of Turkey, etc., and their delay in reaching the ranks of developed countries are temporary campaigns, then you will certainly benefit from all types of organized laws issued by the government.
However, if you believe that you have been involved in non-investment properties and only aspire to exit the Turkish investment market rather than enhance your investments and avoid past mistakes by seeking professional real estate advice, then in this case, you are considered affected by this type of law, which will not be the last. When the sales representative advised you to buy an old apartment with the aim of renting it out on a daily tourist basis to achieve high returns without considering the future of real estate investment in Istanbul, that was a significant mistake. However, you can still rectify it in your future investments. Remember that you can always contact us and get free real estate consultation at any time.
