Real Estate in Istanbul for Rent: Choice, Features and Nuances
Istanbul is one of the most sought-after cities in the world for vacation rentals and permanent residence. The population of the metropolis is 16 million people. From this article, you will find out whether a foreigner can earn a second pension and regular passive income by buying property in Istanbul for the purpose of renting out, what are the features and nuances of the legislation.
Istanbul Rental Market 2023
According to the Emlakjet platform, in 2023, 87% of owners do not plan to rent out their property. The authorities even want to impose a tax on vacant housing to stimulate the market. Demand significantly outstrips supply.
Istanbul Airport leads in Europe in terms of the number of flights per day. With the right choice of an apartment and a good location, there will always be a load on rent. For 5 years, the population of Istanbul has grown by 1 million people and continues to increase. In 2023 - 2023, the influx of expats is a record one. The city has prospects, work, future. And it is not always possible to quickly find a suitable apartment for rent, even by contacting a realtor.
In sleeping areas, large apartments with several bedrooms are in demand. Developers' projects include many apartments with a layout of 2+1, and several times less than 1+1, while in the resorts of the Mediterranean the situation is the opposite and there are fewer squares.
In the central part, on the banks of the Bosphorus and tourist locations in Istanbul, you can make good money by renting a 0+1 studio, a 1+1 one-bedroom apartment.
What are the Prices for Rental Housing in Istanbul
A number of factors come into play here, the main ones being:
Proximity to metro, metrobus line, other transport and key highways.
The age of the house, the condition of the facades, the interior decoration in the apartment.
Features of the area, saturation of the infrastructure around.
Availability of schools, lyceums, universities nearby.
Park areas near the house, proximity to the sea and beaches wh ere you can swim.
Distance to the airport.
The presence or absence of infrastructure on the territory of the complex (swimming pool, spa, etc.).
The area and its reputation.
Demand and number of similar offers.
Furnishing or lack thereof.
Other factors also influence, the prices for renting apartments in Istanbul are different. There are no average numbers to rely on.
According to Endeksa, in 2022, rental prices in Istanbul increased by 158%, and in 2021-2022 they rose by as much as 350% in TL. In 2023, price growth slowed down, there is a +25% threshold for rent increases per year, which forces many owners to evict their tenants through the courts who do not agree with the current market rental price.
Always high demand for luxury apartments and prices dictates the class of the complex. There will be clients who are willing to pay 2-3 thousand Euros for 2+1 in a prestigious residential complex with a good location and recreation areas in a protected area. Luxurious modern apartments are a profitable investment.
How to Put Together a General Idea of the Rental Market in a Particular Area?
As in any other country, you just need to look for analogues and study in detail the features of the area, its pros and cons.
As a guideline for prices for long-term rental housing in Istanbul, you can rely on the offers posted by owners and realtors on the most popular website, sahibinden.com.
If you plan to make money on short-term rental housing, you can analyze offers on Booking and Airbnb booking services. But in this case, you will need a management company that has a license.
In 2023, taxation innovations are being prepared, as many rent their apartments illegally, and the budget does not receive significant injections. Registration of housing and all tenants will be required. More specific data on upcoming innovations are not yet available, but this is a reasonable course of events, given how active the long-term rental market is. Most likely, the owners will simply raise prices in order to receive the same profit they are used to and pay taxes.
Large residential complexes in Istanbul with infrastructure and benefits for residents usually have their own management company. It will take care of the management of the lease, and will take a percentage of the profits. You can also contact third-party management offices for concierge services.
It is better to clarify all the details and figures in advance at the sales office together with his experienced realtor, who has repeatedly concluded transactions on real estate purchased for the purpose of renting. In recent years, a net income of 4-6% per annum in Euros is considered normal, but it all depends on the stage at which you invested in real estate, the incoming price, market conditions, the quality of the complex and the demand for the location.
The commission for the full management of the lease by the concierge service will be 30-40% of the rent. In this case, the owner simply receives his profit without doing anything. You can rent an apartment on your own, but with a short-term lease, it is illegal to do this without a license.
Tax on income from rental housing depends on profits, it is paid from March 1 to March 31 with the filing of a declaration through the state system E-devlet online or in person to the Turkish tax office. Progressive personal income tax rate scale:
The annual municipal real estate tax is 0.1-0.2% of the cadastral value, there is also a small payment for compulsory earthquake insurance DASK.
How to Choose a Tenant
There are two fundamentally different options - to settle Turkish citizens or a foreigner. With citizens, it is easier to check solvency, place of work. It is more difficult to determine the reliability of a foreigner. Therefore, the Turks usually take a smaller security deposit, and foreigners are often required to pay six months in advance.
As a rule, foreign tenants want to notarize the lease agreement in order to obtain a residence permit in the country. With such a condition, the price of an apartment is usually higher than without it.
Citizens are more difficult to evict from an apartment, courts sometimes drag on for years. Increasing rent to market is not an easy task. Whereas with foreign tenants it is easier to do this. Although it would seem more reliable to take a citizen tenant, this is not always the best way. The term of the residence permit corresponds to the term of the rental contract. At the slightest delay in paying rent, you can cancel the contract as a basis for a residence permit.
Even a contract that is not certified by a notary is considered valid, and the tenant has the rights almost like the owner. He cannot sell your apartment, but he has the right to live in it for years, if he does not violate the terms of the contract, and the prolongation occurs automatically.
The insurance premium is mandatory, but not always fully refundable after a long-term rental. The owner can use this money to paint the walls, which is customary to do after a long lease of the apartment, or to replace damaged valuables and furniture. It is important to prescribe everything that is in the apartment, to the full, to the smallest detail.
A feature of long-term rentals in Istanbul is that apartments are often rented out completely empty. Tenants are usually aimed at long-term living, they buy furniture and appliances themselves.
Pitfalls of the Rental Housing Market in Turkey
It is noteworthy that in Turkey, water and electricity meters are not necessarily issued to the owner, they are issued to the tenant himself, and all debts on the accounts are his debts, not the owner's. You can, as a precaution, leave communications in your name, and simply turn them off if the tenant is unfavorable, but refuses to move out. Without water and light, he will not stay in the apartment for a long time.
To move out your tenant, you need to officially notify him 2 months in advance that you do not plan to continue the contract. But for this there must be reasons - independent living, changed your mind about renting, you will make repairs, sell. If tenants simply move in for a higher pay, the previous tenant has the right to sue.
The transfer of ownership does not mean the cancellation of the current lease, even if the new owner plans to live in the apartment himself, he must notify the tenant in advance and wait. Therefore, you should not buy housing with a tenant. A self-respecting realtor will not lie that the tenant will definitely move out. First, let them terminate the contract and take things out, then make a purchase.
Renting a property in Istanbul is profitable and convenient. But in order to avoid stress and mistakes when concluding lease agreements, you should carefully choose a real estate specialist.
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