Renting in Turkey: yield, the lira and limits on raising the rent

The yield on a Turkish apartment is almost always calculated in hard currency and received in lira. Between those two figures lies inflation, and it — not the rent — determines the real result of ownership.

The currency gap

The lira depreciated consistently for many years against high domestic inflation. For a landlord that means nominal rent growth in lira can look impressive while representing a fall in income in dollars or euros. Any yield calculation on a Turkish property has to be tied to the currency you count your capital in, and to the exchange rate across the holding period rather than on the day of purchase.

Limits on raising the rent

Turkey regulates rent indexation at renewal: increases are capped by a formula tied to the official inflation measure, and in some periods the state imposed a direct ceiling noticeably below actual price growth. The intent is social — to protect tenants — but the consequence for an owner is direct: the rate under an existing lease falls behind the market, and the gap accumulates over years.

• A new lease is signed at the market rate; a renewal moves by the capped indexation.
• The gap between "market" and "current" rent has reached multiples in some apartments.
• Evicting a tenant to re-let at a new rate is a complex and slow procedure: the law is on the tenant's side.

Tax on rental income

Rental income is subject to income tax on a progressive scale, with an exempt amount for residential letting and the option to deduct expenses — actual or at a fixed proportion. A return is filed annually, and non-residence does not exempt you: tax is paid where the property is.

How to calculate honestly

• Calculate in your own currency and over five to seven years, not in lira over one.
• Build in the rate falling behind the market with a long-standing tenant.
• Deduct tax, complex upkeep and management before concluding anything about percentages.
• Do not extend coastal summer rates across the whole year — the most common error on the coast.
• Note that tenant protection works against speed of exit: an apartment with a sitting tenant on a low rent is harder to sell.

What follows

Turkey offers a low entry and a simple purchase — a TAPU is registered quickly and there are few nationality restrictions. But the rental model works worse here than it looks on paper: currency risk and rate regulation consume a significant part of the nominal yield. As a market for your own occupation and wintering the country is more convincing than as an instrument of rental income.