Gov’t to cover 15 pct mortgage down payments for first time buyers
by Daily Sabah
ISTANBULJan 29, 2015 - 12:00 am GMT+3
by Daily Sabah
Jan 29, 2015 12:00 am
First-time buyers and those who buy real estate as a residence will be given incentives by the government of up to 20 percent
Turkish Prime Minister Ahmet Davutoğlu announced that the government will subsidize 15 to 20 percent of each account opened to deposit the 25 percent legally required as a down payment to obtain mortgage loans. Furthermore, gradual payment will be provided for those that are willing to purchase their first house before the five-year period. "For example, if one of the potential buyers says that they want to purchase a property on their fourth or third year, then 12 percent will be provided for the fourth year and 10 percent will be provided for the third year," Davutoğlu said, adding that the details of this incentive will soon be announced.
In order to benefit from this incentive, there are two requirements. One, the buyers should be first-time buyers without any property registered in their names. Second, the buyers must use the real estate in question for dwelling purposes. While the representatives of the construction sector welcomed Davutoğlu's announcement, they also underscored that this step, which was taken to encourage savings, is also expected to boost real estate sales.
The CEO of Istanbul Constructors Union (İNDER), Nazmi Durbakayım, regarded this decision as a positive step for both the sector and citizens, and noted that this incentive will help many who have had no opportunity to purchase their own apartments. Durbakayım said that with this decision, the government has killed two birds with one stone, as this incentive will both increase savings, which is required to decrease the current account deficit, and boost credit volume rations, which are one of the most important elements of the finance sector. "We can easily expect the mortgage volume, which was around TL 122 billion [$51.5 billion] in 2014, to increase to TL 200 billion. Furthermore, this decision will trigger free competition in the finance sector, followed by a reduction in the mortgage interest rates," Durbakayım said. However, he also added that such an incentive might not be enough on its own, and they are expecting other incentives regarding stamp duties, charges and VAT as the second step.
The Chairman of the Association of Real Estate Investment Companies (GYODER), Aziz Torun, said that this would increase savings in especially middle and low-income families who are willing to purchase their own properties. Yet, in order to avoid any kind of misunderstanding, Torun highlighted that the incentive was only 15 percent of the 25 percent legally-required down payment, not 15 percent of the whole sales price. According to Torun, while such incentives will not necessarily boost real estate sales, it will be encouraging for first-time buyers.
İş Real Estate Investment Trust's General Manager Turgay Tanes said that the government providing such support to each bank account opened to deposit the 25 percent down payment would ensure cash inflows and the rate between mortgages and cash purchases will become more balanced. Tanes stressed that the majority do not have enough savings to purchase property; therefore, this new incentive will motivate first-time buyers.
The Chairman of Turkish Contractors Association, Mithat Yenigün, also emphasized that this incentive will decrease the number of currently available properties and increase savings, thus boosting the Turkish economy.
The Chairman of the Real Estate Developers Association (KONUTDER), Ömer Faruk Çelik, said that the government's decision to provide a 15 percent incentive for first-time buyers is a very positive decision. He also underscored that such an incentive will not bring a boost to the real estate sector necessarily, but the interest in real estate purchases will definitely increase. "Five years is a long period for citizens. Such a period should be shortened to around two years. Turkish citizens should know what their near future will entail. I think it's a very good incentive, but the period should definitely be shortened," Çelik opined.
Keep up to date with what’s happening in Turkey,
it’s region and the world.
You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.