Turkey 'rental guarantee' alert

Investors should be vigilant when dealing with letting companies in Turkey, warns one expert…

Rental guarantees are sometimes offered by estate agents or developers in Turkey, and these guarantees are ostensibly a commitment to return a percentage of the purchase cost of a property to the buyer each year for a fixed term.  In theory, the developer recoups this money by renting out the property, which sounds an like an attractive proposition, but according to Paul Owen, CEO of the Association of International Property Professionals, these rental guarantees should be examined closely.

Mr Owen explained: “Firstly, unscrupulous companies may simply be inflating the sale price of the property in order to cover the rental. Buyers should shop around carefully to see the cost of comparable properties in the same area. Find out whether the developer has an agreement in place with a travel company or lettings agent. If not, then how do they plan to find tenants and ultimately pay the guarantee? Examine the fine print of your contract to see who is actually guaranteeing you the money”

Mr Owen continued: 'Rental guarantees are marketed with alarming regularity. The simple rule is: if it is not in the contract, it's not guaranteed. Potential rental incomes are often re-classified by salesmen as 'guaranteed', though this is never in writing. Check the contract and recognise that no mention means no guarantee. Even rental guarantees in the contract should be scrutinised by an expert. Make sure you hire a lawyer to check them before you sign anything”.