After the earthquake disaster, the importance of urban transformation was understood once again and new incentives came into play for the rapid renewal of risky structures.
The “Urban Transformation Financing Package” was prepared by the Ministry of Treasury and Finance and the Ministry of Environment, Urbanization and Climate Change.
In the new package, credit limits and the interest support provided by the government increased. So, who will apply and how, what will the interest and installments be in the new period?
WHO WILL BENEFIT FROM THE URBAN TRANSFORMATION LOAN?
Owners who are in a risky area, in a reserve area and whose building has been decided to construct a risk can benefit. Tenants who have lived in risky buildings for at least 1 year or holders of limited real rights (right of residence) can also take out loans.
If the house or workplace demolished within the scope of the transformation is not built in the same place, the right to a loan is also granted to those who want to buy a different house or workplace.
HOW MUCH HAVE CREDIT LIMITS INCREASED IN THE NEW PERIOD?
Credit upper limits were increased by evaluating the increasing construction costs and the demands of the citizens.
What will be the interest rate on the loan, at what rate will the government provide support?
The supports to be given at an interest rate of 1.49 percent are as follows:
EMPOWERMENT: 0.99 percent beneficiary, 0.50 percent state contribution.
HOUSING CONSTRUCTION: There will be 0.79 percent beneficiary and 0.70 percent state contribution in the first house. For the following houses, 0.89 percent beneficiary and 0.60 percent state subsidy will be applied up to a maximum of 3 million liras.
HOUSING: 0.79 percent beneficiary, 0.70 percent state contribution.
WORKPLACE CONSTRUCTION: 1.09 percent beneficiary, 0.40 percent state contribution.
OBTAINING A WORKPLACE: 1.09 percent beneficiary, 0.40 percent state contribution.
How many years will it be due?
Mortgage of 10 years for housing loans and 7 years for workplaces will be applied.
How much will the monthly installments be?
Let’s explain monthly payments through a few examples:
HOUSING CONSTRUCTION LOAN
Loan amount: 1 million 250 thousand liras
Term: 120 months
Interest: 0.79 percent
Monthly installments: 16 thousand 161 liras
Total repayment: 1 million 939 thousand 321 liras
EMPOWERMENT LOAN
Loan amount: 320 thousand liras
Term: 120 months
Interest: 0.99 percent
Installment: 4 thousand 568 liras
Total repayment: 548 thousand 267 liras
WORKPLACE CONSTRUCTION LOAN
Loan amount: 800 thousand liras
Term: 84 months
Interest: 1.09 percent
Installment: 14 thousand 588 liras
Total repayment: 1 million 225 thousand 424 liras
HOW TO APPLY FOR A CREDIT?
If you are not in a place that has been declared a risky area, you should first apply to the inspection institutions authorized by the Ministry of Environment, Urbanization and Climate Change and have your building risk assessment done.
If the building is risky after detection, the transformation process begins. The owners are given 60 days to demolish the buildings. During this period, it is checked whether the risky buildings are demolished or not, and if they are not demolished, an additional period of less than 30 days is granted. After that, electricity, water, natural gas are cut off and destruction takes place.
In order to benefit from the loan support, the building must be evacuated by agreement.
The beneficiary citizens are required to sign a construction or flat-for-floor construction contract with a contractor company for conversion with a 2/3 majority.
Citizens, who have entered the new construction process, can apply to banks that have signed a protocol with the ministry and have the opportunity to get a loan. It is expected that public banks will receive applications for the new package next week, and then private banks will be involved in the process.
Interest support payments are stopped for loans that are not repaid by the beneficiaries.
IS THERE A TIME LIMITATION?
Application for conversion loan can be made within 3 years from demolition.
Will the borrower be able to get rental assistance?
Rental assistance is provided for 18 months for risky buildings and for a maximum of 48 months for risky and reserve structures.
The rent assistance, which varies according to the provinces, has recently increased from 1,000 – 1,500 liras per month to 2 thousand – 3 thousand 500 liras.
However, it is not possible for people whose house will be transformed to receive both rent and interest support, one of them must be chosen.
ARE THERE DIFFERENT SUPPORTS BEYOND CREDIT AND RENTAL?
When renovating risky buildings, exemptions are provided from fees such as title deed, notary public and stamp tax.
If the citizen transforms his house without making an agreement with the contractor for flat, he pays 1 percent VAT instead of 18 percent.
WHAT INCENTIVES FOR HOUSING MANUFACTURERS INCLUDED IN THE NEW PACKAGE?
The Treasury-backed surety system will be included in the scope, and contractors and housing manufacturers will be able to access financing under favorable conditions during the urban transformation process.
While the compensation rate applied so far within the scope of the Treasury-backed surety system has been increased from 7 percent to 9 percent for this package, the guarantee rates authorized by the Ministry of Treasury and Finance in the legislation will be used at the maximum level.
With this financing package provided under favorable conditions, financing opportunities of up to 250 million TL will be offered with a total maturity of 48 months, including a 12-month grace period.
In this direction, the 50 billion lira surety limit will be put into use. The maximum loan amount will be 100 million TL for SMEs and 250 million TL for non-SMEs.
The indemnity upper limit will be 9 percent, and the surety rate for the loan will be 90 percent for SMEs and 85 percent for non-SMEs.
