Conditions, application process, and — the unspoken — legal risks of the loan offered to owners of risky buildings within the scope of the World Bank-funded “Climate and Disaster Resilient Cities Project“. Under the coordination of the Urban Transformation Presidency of the Ministry of Environment, Urbanization, and Climate Change, within the scope of the Climate and Disaster Resilient Cities Project (İADŞP / AFDIS), carried out with World Bank financing, a loan of up to 3,000,000 TL per independent unit is being provided to owners of risky buildings in the provinces of Istanbul, Izmir, Kocaeli, Sakarya, Manisa, Tekirdağ, and Kahramanmaraş, with a monthly interest rate of 0.69%, a grace period of 12 months (payment-free for the first 12 months), and a maximum maturity of 180 months. Across four categories, an additional discount of up to 1.25 points is possible based on the annual interest rate. However, this is not a classic housing loan: the debtor is the owner, but the contractor uses the money. The loan amount is deposited into the owner’s blocked account, transferred to the contractor at the progress payment rate according to construction stages, and a first-degree mortgage for at least twice the loan amount is placed on the independent unit as collateral. And the most critical point: it is clearly stated in the guide that, in case of non-completion of the construction, the debt burden incurred by public finances will be recourse to the parties involved in the building. For this reason, before applying for the loan, the construction contract in exchange for land share needs to be rewritten — to also include the loan mechanism.

1. What is this loan, and where does it come from?

The support, publicly known as the “3 million TL urban transformation loan”, is not a standalone campaign; it is the housing finance component of a multi-component development project funded by the World Bank.

The project’s details are as follows:

The project consists of five components: institutional strengthening, innovative resilient housing finance (Component 2), municipal/public infrastructure investments (İLBANK), project management, and a contingent emergency response component. The 3 million TL loan, which is the subject of this article, falls under Component 2.

Special note for Kocaeli and Gebze region: Kocaeli is one of the provinces included in the project from the outset. Property owners of risky buildings in Gebze, Darıca, Çayırova, and Körfez can benefit from the loan under the same conditions as beneficiaries in İstanbul.

2. Legal basis: Law No. 6306, Article 6/3 and Article 6/8

The loan is not an arbitrary administrative practice; it is based on a clear legal foundation. The legal basis is indicated as follows in the guides published by the Urban Transformation Presidency:

Law No. 6306 on the Transformation of Areas Under Disaster Risk, Article 6/3 — a construction loan to be provided to those who wish to have their residence and/or workplace built,

Law No. 6306, Article 6/8 — a strengthening loan for structures technically determined to be eligible for strengthening for the purposes stipulated by the Law,

The Special Account for Transformation Projects established pursuant to Law No. 6306, Article 7/4, and the Regulation on Transformation Projects Account, Article 12/A.

Thus, funds provided through external financing are transferred to the Special Account for Transformation Projects; from there, they are disbursed as sub-loans to beneficiaries through banks that have signed a protocol. This structure is important concerning the consequences if the loan is not repaid — we will return to this in section 11.

3. Who can benefit? Scope and prerequisites

3.1. Regarding individuals

Only real persons who own risky structures can benefit. Legal entities are excluded.

Beneficiaries can benefit from the loan in proportion to their registered shares in the title deed.

Each beneficiary can apply for only one independent section.

Those residing abroad can apply with a formally issued special power of attorney.

Applications cannot be made in cases of joint (undivided) ownership; since the mortgage will be established over the independent unit, it is mandatory for the title deed to be first converted to shared ownership. After the conversion is complete, each shareholder can apply in proportion to their share.

3.2. Regarding the structure

The structure must be identified as a risky structure under Law No. 6306.

Owners of structures registered as risky and demolished after October 1, 2020 are also included.

In the new building to be constructed,  no manufacturing/work related to the foundation must have been started;  the construction of lean concrete is not an obstacle. This is the condition that most often leads to application rejection in practice.

On the immovable property that will constitute the collateral for the loan,  there must be no annotations, pledges, mortgages, etc., that restrict the right of assignment;  if there are any, they must be removed first.

Common areas and annexes such as garages and warehouses are not considered separate independent sections; duplex and triplex structures are considered as a single independent section.

3.3. Sub-project types

3.4. Change of ownership and critical date

The guide contains a rule that deserves special attention: From the detection of a risky structure until the building permit is obtained in property changes, the new owner can apply for a loan. However, after the construction permit for the new structure has been obtained in property changes, the new owner cannot benefit from the loan. Share transfers made by existing shareholders among themselves after the permit are exempt from this rule.

4. Loan conditions: amount, interest, maturity, grace period

Common calculation error: Additional discounts are not applied to the monthly rate, but are deducted as points from the annual interest rate. Thus, a calculation like “%0.69 – %0.25 = %0.44” is incorrect. The final rate to be applied to your loan is automatically calculated by the system based on the categories you declared in your application and is displayed on the application screen.

5. Additional interest discount: four categories and income thresholds

The Urban Transformation Directorate has determined four separate discount categories in line with the principles of social inclusion and gender equality. Beneficiaries in the first three categories benefit from a 0.25 point discount on the annual interest rate. In the fourth category, a separate discount is applied based on the energy class.

An eligible person who meets all four categories (0.25 + 0.25 + 0.25 + 0.50 for class A) can benefit from a total discount of up to 1.25 points annually.

5.1. Household income thresholds (Category 2)

The thresholds in the guide are as follows. These amounts are updated annually based on TURKSTAT data; the current value must be confirmed before application.

5.2. Supporting documents to be submitted for discount

Supporting document for households where the woman provides for the household’s livelihood (ownership belonging to the woman and contribution to household income / livelihood entirely provided by the woman),

Certificate of entitlement obtained from SGK for martyr’s families, war and service disabled veterans,

Population registration document for widows and orphans,

Relevant document / health board report for retirees and disabled persons,

Energy efficiency standards document.

6. Creditworthiness criteria: who gets rejected?

The bank assesses the creditworthiness of the applicant for applications without missing documents. The criteria listed in the guide are as follows:

No open, ongoing enforcement record,

No open, ongoing debt collection record,

No open, ongoing foreclosure record,

The monthly installment amount of the credit to be used must not exceed 70% of the documented household’s monthly income.

A rejected application is not permanent: Applications rejected for not meeting creditworthiness criteria can be resubmitted after compliance with the criteria. Therefore, closing pending enforcement files with small amounts before applying is practically the most effective preparation step.

Critical warning — majority rule: If multiple owners have applied for the same project and the majority has completed their documents and the loan has been disbursed, it is mandatory for other applications with deficiencies or not meeting creditworthiness criteria to address these deficiencies until the first fund transfer occurs. If not addressed in time, the relevant application will be rejected or cancelled. In other words, an owner who is late in the building may lose their right depending on the speed of their neighbors.

7. Application process step-by-step (ARAAD / AFDIS)

The process is different from conventional housing loan applications: the first step is taken by the contractor, not the owner.

Agreement and additional commitment letter. Owners agree with one of the contractors classified by the Ministry for the transformation of the building. The contractor signs the commitment letter declaring compliance with the environmental, social, OHS, and technical requirements requested within the scope of the project, as an addendum to the contract with the owners. Without this additional commitment letter, the loan cannot be utilized.

Building permit. The loan application process begins after the contractor obtains the building permit.

Contractor’s project registration (ARAAD). The contractor registers the project by accessing the Urban Transformation Presidency’s ARAAD (AFDIS) system via e-Devlet, using the Building Permit Bulletin Number and Risky Structure ID Number; uploads technical, environmental, social, and OHS documents related to demolition and construction, and submits them for Presidency approval.

Presidency approval. The Presidency examines the file; in case of deficiencies, it sends it back for revision or rejects it.

Electronic pre-application of the right holder. For approved projects, owners enter information by declaration through the e-Devlet ARAAD (AFDIS) system: right holder information, risky structure information (YKN), building project information, property information, income information and interest rate discount information.

Physical application to the bank. The beneficiary who has completed their electronic application completes their application by going to the bank branch where the protocol was signed with the required documents.

Creditworthiness assessment and Presidency approval. The bank conducts the assessment and sends the file to the Presidency for approval via ARAAD.

Mortgage establishment and disbursement. For approved loans, a mortgage is established; the amount is transferred to the blocked account opened in the beneficiary’s name.

Three-month forfeiture period: According to the guide, loan applications must be made by beneficiaries within three months from the date the Presidency gives final approval to the project. It is the responsibility of the owners to find out the date the contractor received approval and mark it on their calendar. An owner who misses this period will be left without financing while their neighbors use the loan.

8. Application Documents

8.1. Documents to be submitted to the bank

Proof of income (detailed below),

Supporting documents required for additional interest rate reduction,

Identity card/passport photocopy,

Residence certificate,

Detailed family registration record.

8.2. Documents to be completed at the bank

Loan application form, standard loan agreement,

Blocked account commitment letter annexed to the contract,

8.3. Types of income documents

Salaried employees: Stamped/signed or barcoded payslip for the last month, or a salary declaration letter signed by an authorized person; additionally, a barcoded detailed SGK service statement for private sector employees.

Pensioners: Pensioner ID card (if any) and bank account statement for the last 6 months or a barcoded pensioner’s monthly statement obtained from SGK.

Individual merchants and self-employed professionals: Tax plate, notarized signature declaration/circular, approved financial statements for the last year; trade registry gazette for company partners; ÇKS certificate (Farmer Registration System certificate) and business ledger for farmers.

Other incomes: Title deed, rental agreement, and bank-approved statement for the last 6 months for rental income; bank-approved statement for deposit income; approved statement for the last 6 months translated into Turkish for foreign income.

8.4. Application with a Power of Attorney

The scope of the power of attorney varies depending on the transaction to be made, and this distinction often leads to errors in practice:

For application only: The phrase “Within the scope of Law no. 6306; authorized to apply for credit, to carry out all kinds of works and transactions, and to sign documents” must be included.

For both application and credit utilization: The phrase “Within the scope of Law no. 6306; authorized to apply for credit and to utilize credit” must be included.

The notarized original and a photocopy of the proxy’s ID must be submitted.

In case the right holder is incapacitated, a guardianship decision must be submitted along with a decision from the supervisory authority, which includes the authorization to apply for and use credit.

Practical warning: It is not possible to proceed to the credit utilization stage at the bank with a power of attorney containing the phrase “Authorized to apply for credit”. Especially when preparing a power of attorney for clients abroad, a text covering both authorizations should be preferred; otherwise, it will be necessary to go to the consulate a second time, and the three-month period will be at risk.

9. Flow of Funds: Blocked Account and Progress Payment (Pursantaj) System

This is the most fundamental difference between this loan and a classic housing loan, and it is the most frequently misunderstood point legally:

The owner takes out the loan and becomes indebted; however, the owner does not use the money. The loan amount is deposited into a blocked demand deposit account opened in the name of the right holder. The block is progressively lifted upon the construction reaching the completion levels determined by the Presidency and approval being granted, and the amount is transferred to the account of the contractor who has signed an agreement with the owner.

The transfer is made after queries from the building inspection system and/or physical inspections by the consulting firm, according to the progress payment (percentage) table below:

For projects with 80 or more independent units, transfers are made based on the detailed resource transfer table in the guide’s appendix, in line with the consultant firm’s findings regarding construction progress.

Two strong outcomes in favor of the landowner:
(1) The final 15% payment is conditional upon obtaining the occupancy permit and transitioning to condominium ownership. This is the most effective mechanism in practice to compel the contractor to obtain the occupancy permit — because 15% of their money remains blocked in a building they have delivered but for which they have not obtained an occupancy permit.
(2) Relevant resource transfers are not made until the non-conformities identified by the consultant firm and reported to the contractor are rectified. Owners can activate this mechanism by reporting identified defects to the consultant firm.

10. Conditions for the contractor: at least “G” authorization group

Owners who wish to benefit from the credit cannot freely choose the contractor they will sign a contract with; the contractor must be approved for the project. The conditions stipulated in the guides are as follows:

The contractor must have at least “G” authorization group qualification.

Exception: Contractors in “H” and “G1” authorization groups may apply, provided that the project to be undertaken is planned for a maximum of Ground + 3 floors (with a maximum of one basement floor in addition to this), and they submit their completion certificate for previously completed projects or documents proving project completion.

For ordinary partnerships: The partnership must have a maximum of two partners and possess at least “D” authorization group qualification; each partner’s authorization documents are uploaded to the system separately.

The contractor also uploads documents such as a bank reference letter, construction all-risk insurance, letter of guarantee, building permit, construction contract and additional commitment, contractor class certificate, no tax and SGK debt certificates, and KEP address to the ARAAD system.

In case of any change in the authorization document, the contractor is obliged to inform the parties to the contract within ten days at the latest.

The contractor is also subject to the obligations of compliance with the World Bank’s Environmental and Social Standards (ESS), Labor Management Procedures, Stakeholder Engagement Plan, and Resettlement Framework, establishing a grievance mechanism on site, assigning OHS and environmental liaison personnel, monthly reporting, asbestos inventory, and preparing demolition/construction health and safety plans.

Practical outcome regarding contractor selection: This project, in fact, offers property owners a ready pre-qualification mechanism. A contractor with insufficient authorization group, tax/SGK debt, or who cannot provide a letter of guarantee and all-risk insurance is not accepted into the system. For detailed criteria on contractor selection, you can review our office’s urban transformation articles.

11. Legal risks for the owner: mortgage, default, and recourse

The credit terms are advantageous; however, its legal structure places a heavier risk profile on the owner than a classic housing loan. These risks must be known before applying.

11.1. Twofold Mortgage

As collateral for approved loans, a mortgage is established with first-degree priority and the right to benefit from free degrees, not less than twice the loan amount. This means that an independent section of an owner who uses a 3,000,000 TL loan is encumbered with a mortgage of at least 6,000,000 TL. “The right to benefit from free degrees” ensures that the bank gains priority in future ranks as well, and effectively eliminates the possibility of using the immovable property as collateral for another loan.

11.2. Funds Held in Escrow Are Not at the Owner’s Disposal

After the withdrawal period ends, no offsetting can be made between the blocked account and the collection account. Until the construction is completed and the condominium title deed is obtained, the amount in the blocked account is transferred to the contractor as per project rules. The rightful owner who wishes to close the loan early cannot use the amount in the blocked account for early repayment. In practice, this means: even if you regret it, there is no turning back.

11.3. The Right of Withdrawal is Single-Use

If the right of withdrawal is exercised within the withdrawal period, the loan must be closed, and reapplication is not possible. The decision to withdraw means a complete withdrawal from the project.

11.4. Default Process

11.5. Death and sale

Death: All rights and debts of the credit user pass to their heirs; heirs are responsible in proportion to their inheritance shares.

Sale: In the event that the mortgaged property constituting the credit collateral is sold, the credit must be closed. In other words, it is not possible for you to sell the apartment by transferring the mortgage debt for 15 years.

11.6. The most critical risk: recourse

Article 63 of the Guideline: The emergence of the right to terminate the contract due to the construction work stopping at a certain level and the failure to continue construction activities for at least six months with the team and equipment required to complete the project (Law no. 6306, art. 6/14) and in the event that the construction is not realized/completed, the debt burden to be incurred by public finances will be subject to recourse against the parties concerned with the construction.

This provision is the essence of the matter from the owner’s perspective. Let’s illustrate the scenario:

The owner takes out a 3,000,000 TL loan, and a 6,000,000 TL mortgage is placed on their apartment.

The progress payment system works; a transfer is made to the contractor, for example, up to 55% (approximately 1,650,000 TL).

The contractor faces financial difficulties, the construction site stops, and six months pass.

The contract is terminated ex officio by administrative means, in accordance with Law 6306, Article 6/14.

However, the loan debt is on the owner; the recovery of the amount transferred to the contractor is the subject of a separate lawsuit to be filed by the owner against the contractor.

This asymmetry shows that the loan should not be used alone, but in conjunction with a strong contractual architecture. How this structure will be established is the subject of the next section.

12. Intersection of loan and construction contract in return for land share

Credit guidelines are an administrative regulation; they do not regulate the private law relationship between the owner and the contractor. This relationship is established by a construction contract in return for a land share. If a loan is to be applied for, the contract must be updated under the following headings:

12.1. Definition of the legal nature of the loan

The contract must clearly state what the loan used is: Is it a payment made by the owner to the contractor, or is it the owners’ contribution to the construction cost falling to their share? This definition directly affects the sharing ratio. The most common mistake in practice is that even though a loan is used, the sharing ratio is determined as if there were no loan: the contractor finds the financing readily available and maintains the ratio as in a project without a loan. In projects where a loan is used, the sharing ratio should be renegotiated in favor of the land owner to the extent of the loan amount.

12.2. Making the additional undertaking an annex to the contract

The environmental/social/OSH additional undertaking signed by the contractor should be regulated as an integral annex to the contract, and it should be stated that any breach of the undertaking will be considered a breach of contract. The guideline already stipulates that the contract may be terminated if it is determined that actions are not in compliance with World Bank documents and Law No. 6331.

12.3. Provisions recommended to be added to the contract

Formal note: Since the construction contract in return for land share also includes the sale of real estate, it must be executed in official form — in practice, as a notarized deed. Loan guidelines do not waive this formal requirement. Furthermore, the annotation of the contract in the land registry is of vital importance for the landowner following the decision dated 16.05.2025, numbered E.2024/1, K.2025/2 of the Grand General Assembly for Unification of Jurisprudence of the Court of Cassation (Official Gazette 18.07.2025, No. 32959).

12.4. Free technical and legal support

The guide stipulates that in order to inform owners of risky buildings before they sign a contract with the contractor and to ensure their participation in the process without loss of rights, a free technical and legal consultancy service will be provided through a consultant appointed by the Presidency; this service can be obtained from the project provincial offices. Furthermore, the Presidency explicitly states in the guide that it has not authorized any private firm in this regard and that the most reliable source of information during the application process are the AFDİS consultancy offices in the project provinces.

Despite this, why a separate lawyer? The support provided by the project office is general information regarding the project and the loan process. It is not an attorney-client relationship that represents your specific interests, negotiates the sharing ratio, or drafts the contract in your favor. These two are not alternatives to each other, but complementary.

13. Relationship with “Half from Us” (Yarısı Bizden), rent assistance and tax exemptions

13.1. Cannot be used in conjunction with the “Half from Us” (Yarısı Bizden) campaign

According to the Presidency statements reflected in the press, the same person cannot benefit from both the “Half of It is Ours” campaign and the IADSP loan simultaneously. On the other hand, it is possible for different owners in the same building to choose different support options. This creates a serious planning issue within the building: which owner will choose which support option must be collectively evaluated before the contract.

The main distinction to consider when making a comparison is this: a part of the “Half of It is Ours” package is in the nature of a grant, while IADSP is entirely a repayable loan — however, its limit is higher, its term is longer, and its conditions differ in terms of precedent/construction area limits. Which one is more advantageous must be calculated on a building-by-building basis, according to the number of independent sections, construction cost, household income, and the owners’ payment capacity.

13.2. Can be used with rent assistance

As clearly stated in the guide, beneficiaries who use a loan within the scope of the project can benefit from rent assistance provided under Law No. 6306. This provides significant flexibility in favor of the owners.

13.3. Tax, duty, and fee exemptions

The exemptions provided by Law No. 6306 are applicable to the works and transactions within the scope of the project:

Notary fee,

Title deed and cadastral fee,

Taxes, duties, and fees collected by municipalities,

Stamp duty,

Inheritance and transfer tax,

All fees collected by institutions and organizations under the name of revolving fund fees,

Regarding the money to be received in favor due to the credits extended, the bank and insurance transaction tax.

Additionally, in accordance with Article 7/10 of Law No. 6306, in risky areas, reserve building areas, and parcels containing risky structures, if real persons and private legal entities carry out implementations, regardless of a change in function, no fees or charges will be collected by municipalities for new construction areas up to one and a half times the existing construction area.

14. 18-item checklist before application

Has your structure been identified as a risky building? (Or was it demolished after October 1, 2020?)

Is your province among the project provinces? (Istanbul, Izmir, Kocaeli, Sakarya, Manisa, Tekirdağ, Kahramanmaraş)

The foundation work has not started on the new building, right? (Lean concrete is not an issue.)

Is your title deed shared ownership? If it’s joint ownership, has the conversion process been completed?

Is there an annotation, pledge, mortgage, or seizure on the independent unit? Has it been lifted?

Is there an open enforcement/seizure/follow-up record in your name? Have small files been closed?

Does the monthly installment / household income ratio remain below 70%?

Which interest rate reduction categories do you fall into? Are the supporting documents ready?

Is the contractor’s authorization group at least “G”? (In ground floor + 3 stories project H/G1 + completion certificate)

If it’s an ordinary partnership, is the condition of a maximum of two partners and at least a “D” group met?

Has the contractor signed and attached the environmental/social/OHS supplementary commitment letter to the contract?

Was the contract notarized in the form of an official deed and was a memorandum entered in the title deed?

Was the effect of the loan amount on the sharing ratio regulated in the contract?

Was a bank guarantee letter, a construction guarantee mortgage, and a personal guarantee obtained from the contractor?

Did the contractor obtain the building permit and register the project with ARAAD?

Was the final approval date of the Presidency learned? Was the three-month period entered into the calendar?

In the contract, is there an obligation for an A-class Energy Performance Certificate and a corresponding sanction?

Was the comparison with “Half From Us” calculated on a building basis?

15. Why is expert legal support necessary?

Although a 3 million TL loan technically appears to be a banking transaction, legally, it is a structure where three distinct relationships are simultaneously established: (1) the loan agreement and mortgage relationship between the owner and the bank, (2) the construction contract in exchange for land share between the owner and the contractor, (3) the public relationship under the scope of Law No. 6306 between the owner, the contractor, and the administration. Since these three relationships feed into each other, an error made in one spills over to the others.

2M Law Office, provides legal support that considers these three dimensions together to owners of risky structures in the fields of urban transformation law, condominium law, and real estate law:

Preliminary credit eligibility analysis: preliminary review report in terms of structure, ownership, encumbrances, and creditworthiness,

Conversion of joint ownership into shared ownership and removal of encumbrances on the title deed,

Examination of contractor candidates in terms of authorization group, registry, and financial competence,

Drafting of the construction contract in return for land share covering the credit mechanism and the technical specification, management of notary processes, and title deed annotation procedures,

Establishment of letter of guarantee, construction collateral mortgage, and personal guarantee structure,

Preparation of properly comprehensive power of attorney texts for right holders abroad,

Supervision of documentation related to interest rate reduction categories,

In case of site stoppage, determination of evidence, warning letter, and execution of the application for administrative ex officio termination under Law 6306, Article 6/14,

Recovery of credit amounts transferred to the contractor after termination, and initiation of compensation and penalty clause lawsuits,

Preparation of applications to the complaint mechanism (Alo 181, CİMER, PYB, World Bank Grievance Redress System).

Our office, based in Tuzla, operates in the regions of Tuzla, Pendik, Kartal, Maltepe, Ataşehir, Ümraniye, Sancaktepe, Sultanbeyli, Kadıköy, and Üsküdar, as well as the project provinces of Kocaeli (Gebze, Darıca, Çayırova, İzmit, Körfez) and Sakarya, within the scope of services such as urban transformation lawyer, Istanbul urban transformation lawyer, Tuzla urban transformation lawyer, Gebze urban transformation lawyer, flat-for-land construction contract lawyer, risky building lawyer, and real estate law lawyer.

Frequently Asked Questions

In which provinces is the 3 million TL urban transformation loan applicable?

According to the Urban Transformation Presidency guidelines, the project provinces are Istanbul, Izmir, Kocaeli, Sakarya, Manisa, Tekirdağ, and Kahramanmaraş. The project was launched as a pilot in Izmir, and applications were gradually opened in other provinces.

Who can benefit from the loan?

Only the natural person owners of structures identified as risky under Law No. 6306. Owners of structures registered as risky and demolished after October 1, 2020, are also included. Legal entities cannot benefit.

What are the interest rate and maturity period?

A monthly interest rate of 0.69%, an initial 12-month grace period, and then a maximum term of 180 months are applied. Installments are equal monthly payments, and no penalty or commission is charged for early repayment.

How can I benefit from the interest rate reduction?

There are four categories. An annual reduction of 0.25 points is applied for being a single homeowner, for household income being below the provincial threshold, and for meeting one of the social criteria in the third category (martyr’s family, retired, over 65, at least 40% disabled, female-headed households, etc.); an annual reduction of 0.50 points is applied for an A-class Energy Performance Certificate. The total reduction can amount to up to 1.25 points annually.

Will the loan amount be paid to me?

No. The loan amount is deposited into a blocked current account opened in your name and gradually transferred to the contractor’s account according to the completion stages of the construction. The final 15% tranche is contingent upon obtaining the occupancy permit and transitioning to condominium ownership.

How much mortgage will be placed on my apartment?

As collateral, a mortgage is established with first-degree and free-degree right of benefit, provided it is not less than double the loan amount. This means a minimum mortgage of 6,000,000 TL for a 3,000,000 TL loan. Fee, duty, and expense exemptions are applied for e-mortgage establishment.

What happens to the loan debt if the contractor abandons the construction?

The loan debt belongs to the owner and continues. The guide also states that in case of incomplete construction, the debt burden on public finances will be recourse to those involved in the construction. The recovery of amounts transferred to the contractor is the subject of a separate legal action. Therefore, it is critical that the contract includes securities such as a letter of guarantee, construction collateral mortgage, and personal suretyship.

Is there a time limit for loan applications?

Yes. Loan applications must be made by the beneficiaries within three months from the date the Presidency gives final approval to the project.

What class should my contractor be?

At least “G” authorization group. As an exception, in projects planned for a maximum of Ground+3 floors (and a maximum of one basement floor), agreements can also be made with “H” and “G1” group contractors, provided they present a work completion certificate for previously completed projects. In ordinary partnerships, a maximum of two partners and at least a “D” group requirement is sought.

Can I receive rent assistance if I use a loan?

Yes. The guide clearly states that beneficiaries using a loan within the scope of the project can benefit from rent assistance under Law No. 6306.

Can I use it together with “Yarısı Bizden”?

According to the Presidency’s statements, the same person cannot benefit from both supports simultaneously. However, it is possible for different owners in the same building to choose different supports. Which support is more advantageous should be calculated on a building-by-building basis.

Can I close the loan early?

Yes, no penalty or commission is charged for early closure. However you cannot use the amount in the blocked account for early closure; that amount is held blocked to be transferred to the contractor as per project rules.

Conclusion

The World Bank-financed IADŞP loan provides a real solution to the financing problem , which is the biggest obstacle to urban transformation: a resource with a 15-year maturity, a one-year grace period, and costs below market conditions, which is an opportunity that owners of risky structures have not had access to until now.

However, the legal architecture of this resource burdens the owner with a loan debt and a double mortgage , while leaving the use of the money to the contractor . This asymmetry is not a flaw in itself — it has been attempted to be balanced with mechanisms such as the progress payment system, consultant supervision, and the final installment tied to occupancy permits. But these public mechanisms do not replace the private legal relationship between the owner and the contractor.

Therefore, our summary advice is clear: Rewrite your contract before applying for the loan. Entering into this loan with a construction contract in exchange for land share that has not been updated to cover the loan mechanism, collateral, occupancy permit obligation, energy class, and repayment of loan amounts in case of termination turns the advantage into a risk.

For credit eligibility analysis and contract review, you can contact 2M Law Office along with documents related to your project (risk assessment report, encumbered land registry record, contractor’s offer, contract draft, and additional commitment letter).

Main sources utilized

Republic of Turkey Ministry of Environment, Urbanization and Climate Change, Urban Transformation Presidency — Implementation Guide for Owners of Risky Buildings within the Climate and Disaster Resilient Cities Project

Urban Transformation Presidency — Implementation Guide for Contractors (05.06.2026)

Official project page — kentseldirenclilik.csb.gov.tr

World Bank — Climate and Disaster Resilient Cities Project (P173025) and press release dated September 27, 2022

Law on the Transformation of Areas Under Disaster Risk, numbered 6306 (especially articles 6/3, 6/8, 6/14, 7/4, 7/9, 7/10) and its Implementing Regulation

Supreme Court of Appeals Grand General Assembly for Unification of Jurisprudence, 16.05.2025, Appl. 2024/1, Dec. 2025/2 (Official Gazette 18.07.2025, No. 32959)

Legal Disclaimer and Timeliness Note: This article has been prepared for general informational purposes only and does not constitute legal advice or legal services. The information in this article is based on the guides published by the Urban Transformation Directorate as of their preparation date. The guides explicitly state that due to the use of international financing, exceptional provisions may apply, and changes may be made by the Administration, and these changes may also be applied to ongoing projects. Loan amount, interest rates, income thresholds, and application conditions may be updated; updated information should be confirmed before application from kentseldirenclilik.csb.gov.tr and AFDİS consulting offices in project provinces. The citation of the judicial decision mentioned in the article must be verified with its full text via the UYAP / Supreme Court of Appeals Decision Search system before being used in any petition or publication. Always consult a lawyer before taking any action regarding your specific case.