On the agenda for a long time, in order to prevent the increase in rental prices caused by high inflation figures, the amendment restricting housing rent increases in the Turkish Code of Obligations entered into force on June 11, 2022 and was published in the Official Gazette No. 31863. In accordance with the relevant amendments, effective from June 11, 2022, when the Law entered into force, a temporary provision was added to the Code of Obligations No. 6098 that the rate of rent increase in housing rental agreements is limited.[1]
From Jun 11, 2022 to July 1, 2023 rent increases on residential lease agreements subject to renewing leases will not exceed 25% of the previous year's rent amount.[2] Owing to the fact that the upper limit in question is regulated as a temporary clause, from June 11, 2022 to July 1, 2023, if there is no subsequent extension in terms of the period, the upper limit in question is valid. In case of rent increases, the Consumer Price Index (CPI) change rate for the previous rental year must be less than 25% compared to the 12-month average in order to apply the CPI change rate.[3] If the rent increase exceeds the amount stipulated by law, the amount exceeding will be considered invalid.
In the case of the parties cannot agree on the rent increase rate to be applied during the new lease period, in accordance with the made reference to the provision of Article 344/2 of the Turkish Code of Obligations in the temporary lease provision, while the judge appreciates the rent increase rate, the judge will take this amendment, which limits the exorbitant rent increase in housing, as a basis. In theory, Article 344/2 of the Turkish Code of Obligations relates to lease agreements in which there is no rent increase clause, but in practice, it is not often that there is no rent increase clause in residential lease agreements. About ‘rent determination cases’ which has been filed for lease contracts that has expired for a period of 5 years relating to the Article 344/3 of the Turkish Code of Obligations, it should be brought into discussion that it will be more accurate to prevent judges from making decisions on a large amount of increase, taking into account today's similar rents. It is necessary to say that the landlords have the right to file a lawsuit to tenants who have completed 5th year, to increase the rent price and there is no “25% limit” here. Having said that, in the event that landlords ask for a rent increase of more than 25% and in case the tenant does not agree, if an eviction lawsuit is filed arising from underpayment of rent, the case will be dismissed, since the courts are bounded by legal regulation.
The upper limit imposed on rent increases does not apply to workplaces in scope and only covers residential buildings. Therefore, in terms of workplace rents, the upper limit rule of increasing the CPI rate contained in the Law will continue to apply. This regulation appears to be a protective regulation for tenants in the face of rent inflation, together with after July 1, 2023, the fate of this regulation will be evaluated according to the rent inflation of that day. Summing up, it is possible to say that from the date of entry into force of the temporary law, all residential tenants who have renewed the lease agreement will benefit from this rule.
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[1] TCO, PROVISIONAL ARTICLE 1- Agreements on the rental price to be applied during the renewed lease periods from the date of entry into force of this article to 1/7/2023 (including this date) in respect of housing leases are valid provided that they do not exceed twenty-five percent of the rental price for the previous lease year.
[2] TCO, PROVISIONAL ARTICLE 1- This rule is also applied to lease agreements for a period of more than one year. Contracts concluded in such a way as to exceed these rates are invalid in terms of excess amounts. The provision of this paragraph shall also apply to decisions to be made by the judge in accordance with the second paragraph of Article 344.
[3] TCO, PROVISIONAL ARTICLE 1- If the rate of change remains below twenty-five percent compared to the twelve-month averages in the consumer price index of the previous rental year, the rate of change applies.