Duygu Erdogan – Housing rents and annual increases have been the biggest issue for the public for the past two years. Housing rent increases were previously determined based on the 12-month average of the CPI, which was fixed during periods of high inflation and subject to a two-year 25% increase limit to protect tenants.
Applications will close in July. From tomorrow, as of July 2024, residential rent increases will again be capped at the 12-month CPI average.
The practice of a 25% cap on residential rents will be abolished from July 2, following the addition of a transitional clause to Turkey’s debt law in June 2022. Minister of Finance and Treasury Mehmet Şimşek made a statement on a television program on the issue in May, saying that the practice had been in place for a certain period of time and that there were no efforts to continue it.
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It will be announced on July 3rd
The upper limit of the increase in residential rents will be the 12-month average of June inflation, which will be announced on July 3. Based on the 12-month average data that is usually the basis for rent increases, the rent increase rate for businesses that continued to increase rents in June was 62.51%.
The increase across Turkiye was 265 percent
According to an Endexa market study that assessed the impact of rent increase restrictions expiring in July, the value of rental housing across Turkey increased by 265 percent in nominal terms over two years. Adjusted for inflation, the increase is about 50 percent. Endexa general manager Gölkem Ogut said the lifting of restrictions would have a positive impact on the sector and the market would rebalance. The average rent level in Istanbul was 20,000 lira. The average was over 17,000 lira in Ankara and 19,000 lira in Izmir.
More controversy and litigation
The 25% increase limit on residential rents over the past two years has caused a lot of debate and disagreement. Real estate agents’ statements say that the regulation failed to be implemented 80-85 percent of the time. The expected increase in rents for 2023 is over 300%. There has been at least a two-fold increase. The average rent across Istanbul has exceeded 19,000 lira.
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Faced with rising rents in their area, homeowners considered the 25% increase an “unfair” limit. Homeowners who said they rent their homes to make ends meet also said they were struggling in an inflationary environment.
Due to these disputes, litigation between landlords and tenants has increased many fold. In fact, to reduce the burden of disputes in the courts, the appointment of a mediator has been made mandatory in landlord-tenant litigation since September 1st.
Various measures are currently being taken to ensure a balance between rents and real estate sales prices. People who own more than one home will be taxed more. Suspicions of withholding tax on rental income are frequently reported in the public eye.
At least half of the increase
As of May, the 12-month CPI average was over 62 percent. By this calculation, for someone paying 20,000 lira in rent, a rent increase would mean an increase of 12,000 lira. In June’s inflation-adjusted table, tenants are expecting a rent increase of at least half.
Questions and Important Points
Attorney Ali Güvenç Kiraz, specialist in real estate law, answers frequently asked questions about residential rent increase regulations.
1- What period does the 25% residential rent increase limit cover?
The rent cap restrictions that began on June 8, 2022 will end on July 2.
2- How are July rent increases calculated?
Back before June 15, 2022. Businesses whose leases are up for renewal will be subject to owed increases that are within the 12-month average of the Consumer Price Index (CPI) for the previous month.
3- Can I request a raise above the CPI average?
Our law makes any lease provision that provides for increases above the 12-month CPI average invalid, where the base increase is the tenant’s 12-month CPI average.
4- What happens to consumers who had their rent increased before July?
For example, the 25% limit is already in place on contracts renewed and increased from April to April, meaning homeowners will have to wait until April 2025 for a new increase period.
5- For tenants who received an increase before July 2nd, can I ask for an increase equal to the difference or a different increase after July 2nd?
Residential tenants who have increased their rent by 25 percent, regardless of the date prior to July 2, will not receive an additional or differential increase after July 2. These tenants will wait until next year and, when their renewal period comes around, will receive increases within the 12-month average of the CPI during the renewal period.
6- Can a fixed rental price be agreed upon in the contract?
Our law caps residential rent increases at the 12-month CPI average, so you can decide on a rate that won’t exceed that, but any request that exceeds that will be invalid.
7- How does the pay increase apply to those with ongoing legal proceedings?
Dispute cases and arbitration proceedings between landlords and tenants are ongoing. Tenants in this situation will still be subject to the current rates when the rate increase period arrives.
8- Under what conditions can a landlord ask for a rent increase?
The landlord cannot ask for an increase beyond this rate until the fifth year of the lease, at which point the right to bring a rent determination lawsuit arises.
9- What is the procedure for rent disputes?
The obligation to consult a mediator before filing a lawsuit in a rental dispute began on September 1, 2023. For all disputes arising from a rent dispute, mediation is applied first, except for evictions without judgment. If no agreement is reached, a lawsuit may be filed.
10- How does this apply in workplace rentals?
There was no limit on workplace rents, and as always, rents continue to rise in the CPI average.
