Minister of Finance and Finance Mehmet Šimšek announced that he saw no reason for the 25% increase limit on housing rents, which has been in place for two years, and that no efforts were being made to continue it.
So, on what basis will it be possible to raise housing rents after July 1, when the 25% price increase restriction is lifted? Will homeowners be able to increase the price of their homes as much as they want? Mr. Burc Akar Muratoglu, a lawyer from the Ankara Bar Association, answered these questions. According to information provided by Muratoğlu, since this law will be repealed after July 1, residential rent increases will continue to be determined based on average annual inflation (CPI).According to the Turkish Obligation Law (TBK), the old regulations
Rent increases are based on a 12-month average of inflation. Muratoğlu’s questions and answers regarding rent are as follows.
* When will the 25% rent limit be lifted?
A temporary provision added to the Turkish Debt Law on June 8, 2022 imposes a 25% rent increase limit on residential rents. This restriction has been extended until July 1, 2024. Within this regulation, the maximum rate of increase in housing rent was capped at 25%. The law restricting housing rent increases by 25% will be abolished from July 1, as Prime Minister Şimşek announced that there will be no new regulations.
*How will rent increases be regulated after July 1st?
Housing rent increases will return to previous levels. This is done according to article 344 of the Obligations Act and according to the calculation of the 12-month average of inflation. From 2 July, residential rent increases will be based on the rate published monthly by TUIK and based on the inflation average, i.e. the 12-month CPI average.
* How would the May rental rate be determined if there was no 25% limit?
Inflation statistics for April were released on May 3rd. We added April and the previous 11 months and divided the result by 12 to find the average annual inflation rate. Last month, this rate was 59.64%. Without the 25% rent increase limit, a landlord who renews a lease last month would be able to increase the rent by up to 59.64%.
*Can a landlord whose five-year rental contract expires on July 2nd file a rent determination lawsuit?
The 25% rent increase limit has been in place for two years. His fourth or fifth year of many contracts will be effective July 1, 2024. To file a rent determination lawsuit, five rental periods must have elapsed. At this point, on July 2, 2024, the landlord will increase the residential rent at her CPI rate. This law will compensate them to some extent for the losses they have suffered. When the five-year lease contract expires, if you cannot reach an agreement with the tenant, you can file a lawsuit to determine the rent. For those who have not completed 5 years, they can file a rent adjustment lawsuit at any time.
How is a rental lawsuit filed?
From September 1, 2023, rental cases are also subject to compulsory mediation. Judgment is rendered by a landlord (excluding evictions due to non-execution) who intends to file a lawsuit regarding eviction of a rental property, rent determination, rent adjustment cases, and disputes regarding various claims and compensation claims between tenants and lessors (landlords). If so, the first step is to proceed to mediation as a necessary condition for litigation. If an agreement cannot be reached through mediation, a rent determination lawsuit may be filed in court.
“If we did not buy foreign exchange from the market, USD/TL would fall below $30.”
Simsek said the lira could gain nominal value if the central bank (CBRT) does not accumulate foreign currency, adding: “If we do not buy foreign currency from the market, the lira will probably fall below 20 or 30 liras. I will.” “If our central bank had not accumulated foreign currency within the past month and a half,” he said. Other highlights of Simsek’s speech on TRT Harbor include:
* There will be no new increases in SCT and VAT this year.
*Inflation expectations have improved significantly. If you ask the market over the next 12 months, they predict lower inflation. It has fallen to about 33%. Over two years, it has decreased to about 22%.
*Both public and business demand for TL is increasing. Confidence in the Turkish lira has increased.
“Significant increase in capital flows”
There are several indicators that summarize that the economic plans they have implemented are working. One of them is the Turkish Risk Premium (CDS), Simsek said, adding: “Turkey’s risk premium was over 700 basis points in May last year. Today it has fallen below 270. Risk Premium The decrease is actually an indicator summarizing that the program is working, Şimşek said, “because this is one of the factors that determines the cost of financial flows into Turkey.” “Fund inflows have increased much more significantly than we expected,” he added.
New regulatory signals on land revenue
Noting that the OECD is making serious efforts to ensure fairness in taxation, Mr. Šimšek said, “Recently, the OECD has switched to a minimum corporate tax for multinational companies. We will also introduce a minimum corporate tax of 15% for all companies, no matter what incentives they receive or how many exceptions they have. Everyone has to shoulder this burden as much as they can bear. Another area is the issue of urban rents. “We also look into the package of income from land and real estate. I’m doing it,” he said.
“We are in a balanced process.”
In a statement to TRT Harbor, Prime Minister Şimşek summarized that the process of rebalancing the economy has begun: Now we are seeing a softening there. The impact of net exports has begun to turn positive for the economy. In other words, the composition of growth changes and growth remains balanced. This eliminates the resulting imbalance. One of the most important imbalances is the current account deficit. As of May last year, it was about $57 billion. big gap. This year, the deficit is expected to fall below $30 billion as of May. “We’re seeing very serious improvements.”
