RENT DETERMINATION IN LEASE AGREEMENTS EXCEEDING FIVE YEARS IN THE LIGHT OF RECENT COURT OF CASSATION DECISIONS

Disputes arising from residential and roofed workplace leases have increased significantly in recent years due to changes in economic conditions, inflation, and the rapid rise in rental prices. In particular, in long-term lease relationships, whether the rent may be aligned with current market conditions has become a major source of legal controversy between lessors and tenants.
Under Turkish law, the principal regulation governing the determination and increase of rent is set forth in Article 344 of the Turkish Code of Obligations No. 6098 (“TCO”). This provision establishes different rules depending on the duration of the lease relationship and, in particular, allows for judicial intervention in the determination of rent once a five-year period has elapsed. However, the scope of application of Article 344/3 of the TCO has been subject to debate in both doctrine and judicial practice, especially where the lease agreement was concluded as a long-term contract from the outset.

This article examines the applicability of Article 344/3 of the TCO to long-term lease agreements in light of doctrinal views and recent court decisions.

Legal Framework under Article 344 of the Turkish Code of Obligations

Pursuant to Article 344 of the Turkish Code of Obligations:
“Agreements between the parties regarding the rent to be applied in renewed lease periods shall be valid provided that they do not exceed the rate of change in the twelve-month average of the consumer price index in the previous lease year. This rule also applies to lease agreements with a term longer than one year.
If no agreement exists between the parties on this matter, the rent shall be determined by the judge in accordance with equity, taking into account the condition of the leased property, provided that it does not exceed the rate of change in the twelve-month average of the consumer price index in the previous lease year.
Regardless of whether an agreement exists between the parties, in lease agreements exceeding five years or renewed after five years, and at the end of every subsequent five-year period, the rent to be applied in the new lease year shall be determined by the judge in an equitable manner, taking into account the rate of change in the twelve-month average of the consumer price index, the condition of the leased property, and comparable rental values. The rent thus determined after each five-year period may be adjusted in accordance with the principles set forth in the preceding paragraphs.”

Article 344/3 of the TCO thus allows the rent in residential and roofed workplace leases exceeding five years or renewed after five years to be determined by the court on the basis of equity and fairness. However, the scope of application of this provision has been interpreted differently in legal doctrine, particularly where the lease agreement was concluded as a long-term contract from the outset.

Doctrinal View on Long-Term Lease Agreements
According to one doctrinal view, where a lease agreement is concluded from the beginning for a period of seven years, ten years, or longer, a claim for judicial determination of rent under Article 344/3 of the TCO cannot be asserted during the contractual term. Proponents of this view argue that by entering into a long-term lease agreement, the parties have expressed their will regarding the rent in advance, and therefore the agreed rent should prevail throughout the contractual period.

This approach is essentially based on the principle of pacta sunt servanda (binding force of contracts) and asserts that Article 344 of the TCO should be interpreted as a whole. Accordingly, the term “agreement” referred to in the third paragraph is understood to denote a rent increase clause, and requesting a rent determination based on comparable rental values merely due to the expiration of five years -absent any extraordinary circumstances- would amount to an unjustified expansion of the doctrine of adaptation.

Decision of the 6th Civil Chamber of the Court of Cassation and Former Practice
This doctrinal approach was reflected for a period in judicial practice through the decision of the 6th Civil Chamber of the Court of Cassation dated 11 February 2015 (Merits No. 2014/13763, Decision No. 2015/1173). In this decision, the Court held that priority should be given to party autonomy in long-term lease agreements and that judicial intervention in the rent during the contractual term could undermine the principle of contractual binding force.

Within this framework, the duration of the lease agreement was considered a limiting factor for the application of Article 344/3 of the TCO, and it was accepted that a claim for rent determination could only arise upon renewal of the lease. Nevertheless, this interpretation was subject to criticism in view of the wording and legislative intent of Article 344/3.

Recent Judicial Practice and Shift in Case Law
Recent decisions of the Regional Courts of Justice and the Court of Cassation demonstrate a clear shift in the application of Article 344/3 of the TCO. Under current judicial practice, the fact that a lease agreement was concluded for a definite or long term is no longer regarded as an obstacle to filing a rent determination action once five years have elapsed.

This approach is grounded in the explicit wording of Article 344/3, which states that judicial determination of rent may be sought “regardless of whether an agreement exists between the parties.” The legislator has thus clearly allowed judicial intervention in rent determination upon the expiration of five years, irrespective of the duration of the lease or the existence of a rent increase clause.

Decision of the 3rd Civil Chamber of the Court of Cassation dated 14 October 2025
This shift in case law was explicitly confirmed by the decision of the 3rd Civil Chamber of the Court of Cassation dated 14 October 2025 (Merits No. 2025/3101, Decision No. 2025/4808). In this decision, the Court emphasized that in residential and roofed workplace leases, once five years have elapsed, the rent applicable to the new lease period must be determined by taking into account (i) comparable rental values, (ii) the condition of the leased property, and (iii) the principles of equity and fairness.

The Court further underlined that the principle of being bound by the claim must be observed in rent determination cases and that expert reports must be concrete, reasoned, and suitable for judicial review. The Court’s consistent annulment of decisions based on expert reports that fail to meet the criteria set forth in Article 344/3 is particularly significant in clarifying the practical boundaries of the equity principle. The fact that the decision was rendered unanimously indicates that this interpretative approach has become firmly established.

Conclusion
Pursuant to Article 344/3 of the Turkish Code of Obligations, in residential and roofed workplace lease agreements exceeding five years or renewed after five years, the rent may be determined by the court on the basis of equity and fairness. The conclusion of a lease agreement as a long-term contract from the outset does not prevent the filing of a rent determination once the five-year period has elapsed.

Doctrinal views and earlier case law asserting that such actions cannot be brought in long-term lease agreements have largely lost their validity in practice in light of recent decisions of the Court of Cassation and the Regional Courts of Justice. The prevailing line of case law demonstrates that Article 344/3 must be applied in accordance with its wording and purpose, independently of the contractual duration of the lease relationship.

Our Law Firm remains at your disposal for any further clarifications you may need.

Copyright © 2025 Cailliau&Colakel Attorney Partnership, All rights reserved.