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ANNUAL RENT INCREASE IN JUNE 2022 AND LIMITATION OF RENT INCREASE ANNOUNCEMENTS MADE BY THE MINISTERS

According to article 344 of Turkish Code of Obligation numbered 6098 (in Turkish, Türk Borçlar Kanunu”), the rent increase rate at most is calculated by taking the 12-month CPI average (in Turkish, “TÜFE 12 aylık ortalamalara göre değişim oranı”) of the month following the expiry of the lease agreement, and the rent increase rate at most for both houses and workplaces in June 2022 is announced as 39.33%.

Minister of Justice Bekir Bozdağ announced that alternative dispute resolution methods will be expanded within the framework of the Judicial Reform Strategy Document. Subsequently, Ministry of Environment, Urbanization and Climate Change (in Turkish,  “Çevre, Şehircilik ve İklim Değişikliği Bakanlığı”), Ministry of Treasury and Finance (in Turkish “Hazine ve Maliye Bakanlığı”), Ministry of Justice (in Turkish,  “Adalet Bakanlığı”) and Ministry of Commerce (in Turkish, “Ticaret Bakanlığı”) officials came together to regulate rent increase rates,  and it has been learned that the temporary regulation regarding the rent increase rates and rental provisions has been discussed. Then, Minister Bozdag said; « We will make a determination on the basis of the ratio, not the quantity. Because when we do it on the ratio, the cost will occur differently according to each quantity. We will reveal a formula that shares the burden. It will again be PPI (in Turkish, “ÜFE”) – CPI (in Turkish, “TÜFE”), but which everyone can accept as reasonable. If rates are set, no one will be able to exceed the ratio. The goal is to resolve any disputes between the lessor and the lessee within 1 month« .

In our country, the Law No. 6570 on Real Estate Leases (“REL”, in Turkish, Gayrimenkul Kiraları HakkındaKanun”) came into force in 18 May 1955. Articles 2 and 3 of the REL were limiting the rent increase rates of immovables subject to the provisions of this law. The said provisions of the REL were annulled by the Constitutional Court on 26.03.1963 with the resolution principle 1963/3 and numbered 67. Thereupon, the Supreme Court Assembly of Civil Chambers decided on 18 November 1964 to consolidate a basic jurisprudence on how to determine the rental fee for the new period that started after the cancellation decision came into force for lease agreements concluded before 26 September 1963 or renewed pursuant to the law. When it came to 16.02.2000, Law No. 4531 was enacted with the name of « Law on Adding a Temporary Article to the Law on Real Estate Leases ». Provisional Article 7 of this law states that “The rental fees agreed in the contracts can be increased by a maximum of 25% per annum in 2000 and by a maximum of 10% per annum in 2001.” was introduced. However, in 2001, the phrase of “at most 10% per annum.” was annulled by the Constitutional Court’s decision dated 19.07.2001. The reason of the annulment was in parallel with the price increases envisaged on the date of entry into force of Law No. 4531, the 10% increase in rents for 2001 remained far below the price increases due to the economic crisis in 2001. Thus, the limitation on rental prices, exceeding its purpose, resulted in the deterioration of the fair balance that should be found between the lessee and the lessor in a way that cannot be considered reasonable and acceptable.

What if there was a similar arrangement today? It is really difficult to answer this question, but we think it is necessary to work at a level that will not bring the issue to the Constitutional Court and to make the regulation in this way.

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

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