How the rent is to be increased in leases of residential and roofed commercial premises has been one of the most debated legal issues in recent years. With the end of the temporary cap introduced during the period of high inflation, the general rules of Turkish Code of Obligations No. 6098 have once again become the sole applicable rules.

General rule: the CPI cap

Under Art. 344 of the Turkish Code of Obligations, agreements on the rent to apply in lease periods renewed by the parties are valid provided that they do not exceed the rate of change in the twelve-month average of the consumer price index (TÜFE) in the preceding lease year. If the parties have not agreed on the rate of increase, the rent is determined by the judge on an equitable basis according to the condition of the leased premises, again without exceeding this rate.

Temporary twenty-five per cent cap

An amendment made in 2022 provided that, in residential leases, the increase in renewed periods could not exceed twenty-five per cent. After being extended once, this temporary rule expired in July 2024. In lease periods beginning after that date, the increase is once again capped at the CPI average.

The five-year period

In leases with a term of more than five years or renewed after five years, at the end of every five-year period the rent for the new lease year is determined by the judge on an equitable basis, taking into account the CPI rate, the condition of the leased premises and comparable rents. This provision is the principal means of updating rents that have fallen behind market conditions.

Action for determination of rent

An action for determination of rent may be brought at any time. However, the period from which the action takes effect is important:

• If the action is brought no later than thirty days before the start of the new lease period, or if the landlord has notified the tenant in writing within that period that the rent will be increased, the rent determined applies from the start of the new period.
• If these conditions are not met, the rent determined applies from the following lease period.

It is therefore of great importance in practice that the notification be made in time and by a means that can be proved, for example through a notary.

Mandatory pre-litigation mediation

Since 1 September 2023, applying to a mediator before bringing an action in disputes arising from a lease relationship has been a precondition for bringing an action. Claims for the determination and adjustment of rent also fall within this scope. An agreement reached in mediation may, when signed by the parties and their lawyers, qualify as a document having the force of a court judgment; if no agreement is reached, the final minutes are attached to the statement of claim.

Assessment

With the removal of the temporary cap, two basic criteria have again come to the fore in lease law: the CPI cap for renewed periods, and comparable rents for leases that have completed five years. Which one applies depends on the start date of the lease and on how the lease period is calculated; a calculation error directly affects the period from which the action for determination of rent takes effect.