What does the 25% Rent Increase Limit Cover? Are Workplace Rents Out of Scope?

Altınbaş University Faculty of Law Inst. Member Assoc. Dr. Umut Yeniocak answered the questions about the arrangement.

 Workplace leases are out of scope

With the temporary law adopted at the General Assembly of the Grand National Assembly of Turkey on 8 June 2022, an upper limit of 25 percent was imposed on the agreements regarding the increase of the rental price in rental agreements. Assoc. Dr. Umut Yeniocak drew attention to the fact that the 25 percent rent increase limit, which was introduced with the temporary article added to the Turkish Code of Obligations, was limited to residences. In this case, he emphasized that the rule of increase in the CPI rate in the Law will continue to be applied in terms of workplace rents.

The increase limit will not affect the lease agreements made after July 1, 2022.

Assoc. Dr. Umut Yeniocak stated that the limitation on the increase in housing rents will be valid until July 1, 2023, unless there is an extension in terms of duration. The rental agreement of the house where he lived added that all tenants renewed as of the effective date of this temporary Law will benefit from this rule. Assoc. Dr. Umut Yeniocak said, “The law was accepted in the Parliament yesterday (June 8, 2022), but it was not published in today's Official Gazette. For this reason, it is not in effect as of today. We can say that the lease contracts with the increase date of the lease agreement today (June 9, 2022) will not be affected by this change.” He pointed out an important detail. He stated that if a special effective date is not brought in terms of this Law, which imposes a 25 percent increase limit on housing rents, it will be applied to the increases to be made in housing rents until 1 July 2023 (including this date) from the date of its publication in the Official Gazette.

Housing rentals will stop for the next month

Assoc. Dr. Umut Yeniocak stated that an interesting situation has arisen with this regulation and said, “We expect the law to be published in the Official Gazette in the next day or two, but this rule, which will be effective until July 1, 2023, will be implemented on July 1, unless the time is extended with a new law. It will not affect lease agreements signed after 2022. For this reason, we can say that new housing rentals will stop significantly for about a month from today.” he said.

Existing or newly opened rent determination lawsuits will not be affected.

Emphasizing that when looking at the text of the law, it was stated that this increase limitation would also be applied in the decisions to be made by the judge by referring to the TCO 344/2, Assoc. Dr. Umut Yeniocak said, “However, the reference made in the text of the Law (TBK 344/2) concerns contracts where there is no article on rent increase in the lease agreement. However, it is almost impossible to come across a residential lease agreement that does not have a rent increase clause. I guess that a mistake was made while writing the text of the Law. I think the main aim was to prevent the judges from giving high amount of increase decisions, taking into account the current precedent rents, in rent determination lawsuits filed for lease agreements that expired for 344 years, based on the provision of TCO 3/5.

However, the paragraph referred to in the article is about a possibility that has no application and has become a meaningless arrangement since it is not related to the rent determination cases in TCO 344/3.” He stated the point that needs attention.

Effects on inflation will be limited

Assoc. Dr. Umut Yeniocak said, "We can say that this effect will be quite limited if the main target of the 25 percent limitation is to reduce inflation, by adding a temporary article to the Law that already limits the CPI on rent increases." Because this change pointed out that the rental prices in new leases could be determined much higher.

Landlords do not have the right to sue

Assoc. Dr. Umut Yeniocak, finally, "Although it is a change that will cause unfair results for landlords, this Law, which imposes a 25 percent increase limit on rent increase, is claimed to be unconstitutional and the Constitutional Court has been appealed to and the Court has decided to cancel the Law. Unfortunately, landlords do not have a right to file a lawsuit regarding this law change or its consequences.” made its assessment.