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Recently, the increase of the rental prices and its effects to tenants and owners have become a popular issue which needs to be examined. Therefore, as Canaydın Law Firm, we prepared an article on this subject within the framework of legislation.
According to Article 343 of the Turkish Code of Obligations it is not allowed to revise the rent contracts against the tenant. However, it is possible to revise the rental price exceptionally. With this regulation, owners are prevented from the violation of their rights while tenants’ rights are protected.
Situations in which the rate of rent increase is determined by parties:
For each renewal terms of the rent contract, parties are able to determine a rate of rent increase between each other without exceeding the Consumer Price Index (CPI) which is declared by TÜİK (Turkish Statistical Institute) each month. According to Article 344 of the Turkish Code of Obligations, agreement of parties on a rate of rent increase is only applicable if the rate amount they agreed on does not exceed the TÜİK’s “rate of change in 12 months moving averages” of the CPI. According to TÜİK, “rate of change in 12 months moving averages” of the CPI is 25,98% in February and it is the rate of rent increase for the contracts which will be renewed in March. Therefore, if parties agree on a rate amount higher than CPI, that amount will not be taken into account and the rate of rent increase will be equal to the CPI. For instance, in March 2022, if parties agree on 30,98% as the rate of rent increase, 5% will not be taken into account and the rate of rent increase will be 25,98%.
Consequently, it is not possible to determine a rate of rent increase higher than CPI and if owner requests an amount more than CPI, tenant does not have to pay this amount and the owner cannot file a lawsuit or evacuate the tenant for this reason.
Situations in which the rate of rent increase is not determined by parties:
Parties do not have to determine a rate of rent increase while signing the rent contract. If parties do not determine a rate of rent increase, they might file a lawsuit requesting from judge to determine the rental price. In this case, the judge determines a rental price according to the CPI rate. However, if the rent contract has been in force for over 5 years, judge does not consider only the CPI rate but also the condition of the property and the rental price of similar properties around.
This lawsuit must be filed at least 30 days before the renewal of the rent contract or during the whole rental period if the owner gives written notice about rent increase to the tenant within those 30 days.
Rental icrease in extraordinary circumstances:
In the case of extraordinary circumstances that cannot be foreseen while signing the rent contract but occurred afterwards, if the terms of the rent contract becomes impossible to fulfill for a party, that party might request from judge to adapt the terms of the contract to the changing circumstances. In such lawsuits, the CPI rate is not binding and the judge may decide on a different rate according to the present circumstances.
As an example of these situations, during the COVID-19 pandemic some tenants were not able to pay their rental prices and had to file a lawsuit to adapt the terms of the contract.
Moreover; earthquakes, floods, wars, financial crises, even devaluations might be considered as extraordinary situations which affects the mass of the population. The Court of Cassation stated that epidemics, wars, natural disasters are considered as extraordinary circumstances which might cause a party to fail to fulfill the terms of the contracts.
As a summary, in cases where the rate of rent increase is determined between the parties, the rate of rent increase will be the same amount that the parties agreed to unless that amount exceeds the “rate of change in 12 months moving averages” of the CPI. In the cases where the rate of rent increase is not determined between the parties, the rental price might be determined by the judge through a lawsuit. Also, in the extraordinary circumstances, rental price might be determined by the judge through a lawsuit.
For further details, please contact our team.
