ENTRANCE
A lease agreement is a contract that creates a mutual obligation, in accordance with the provisions of the Turkish Code of Obligations (TBK) Article 299 et seq., in which the lessor undertakes to leave the use and enjoyment of a thing to the tenant, and the tenant undertakes to pay the agreed rent in return for this use.
In residential and commercial leases, the lessor-tenant relationship is based on the principle of tenant protection. In this context, matters such as the term of the contract, the determination of the rent, and, in particular, the rent increase clause, are subject to the mandatory provisions of the TCC.
DEVELOPMENT
1-) Lessor-Tenant Relationship
A-) Rights and Obligations of the Parties
Obligations of the lessor:To deliver the leased property in accordance with the contract, to keep it in a usable condition, and not to interfere with the tenant’s right of use.
Obligations of the tenant:To pay the rent and any additional expenses, to use the rented property with care, and to return it after the eviction.
B-) Freedom of Contract and Restrictions
Although the parties have freedom of contract regarding the rent and the rate of increase, pursuant to Article 344 of the Turkish Code of Obligations, the rent increase rate for residential and roofed workplace leases cannot exceed the 12-month Consumer Price Index (CPI) rate announced by the Turkish Statistical Institute (TÜİK). With temporary regulations introduced after 2022, this rate has been limited to 25% in some periods.
2-) Elements of the Lease Agreement
A-) Parties:
Lessor and tenant. It is not necessary for the lessor to be the owner; it is sufficient to have the authority to lease.
B-) Leased:
Movable or immovable property to be delivered. Residential and roofed workplace leases are subject to special regulation between Articles 339-356 of the Turkish Code of Obligations.
C-) Rental Fee:
It is one of the essential elements of the contract. The amount of the rent and the payment date can be determined; however, the increase provision is subject to mandatory limitations.
3-) Rent Increase Clause
A-) Legal Basis:
TCC article 344:The parties’ agreements regarding rent increases cannot exceed the rate of change in the Consumer Price Index (CPI) based on the twelve-month average. Furthermore, for fixed-term contracts with a starting date of April 1, 2024, the rent increase will be based on the 12-month CPI average for March 2025. The increase will be based on the 12-month CPI average for the preceding month, regardless of the month of the increase.
Temporary 1-year limitation (between 2022 and 2024): A 25% increase limit has been introduced in some periods.
B-) Validity Conditions:
-The rent increase clause must be clear and specific.
-The increase rate cannot exceed the 12-month CPI average rate announced by TÜİK or the upper limit determined by law.
-Parties may set a rate below the upper limit.
4-) Problems Encountered in Application
Confusion regarding the duration and scope of application of the 25% limitation.
-How to calculate the increase rate if the rent is determined in foreign currency.
-Articles in commercial lease agreements that are contrary to the mandatory provisions of TCC Article 344.
CONCLUSION
The lessor-tenant relationship is a legal relationship that arises from the establishment of a lease agreement and is strictly regulated by the TCC.
Rent increase clause can be regulated within the scope of freedom of contract; however, absolute freedom cannot be mentioned due to the CPI limit and periodic legal restrictions.
The established precedents of the Supreme Court prevent the application of unlawful increase clauses for the purpose of protecting the tenant.
Therefore, when regulating the increase clause in lease agreements, both the existing legal limits and possible judicial interpretations should be taken into account.
FREQUENTLY ASKED QUESTIONS ABOUT THE LESSOR-TENANT RELATIONSHIP, THE LEASING AGREEMENT AND THE RENT INCREASE CLAUSE
1-) What should be written for the lease agreement to be considered valid?
Basic elements such as the identity information of the tenant and the landlord, the full address of the rented property, the rental amount, and the payment date must be clear and every page must be signed.
2-) Can the rent be increased freely?
No, the increase must not exceed the CPI average limit specified in TCC article 344.
3-) How is the rent increase rate calculated?
Generally, the 12-month average of the CPI is taken as basis; a 25% limit was previously applied in some periods.
4-) Can the landlord force the tenant out when the contract ends?
Fixed-term leases automatically extend the lease upon expiration; the landlord can only evict the tenant after the ten-year extension expires and with three months’ written notice. The landlord reserves the right to file an eviction lawsuit, as detailed in our other articles.
5-) What is an indefinite-term lease agreement?
These are contracts that are not for a fixed term but continue indefinitely. They remain in force until one of the parties requests termination.
6-) How is the rent increase rate determined?
Generally, increases cannot exceed the CPI (the last 12-month average). If there is an agreement, this rate applies; otherwise, the judge may make an assessment, provided it does not exceed the legal limit.
7-) Is the PPI/CPI average valid for rent increases?
Must be calculated based on CPI; PPI or mixed formulas are invalid.
😎 According to the Turkish Code of Obligations, can the parties in the lease agreement freely determine the rental price at the beginning?
Yes. The rent can be set freely at the outset, but subsequent increases cannot exceed the limits stipulated by the TCC.
9-) According to TCC Article 344/III, how is the increase in the rental fee determined after five years?
For each new lease year after five years, the judge may determine a fair rent, taking into account the Consumer Price Index (CPI), the condition of the leased property, and comparable rental rates. A rent-fixing lawsuit may be filed every five years. If the conditions are met, a rent adjustment lawsuit may be filed without any time limit.
10-) If the lease agreement is drawn up in foreign currency, how is the increase made?
In contracts denominated in foreign currency, the rental fee cannot be changed until five years have passed; after that, it is evaluated within the framework of Article 344/III of the Turkish Code of Obligations. Furthermore, with the Presidential Decree Amending Decree No. 32 on the Protection of the Value of Turkish Currency No. 85, published in the Official Gazette on September 13, 2018, a ban has been introduced on determining contract prices and payment obligations arising from the contract in foreign currency or indexed to foreign currency, except in exceptional circumstances.
11-) What does the prohibition of regulation against the tenant mean?
According to Article 343 of the TCC, no provisions can be included in the lease agreement that are detrimental to the tenant other than the determination of the rental fee; such provisions are invalid.
12-) What is an indefinite-term lease agreement and what is its effect on rent increases?
These are contracts that are not made for a definite period but continue indefinitely. The contract remains valid until its termination; any increases or renewals are subject to Article 344 of the Turkish Code of Obligations.
13-) What is the “former tenant discount” in the Supreme Court practice?
This is the case in Rent Determination (Adjustment of Rent) cases. According to the Supreme Court of Appeals, the judge may grant some discounts, assuming that former tenants are in an advantageous position; the rent should be determined fairly. Indeed, the Supreme Court of Appeals decision (Supreme Court Decision – 3rd Civil Chamber, E. 2017/7477 K. 2019/4254, Date: 8.5.2019) states;
| “…When determining the rent that is fair and equitable, the last monthly rent paid should be increased according to the index (PPI) and a deduction should be made in an equitable amount from the rent that the property could fetch if it were to be re-let vacant, taking into account that the defendant is the former tenant. |
14-) How many times a year can the rent be increased?
Legally, it can only be done during the period when the lease is renewed (annually), the second increase within the year is invalid.
15-) What happens if an increase rate is specified in the lease agreement?
If the determined rate does not exceed the CPI limit within the scope of TCC Article 344/I, it will be valid; if it does, the part exceeding the limit will be invalid.
COURT OF APPEALS DECISIONS REGARDING THE LESSOR-TENANT RELATIONSHIP, LEASING AGREEMENT AND RENT INCREASE CLAUSE
1-)Supreme Court Decision – 3rd HD., E. 2017/7477 K. 2019/4254 T. 8.5.2019:
| “…When determining the rent that is fair and equitable, the last monthly rent paid should be increased according to the index (PPI) and a deduction should be made in an equitable amount from the rent that the property could fetch if it were to be re-let vacant, taking into account that the defendant is the former tenant. |
2-) Supreme Court Decision – 6th HD., E. 2014/10423 K. 2014/11411 T. 22.10.2014:
| “…Regarding the plaintiff’s attorney’s appeal, there is no dispute regarding the existence of a one-year lease agreement between the parties, dated December 5, 2008. The court determined the rental amount according to the principle of equity and fairness. The expert report stated that if the subject property were rented vacant as of December 5, 2013, the monthly rent would be 1,600.00 TL. Given that the defendant had leased the subject property five years prior, the court’s jurisdiction falls within the court’s jurisdiction to determine and determine the rental amount through a discount based on the principle of equity and fairness. While the defendant is a former tenant and a reasonable discount should have been made based on the principle of equity and fairness, the court’s decision to set the monthly rental amount at 1,300 TL with a significant discount is incorrect. |
3-) Supreme Court Decision – 3rd HD., E. 2017/2379 K. 2017/2164 T. 28.2.2017:
| “…As long as the property is kept ready for use, the tenant is obligated to pay the rent, even if the property is not used or is used only limitedly due to reasons attributable to the tenant. In this case, any expenses the landlord is exempt from incurring are deducted from the rent. ” is included in the regulation. Although the court rejected the defendant’s claim for rent on the grounds that the leased property was not used, the tenancy relationship begins and becomes effective with the signing of the lease agreement. The establishment of the agreement requires acknowledging that the leased property has been delivered to the tenant. In this case, the tenant’s obligation to pay the rent arises as of this date. Moreover, the premises delivery report dated May 15, 2012, indicates that the leased property has been delivered to the defendant-tenant. The tenant’s obligation to pay the rent continues until the leased property is properly delivered to the lessor. The defendant, who claims that the leased property was not delivered in a suitable condition for use in accordance with the agreement, has not asserted any claim that the lease agreement was terminated or that the leased property was delivered to the lessor. Therefore, the plaintiff’s claim for rent should have been evaluated accordingly and a decision made based on the outcome, but the rejection of the request based on written justification was deemed incorrect and necessitated reversal. CONCLUSION: For the reasons explained in the first paragraph above, the plaintiff’s other appeals are rejected…” |
4-) Supreme Court Decision – 3rd HD., E. 2017/5299 K. 2017/13652 T. 10.10.2017:
| “…According to Article 322 of the TCC, a sublease can be defined as the subletting of the leased property by the tenant to a third party with the written consent of the landlord in residential and commercial leases. Transfer of tenancy, on the other hand, is a contract between the landlord, the tenant, and the third party who takes over the leased property, as per Article 323 of the TCC. This transfer agreement can be made jointly or with the landlord’s consent to the agreements between the tenant and the third party. In the transfer of tenancy, the original tenant ceases to exist, and all rights and obligations of the original tenant are transferred to the new tenant, and the new tenant becomes liable to the new tenant. |
The Importance of Legal Support
Tenancy law, eviction cases, and contractual disputes require technical knowledge, legislative expertise, and in-depth expertise in judicial practices. While the legal provisions are clear, each case has its own unique circumstances, and even a small mistake can lead to loss of rights. Therefore, working with an experienced attorney from the beginning of the process is crucial to determining the right strategy, protecting your rights, and achieving the swiftest resolution.
It’s important to remember that every step taken during the litigation process has legal and financial implications. A professional lawyer will guide you not only in preparing the petition but also in gathering evidence, representing the court, negotiating, and pursuing potential alternative solutions.
In order not to risk your rights and to manage the process safely, it is recommended that you consult a specialist lawyer.