Countdown begins for removal of 25% rent increase cap! “Will Rent Prices Skyrocket?”

The 25% cap on rent increases will end on July 1. What will happen next? Will there be exorbitant rent increases? How will the market be affected? Two experts (real estate and investment expert Hasan Ceran and lawyer and mediator Dr. Umut Metin) have answered these questions.

The current 25% rent increase cap, which began in 2022 and was extended through 2023, will end on July 1. According to a report by Milliyet, this cap has caused significant disputes between landlords and tenants over the past two years, and these disputes are expected to escalate. Hasan Ceran, a real estate and investment expert, thinks that disputes and legal cases will increase.

He notes the following: “There is no change for commercial properties, but there is significant chaos in residential properties that will likely continue for a long time. Tenants with rent increases due will need to increase according to the Consumer Price Index (CPI) announced by the Turkish Statistical Institute (TUIK), unless stated otherwise in their contracts. If the contract stipulates an increase according to the CPI, the rent must be adjusted accordingly. However, unresolved issues can arise; for example, if a landlord has not exceeded a 25% increase over the past two years, and the rent of a property rented at 10,000 lira, which is now approximately 15,000 lira, needs to be increased to around 25,000 lira based on a hypothetical inflation rate of 65%. While landlords may find this low compared to higher rents of similar properties, tenants will see it as a significant increase. This will lead to more disputes and legal proceedings. It is crucial for both landlords and tenants to know their legal rights.”

INCREASE IN RENT ADJUSTMENT OR DETERMINATION CASES

Ceran notes that if mediation or other resolution methods fail in these chaotic situations, rent adjustment or determination cases might be filed:

“In cases of disputes for tenants who have not completed five years, a rent adjustment case can be filed rather than a rent determination case. This is applicable if there were unforeseen extraordinary circumstances when the contract was made, such as inflation, pandemics, currency fluctuations, or earthquakes. Additionally, after five years, both landlords who find the increase insufficient and tenants who find it excessive can file a rent determination case.

If an increase above the CPI rate is made, an unjust enrichment claim can be filed against unjust rent increases. If the landlord increases the rent according to the CPI rate and the tenant does not pay, eviction can be requested or initiated through enforcement proceedings. In such cases, a payment order is sent to the debtor, and if no objection is made within 7 days and the debt is not paid within 30 days, eviction can be carried out through the enforcement office.”

WHEN CAN EVICTION OCCUR?

Ceran has also shared the conditions for eviction:

– If the rent of a residential property is significantly lower compared to similar properties and a rent adjustment case is filed, the tenant can be evicted if they do not accept the new rent.

– If the tenancy period exceeds 11 years, the landlord has the right not to renew the tenant’s contract.

– Other reasons for eviction include violation of contract terms, the landlord’s need for the property for a first-degree relative, renovation or sale of the property requiring the new owner’s need, signing an eviction commitment by the tenant, non-payment of rent despite a warning, and the tenant’s damaging behavior towards the property.

IMPACT OF LIFTING THE 25% CAP ON EXISTING CASES

Lawyer and mediator Umut Metin stated that the removal of the 25% rent increase cap does not affect existing rent determination cases:

“The 25% rent increase cap will be lifted after July 1. The new increase will be based on CPI rates. There should not be a perception that landlords can increase rents as much as they want. Rent increases in renewed contracts after July 1 will be based on the CPI of the last 12 months. If a 25% increase was made in the past two years, the differences of those years cannot be added to the new CPI rates.”

NEW RENT CONTRACTS BASED ON THE CPI AVERAGE

Metin emphasized that rent increase rates cannot exceed the average inflation rate of the past 12 months:

“New rent contracts will be based on the average CPI rate of the past 12 months. Contracts might have different agreed increase rates. If the contract rate is below the CPI, the agreed rate applies. If the contract rate is above the CPI, the CPI rate applies.”

RETROACTIVE RENT DIFFERENCES PAID TO LANDLORD

Metin explained that in rent determination cases, the tenant must pay the retroactive rent difference determined by the court to the landlord:

“Rent determination cases can take a long time. These cases are meant to determine the property’s rent according to market conditions by the court. If the tenant and landlord did not agree through mediation before the case, the court’s decision is awaited. If the court determines a higher rent, the tenant must pay the difference retroactively without interest. Resolving issues before going to court through empathy and mediation is an opportunity that promotes social harmony,” he said.

SOURCE: EKONOMIM.COM
Translated by BTT