Under the laws of the Republic of Türkiye, the rental of properties used as residences or commercial premises is regulated by a number of legal rules. This article provides an assessment of the legal rights of property owners when the rent remains below the rental value of comparable properties on the market.
First of all, it should be noted that not all property leases are subject to the same rules under Turkish law. In particular, properties used as residences or commercial premises are subject to rules that differ from those applicable to other types of property. Therefore, when purchasing a property in any city in Türkiye for the purpose of renting it out, it is important to be familiar with these rules before entering into a rental agreement.
First, it should be understood that once a residential or commercial property has been rented out and a lease agreement has been signed, the property owner has very limited legal rights to terminate the lease. Even if a specific term is stated in the lease agreement, the agreement does not automatically terminate when that term expires.
Even after the lease term expires, if the tenant does not notify the landlord that they do not wish to continue the lease, the lease is automatically extended for another year. At this point, whether the property owner wishes to extend the lease or not is irrelevant. In other words, even if the property owner objects to the extension, the lease is automatically renewed.
This may lead to problems regarding the amount of rent after the lease is extended. In particular, if the lease agreement is incomplete or contains errors and does not specify how the rent should be increased in subsequent years, disputes may arise between the tenant and the property owner regarding the amount of the rent increase.
When entering into a lease agreement, it is extremely important to include a provision specifying the amount and method of the rent increase for each year of the lease extension. If the agreement contains a rent increase provision, the rent will automatically increase in accordance with that provision after the lease is extended.
Increasing Rent When It Remains Low Due to Inflation
Even if the lease agreement specifies how the rent will be increased in subsequent years, the rent may become too low in long-term rental relationships. In other words, due to inflation in Türkiye, the rent may eventually remain significantly below market levels despite the increases provided for in the agreement.
In such cases, it is possible to apply to the court and request that the rent be increased to a level consistent with comparable properties on the market. Under Article 344 of the Turkish Code of Obligations No. 6098, once the five-year rental period has expired and the sixth rental year begins, the property owner may file a lawsuit requesting that the rent be determined in accordance with the market value of comparable properties.
Under the current procedure, it is mandatory to apply to a mediator before filing such a lawsuit. In other words, after the five-year rental period has expired, the landlord may first apply to a mediator, stating that the rent has remained too low due to inflation and is significantly below the rent charged for comparable properties. If no agreement is reached with the tenant, the landlord may then file a lawsuit.
If the lease agreement contains a provision specifying the annual rate of increase, an increase in rent may be requested starting from the beginning of the sixth rental year.
For example, assume that a lease agreement began on 01.01.2020 and contains a provision stating that the rent will increase in accordance with the inflation rate. The five-year period of this lease expires on 01.01.2025. If the property owner files a lawsuit on 01.06.2025, they may also request the difference in rent for the previous six months based on the newly determined rental amount.
In other words, if the court increases the rent for the sixth rental year, the tenant will be required to pay the accumulated six-month rent difference to the property owner starting from 01.01.2025.
If the lease agreement does not contain a provision specifying how the rent should be increased, a notarised notice must be sent to the tenant at least one month before the five-year rental period expires.
The Rent Remains Low — What Should I Do?
If the rental relationship has reached five years through extensions, the landlord may first apply to a mediator to request that the rent be increased to a level comparable to similar properties.
If no agreement is reached with the tenant during the mediation process, the landlord may file a lawsuit and request that the rent be increased by the court.
How Does the Court Determine the New Rent?
In lawsuits concerning an increase in rent, the court examines the rented property with the assistance of experts.
Following the examination, the expert determines an average rental value based on the rents of comparable properties. The court then determines the new rent based on this assessment.
What Are the Tenant’s Rights When the Court Increases the Rent?
Because the tenant has been renting the relevant property for a long period of time, the court may, at its discretion, apply a discount of approximately 10–25%.
For example, if the expert determines the rental value to be TRY 20,000, the court may apply a discount to this amount and determine the rent at a lower level.
