According to article 344/1 of the Turkish Code of Obligations numbered 6098 (“TCO”, “Law”), which applies to the rental fees of residential and roofed business premises; “The agreement of the parties regarding the rental fees to be applied in the renewed lease period is valid provided that it does not exceed the previous rental year’s twelve-month consumer price index average. This rule is also applicable to the lease agreements with a duration of more than one year.”
In accordance with this provision of the Law, since the parties cannot agree on an increase in the rental fees that is above the previous rental year’s twelve-month consumer price index average, the contractual clauses which provide otherwise shall be partially invalid. In this connection, even if the parties determine an increase rate in the rental fee which exceeds the previous rental year’s twelve-month consumer price index average, the exceeding part shall be invalid.
Moreover, a further limitation regarding the increase rates of the residential rental fees has been implemented by a provisional article which is added to the Turkish Code of Obligations numbered 6098 with the “Law Amending the Law on Attorneyship and the Turkish Code of Obligations” numbered 7409 and published on the Official Gazette numbered 31863 and dated 11 June 2022. According to this provision, the increase in the rental fee shall not exceed 25% of the rental fee of the last rental period in terms of lease agreements that are renewed between 11.06.2022 and 01.07.2023. If the previous rental year’s twelve-month consumer price index average is below 25%, then this rate shall be applied. On the other hand, if the contractual increase rate is below the above two rates, the contractual increase rate shall be applied.
The legislator, having considered the social aspect of the residential and roofed business premises, has imposed restrictions on the increases in rental fees as an exception to the principle of the freedom of the contract. The reason for this is the belief that the lessee is often the weak party and is in the need of protection in residential and roofed business premises.
This regulation, which applies to residential and roofed business premises, and which essentially protects the lessee, may, time to time be far from fairness, considering the emerging developments in today’s economic conditions, the increase in the demand for rental houses, the decrease of supply thereof and the inflation. For this very reason, the legislator has implemented an exception to the limitations of the increase in the rental fees by way of article 344/3 of TCO:
“Regardless of whether an agreement has been made by the parties on this matter, the rental fee to be applied in the new rental period in leases lasting more than five years or renewed after five years, and at the end of each five years period afterward shall be fairly decided by judge taking twelve-month consumer price index average, the status of the leased property and similar rental prices into account. …”
In line with this article, a lawsuit for the determination of the new rental fee may be filed for the lease agreements with a duration of more than five years or renewed after five years.
Article 345 of the Law sets out the rules regarding the time to file a lawsuit and the effect thereof. In accordance with the said article, the lawsuit for the determination of the rental fee may always be filed. However, in order for the rental fee to be ruled by the court to be applied from the beginning of the new rental period, certain conditions must be met. For this purpose, the lawsuit must be filed thirty days before the new rental period at the latest or the lessee must be notified in writing by the lessor that the rental fee is going to be increased in the same period. On the other hand, if there is a provision in the lease agreement stipulating that the rental fee shall be increased in the new rental period, then the rental fee to be ruled by the court in the lawsuit to be filed until the end of the new rental period, shall be applied from the beginning of this new rental period.
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