25 percent rent increase cap removed

ANKARA

The Turkish government has announced the removal of the “25 percent increase limit” on housing rents, effective on July 1.

The cap, which has been in place for the past two years to protect residential tenants amidst ongoing high inflation, limited the annual rent increase to 25 percent.

Treasury and Finance Minister Mehmet Şimşek confirmed on a recent TV program that this temporary measure, introduced in June 2022, was designed for short-term relief and would now expire.

The new rent increase will be based on the 12-month Consumer Price Index (CPI) average as before the cap.

Gökmen Öğüt, general manager of a housing price statistics platform, emphasized that the market needs time to stabilize post-regulation. “The removal of the regulation will significantly affect the sector. We expect the market to find its balance,” he said.

In the meantime, the inflation-adjusted increase in rents remains capped at 50 percent. The average rent in Istanbul has soared, reaching up to 20,000 Turkish Liras ($610).

Similarly, Ankara and İzmir have seen average rents hit 17,000 and 19,000 liras, respectively.

These increases have sparked widespread disputes between landlords and tenants.

In the face of rising rents in their regions, landlords saw the 25 percent increase as an "unfair" limit. In addition, landlords, who stated that they make a living with a single house rent, said that they had a hard time in the inflationary environment.

Hasan Ceran, a real estate law specialist, explained that the judicial system is now frequently handling cases where landlords attempt to increase rents above the previous 25 percent limit.

“The 12-month CPI average as of May 2023 was 62.51 percent,” Ceran noted. “If landlords increase rents by this rate, the financial burden on tenants will be substantial.”

Ceran added that disputes often lead to litigation, with mediation processes becoming more common.

Landlords can request an increase above the CPI rate only if the rental period exceeds five years, subject to court approval.

New lease agreements will adhere strictly to the CPI average, with no increases permitted beyond this figure. However, landlords and tenants continue to face complexities.

Legal experts anticipate that disputes will likely increase once the 25 percent cap is lifted.

“From July 1, landlords can adjust the rents according to the CPI, leading to potential increases far exceeding the previous cap,” lawyer Umut Metin said.

“Ensuring fair practices while accommodating economic realities is crucial for market stability,” he added.