Cap on rent increases not likely to be extended again

ISTANBUL

A measure that limits rent increases to a maximum of 25 percent is not likely to be extended once again when it expires in July.

The cap was first introduced in June 2022, after Türkiye had experienced exorbitant rent increases. Representatives of the housing sector argue that imposing a limit on the annual rent increases did not resolve the problem but, on the contrary, caused tensions between landlords and tenants.

Courts received thousands of cases regarding disputes between property owners and occupants.

According to real estate agents, in 80 to 85 percent of the cases, the cap measure was not implemented and there were even rent hikes exceeding 300 percent during 2023.

But the annual increase in rent prices has been on decline, dropping to 50.8 percent in April, showed to a recent study.

Recently, Finance Minister Mehmet Şimşek signaled that the cap will not be extended once again.

“I do not see any reason why it [cap on rent increases] should continue. I believe it should discontinue,” said Şimşek in an interview, adding that authorities are not working on extending the measure.

“I cannot comment on what the government will do about it. But I personally think, it will most probably not continue,” the minister said.

Once the cap is removed, the upper limit for rent increase will be the 12-month average consumer price inflation as had been the case before the measure was first introduced.

The 12-month average inflation rate was 59.64 percent in April, according to the latest official data from the Turkish Statistics Institute (TÜİK). The headline inflation was 69.8 percent.

However, experts are not optimistic that tensions between landlords and tenants will disappear after reinstating the old inflation-based calculation in rent increases.

Imposing caps will be ineffective, they said, adding that only increasing home supply will properly address the rent crisis.