New temporary cap introduced for residential lease rental fee increases

A new law announced on 11 June and effective from 11 July 2022 includes a significant amendment on Turkish Code of Obligations regarding the maximum rate that will be applicable for rental fee increases of residential leases.

As per the newly added Temporary Article 1 of the Turkish Code of Obligations, the rent increases that will be applicable for those residential leases renewed between the dates of 11 June 2022 and 1 July 2023 (including) will be capped at 25 percent. In the event that the twelve-month average consumer price index change of the previous year ("Average Consumer Price Index Change")—which is the existing cap as per the Turkish Code of Obligation—is below 25 percent, then such rate will continue to be the cap for the rental fee increases. Contracts concluded which exceed these rates are invalid in terms of the excess rental fee amounts.

According to the Turkish Code of Obligations, if no agreement has been reached by the parties on rental fee increases, provided that the increase does not exceed the Average Consumer Price Index Change, the rental fee shall be determined by the judge according to fairness, and taking into account the status of the leased property. The Law states that the new temporary cap shall be taken into account by the judge instead of the Average Consumer Price Index Change when determining the rental fee as described above.