RENT INCREASE RATE


What is Rent Increase Rate?

The increase in the rental price of the leased property at certain intervals at a certain rate is called the rent increase rate. It is fair to increase the amount of rent paid regularly in the face of inflation and difficult living conditions.

However, the exorbitant increase of this amount is prevented by law. In other words, the law interfered with the freedom of contract in a way. We have given the details of this below.

It should be noted that in our article, we will explain the rate of rent increase in rental agreements related to housing and roofed workplaces. In other words, movable rent or any other rent is out of our subject. In practice, the rate of increase in rents is mostly seen in residential and roofed workplace rents.

So, what is the rent increase rate based on? Is the agreement between the parties valid in all cases? Or can the home-business owner make the increase he/she wants? Regarding this, the provision of article 344 of the Turkish Code of Obligations numbered 6098 is examined. We will address that now.

How Is The Rent Increase Made?

In the rate of rent increase, it can talk about separate provisions by looking at whether the rent is a residence or a roofed workplace. We will consider them separately. In fact, although the distinction between them has ended as of July 1, 2020, we will explain both before and after this date.

House Rent Increase

There are two possibilities in the rate of increase in house rent. The parties may have discussed how much the rent increase will be in the contract, or no agreement may have been made on this issue. In these two possibilities, we can answer the question of how the rent increase rate is made with a table:

How Is The Rent Increase Made?

If there is an agreement between the parties, it increases by the rate in the Agreement. However, this amount cannot exceed the 12-month average rate of change in the consumer price index (CPI) in the previous rental year.

If there is no agreement between the parties, it is determined by the individuals in a way that does not exceed the 12-month average change rate in the consumer price index (CPI), and if there is no agreement, it is determined by the judge according to equity.

It should be noted that the rules in the table are also valid for lease agreements with a duration of more than 1 year.

There is also a situation where it does not matter whether an agreement has been made between the parties. Accordingly, the lease amount to be applied in the lease agreements, the duration of which is determined as more than 5 years or continues to be renewed after 5 years, and after each 5 years, in the new period, can be determined by the judge according to the characteristics of the concrete event, without the CPI limit.


The rental price determined in this way in the next five years can also be changed around the rules mentioned above.

If the Rent is Paid in Dollars: If the rental fee is paid in foreign currency (Dollar/Euro etc.), the rent cannot be increased until 5 years have passed. However, it is possible to change this according to the conditions of the concrete case, in accordance with the rules of "hardness of performance". After 5 years have passed, a fair increase rate can be determined by the judge without being limited to the CPI.


Workplace Rent Increase

According to the provisional article 2 regulation of the Turkish Code of Obligations No. 6098, the rules mentioned above regarding the rent of the house will not be applied for the workplace until 1 July 2020. The agreement made between the parties until this date will remain valid. In other words, a rate such as the CPI rate will not be valid.

However, as of July 1, 2020, the increase in workplace rent has to be according to the order we mentioned above for residential rent. Not only the rent increase, but also the provisions regarding the rent determination case, which we have mentioned due to contracts with a term of more than 5 years, are also valid here. We will provide more detailed information on the lease determination case below.

So what is the CPI? Consumer Price Index. It is announced by TURKSTAT and in line with this explanation, the legal rent increase rate is determined. This determination is made on a monthly basis. The rent increase rate for September 2020 was announced as 11.27%. Below, we have included these data and sample calculations under the title of rent increase calculation.

As a result, we can present the following table regarding the rent increase rate of residential and roofed workplaces:

Home Rent Increase Rate Workplace Rent Increase Rate

If there is an agreement, it cannot exceed the CPI, however, until 01.07.2020, the parties freely determine

If there is no agreement, the parties or the judge will determine, not exceeding the CPI. After 01.07.2020, it is subject to the same provisions as the house rent increase rate.

NOTE: The parts we mentioned above as CPI were PPI until 2019. In other words, while transactions were made according to the producer price index until 2019, they are now processed according to the consumer price index.

 

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