Rent increases, legal limits, and rent wars

As a result of the housing crisis, production crisis, financial crisis, and global trade wars, hostilities between tenants and landlords have grown like an avalanche. 

In essence, an economic bottleneck is the determining factor at the root of the conflict between the parties. Since fixing the economy is difficult and time-consuming, this political-economic problem is being judicialized. Thus, it feels as if the issue could be resolved by the parties settling scores in court, labeled with accusations of "landlord greed" or "tenant ruthlessness." 

Confining political-economic issues to the legal system makes the parties passive and delays real solutions. On the other hand, judicialization has an impact on the economy. For instance, courts are faced with a heavy caseload. Creditors cannot collect their debts; debtors try to borrow and postpone the problem. The issue is being attempted to be solved through extra-legal, and even unethical, methods. 

In order to put a stop to tenant-landlord wars, a temporary article was added to the Law on Amendments to the Turkish Code of Obligations, published in the Official Gazette dated June 11, 2022, and numbered 31863, which limited rent increases for residential properties to 25 percent. This limitation meant preventing both the application of the change rate according to the 12-month averages of the CPI and rent increases under landlord pressure. This regulation ended on July 1, 2024. 

When we look at the purpose of the regulation, we can understand that it was to protect tenants against economic depression and to impose an urgent measure against exorbitant rent increases by landlords out of fear of being left homeless. During these dates, increases in many rental relationships exceeded this legal limit. This can rarely be interpreted as the tenant's "goodwill." However, in most cases, we can say that the effort of tenants, who fear the harassment and pressure of the landlord, to maintain the relationship "in peace" was effective. Therefore, it is clear that exceeding the legal limit in these cases cannot be explained by freedom of contract; indeed, if freedom of contract were in question, a new lease agreement would have been established. 

Some hold the view that the lease agreement was not renewed and that the parties decided on a rent beyond the legal limit through a tacit agreement. As a result of the appeal of court decisions in cases where "excess payments" made during the period when the legal limit was applied were requested to be returned by tenants in Civil Courts of Peace, some appellate courts have found this excess payment to be in accordance with the law. In their reasoned decisions, they found the party requesting the return of these excess payments to be unfair by using concepts such as the "rule of honesty" and freedom of contract. However, the subject has no relation to freedom of contract. Because the subject is the increase made in the renewal of the lease agreement; it is not the establishment of a new lease agreement. On the other hand, it is not possible to apply the rule of honesty to the event. 

It is clear that the purpose of the temporary legal limit was to protect the tenant. Moreover, this law is a mandatory provision. Therefore, contract clauses contrary to this provision should be considered invalid; if these clauses are not an essential (constitutive) element of the contract, the contract should be considered valid excluding these clauses; otherwise, the contract should be considered invalid. In a rental relationship, since the rent increase being above this limit was not predetermined, it should not be accepted as a constitutive or essential element, so the contract should be kept intact and the clause requiring a rent increase above the legal limit should be void. 

The reason why the tenant makes excess rent payments despite this limit is either that the tenant is content with a low rent or wants to get rid of the pressure on them. It is very difficult for the tenant to prove the existence of pressure. Since it is clear that there would be no need for such a legal limit if the existence of such pressure could be proven, leaving this burden of proof on the tenant in a reasoning regarding the legal limit is contrary to law, logic, and equity. 

But what if the tenant was well-intentioned and requested the excess payment to the landlord themselves... In this case, if I were the landlord's lawyer, I would want this matter to be stated in writing by the tenant. Otherwise, my client could find themselves in the position of a debtor in a debt lawsuit arising from the rental relationship and the non-application of the legal limit, or directly in a lawsuit for unjust enrichment. 

In summary, regarding excess payments during the period when rent increases were legally limited, the tenant will be able to request the return of the payments due to the landlord's failure to fulfill their contractual obligation or due to unjust enrichment. 

The failure of the courts to grant this right to the tenant is a reflection of the Americanization of our law. Such a broad interpretation of freedom of contract is not compatible with the Continental European legal tradition to which Turkish law belongs. 

Court decisions that label the tenant as an "opportunist" paying low rent or turn a tenant requesting excess payments into someone acting "contrary to the rule of honesty" and acting in bad faith, due to a legal limit imposed to avoid throwing the tenant and landlord into the fire due to social injustice and economic crisis, represent an understanding contrary to the social state, the will of the legislator, and the Turkish legal tradition. 

Resolving these disputes between the landlord and the tenant and ensuring social peace should not be dumped on the courts. At the root of these disputes lie social injustice and the mismanagement of the economy. Judicializing real and material problems will not benefit anyone in the long run. 

Let us ask the law to establish justice. But if we expect the law to reverse material facts, neither justice will come nor will the law be established. If we are to hope for help from this, woe to us!