The 25 percent rent increase cap ends on July 1: What are the rights of landlords and tenants?

In Turkey, where a housing crisis is being experienced due to high rental prices, landlords and tenants have been taking each other to court.

Minister of Treasury and Finance Mehmet Şimşek announced that the 25 percent cap on residential rent increases, which has been in effect for 2 years, will not be extended.

Accordingly, the 25 percent increase cap will end on July 1.

After July 1, when the 25 percent increase cap expires, tenants whose contract renewal period has arrived will be able to calculate their rent by adding the last 12-month Consumer Price Index (CPI) growth rate to their rent, and landlords will be able to increase rent once a year. No increase above the CPI rate will be permitted.

With the lifting of the 25 percent increase cap, while landlords will be able to protect their income against inflation, tenants are concerned.

"LANDLORDS CANNOT INCREASE RENT AT THEIR DISCRETION"

According to a report compiled by Sabah, Hakan Akdoğan, Chairman of the Istanbul Chamber of Commerce Real Estate Committee, who stated that a sense of unease has begun among tenants with the lifting of the 25 percent increase cap, said, "There is no such thing as landlords being able to increase rent at their discretion after this practice is lifted."

Emphasizing that there was an upper limit on rents even before the 25 percent increase cap was introduced, Akdoğan spoke as follows:

"It is clearly stated in the Code of Obligations; landlords can increase rent for tenants once a year, during the contract renewal period. The rent increase rate can be up to the CPI. Landlords absolutely have no legal right to demand an increase above the CPI rate. Only if the tenant has completed 5 years and the rent price has remained far behind the market can the parties talk among themselves and make a price update." 

Stating that if the parties cannot reach an agreement, the landlord can file a lawsuit, Akdoğan said, "The court determines a rent price equal to the market value in that region or 10-15 percent below the market value. The court generally sets a fee below the market value for old tenants."

"THE 25 PERCENT CAP WAS NOT EFFECTIVE, IT WAS CIRCUMVENTED"

Ulvi Özcan, President of the Istanbul Real Estate Brokers Cooperative, said, "I think the 25 percent rent increase cap, which emerged to protect the tenant, was a correct practice," and expressed the following:

"With this regulation, a certain amount of planning and solution work needed to be done. It was not done. When it was not done, the 25 percent cap was not effective; it was circumvented. Landlords can never increase rent at their discretion and evict a tenant. If the tenant pays their rent regularly and there are no special reasons, it is not easy to evict the tenant."

Stating that healthy housing production should be carried out to balance supply and demand, Özcan stated that regulations should be made with attractive loans in a way that protects the disadvantaged.

Özcan continued as follows: 

"Migration to large cities needs to be prevented. TOKİ, the Treasury, and municipalities need to cooperate to produce social housing. The priority should be rental housing, and disadvantaged groups should be protected. For example, social rental housing should be built for students, single women, or newly married couples.

I think the new tax regulations are very correct. There should be regulations such as those who own several properties and have an income above a certain amount paying more tax so that everyone can benefit from public resources." 

WILL THE HOUSING MARKET BE AFFECTED?

Nizameddin Aşa, President of the Istanbul Real Estate Agents Chamber, also emphasized that the end of the regulation would not affect the housing market.

Noting that the rent cap practice was not successful, Aşa said, "The end of the practice will not cause a price increase in housing for sale or rent, but it may cause an increase in the supply of rental properties."

WHAT DO LEGAL EXPERTS SAY?

Emphasizing that it is very important for both tenants and landlords to know their legal rights and act consciously, Attorney Ece Değer Kalyoncu said, "After the regulation on July 1, tenants who have not completed 5 years can, if they cannot reach an agreement with the landlord, take the path of a 'Rent Adaptation Lawsuit' instead of a 'Rent Determination Lawsuit' and request the court to adapt the rent. It is possible to file an adaptation lawsuit in the event of an extraordinary situation that was not foreseen by the parties at the time the contract was made. Inflation, epidemic diseases, dollar exchange rates, earthquakes, etc., can be shown as extraordinary situations." 

IN WHICH SITUATIONS CAN LANDLORDS FILE A LAWSUIT?

Kalyoncu stated that landlords who have had a tenant in their home for 5 years and foresee that they will suffer a loss even with an increase made in accordance with TUIK rates can file a 'Rent Determination Lawsuit'.

Kalyoncu made the following statements: 

"When there is a rent increase above the CPI rate, since there will be an unfair rent increase, they can file a claim lawsuit according to the provisions of unjust enrichment or apply for enforcement proceedings without a judgment. If the landlord has made an increase in accordance with the CPI rate but the tenant does not pay the rent, the landlord can request the eviction of the tenant through a lawsuit or through enforcement proceedings.

In the enforcement path, a payment order with a request for collection and eviction will be sent to the debtor, and if the tenant does not object within 7 days; if they do not pay their debt within 30 days, they will be evicted from the property through the enforcement office."

CONDITIONS FOR A RENT ADAPTATION LAWSUIT

• An extraordinary situation that was not foreseen by the parties at the time the contract was made and was not expected to be foreseen must have occurred subsequently,
• The extraordinary situation in question must have arisen due to reasons not originating from the debtor,
• This situation must have changed the facts existing at the time the contract was made to the detriment of the debtor to such an extent that requesting performance from them would be contrary to the rule of good faith,
• The debtor must not have yet performed their debt or must have performed it while reserving their rights arising from the excessive difficulty of performance.

In the presence of these conditions, the tenant can ask the judge to adapt the lease agreement. By situations that were not foreseen by the parties or were not expected to be foreseen by the parties, it is meant situations that the debtor did not take into account and was not obliged to take into account according to the ordinary flow of daily life.

CONDITIONS FOR A RENT DETERMINATION LAWSUIT

There must be a lease agreement between the tenant and the landlord. There is no requirement for this contract to be in writing. It can also be verbal.

The parties must have a legal interest in filing the lawsuit.

What should be understood from this is, for example, if the parties have already determined a rent price for the new rental period in accordance with legal limits and the law, in this case, there can be no mention of a legal interest in filing a lawsuit for the determination of the rent price.

IN WHICH SITUATIONS CAN A LANDLORD EVICT A TENANT?

• The landlord can file a rent adaptation lawsuit if the residential rent remains very low compared to surrounding houses.
• They can evict their tenant if the newly determined rent price is not accepted.
• The landlord may not renew the contract of their current tenant at the end of the 11th year.
• Violation of one of the clauses determined in the lease contract.
• The landlord or a first-degree relative having a housing need.
• The house being taken for renovation or being sold.
• The tenant signing an eviction commitment.
• A member of the tenant's family owning a house in the same city.
• There being a criminal case filed between the tenant and the landlord.
• The landlord can evict the tenant in cases such as the tenant damaging the property.
• On the other hand, in the case of unpaid and accumulated rent, the landlord has the right to send a formal notice. If the landlord cannot collect the rent within the 30-day period, they can unilaterally terminate the contract.
  

News Source: 12punto