Lease Agreement
The lease agreement is defined in Article 299 of the Turkish Code of Obligations No. 6098:
“A lease agreement is a contract in which the lessor undertakes to allow the lessee to use or benefit from an asset, while the lessee undertakes to pay the agreed rental fee in return.”
Rent Fee
The tenant’s obligation to pay the rent fee is regulated in Article 313 of the Turkish Code of Obligations (TCO) as follows:
“The tenant is obliged to pay the rent fee.”
In accordance with the principle of freedom of contract, the tenant and the lessor may determine the due date of the rent payment themselves. If no specific date is agreed upon, the time of performance is regulated in Article 314 of the TCO:
“Unless otherwise agreed in the contract or required by local customs, the tenant is obliged to pay the rent fee and, if necessary, additional expenses at the end of each month and at the latest by the end of the rental period.”
The rent fee can be freely determined by the parties. However, pursuant to Article 343 of the TCO, “In lease agreements, no changes can be made to the detriment of the tenant, except for the determination of the rent fee.”
How Is the Rent Increase Rate Determined?
Just like the rent fee, the rent increase rate can also be freely determined by the parties. However, Article 344 of the Turkish Code of Obligations imposes a limitation on this:
“Agreements made by the parties regarding the rent fee applicable in renewed rental periods are valid only if they do not exceed the twelve-month average change rate of the consumer price index (CPI) from the previous rental year. This rule also applies to lease agreements with a duration of more than one year.”
Therefore, any agreement that stipulates an increase exceeding the CPI rate is deemed invalid by law.
For example, if a lease agreement with a monthly rent of 1,000 TL was made in January 2015 and renewed at the end of one year, considering that the CPI rate was 7.67%, the new maximum monthly rent as of January 2016 would be 1,076.70 TL.
Failure to Determine the Rent Increase Rate
If the rent increase rate is not determined, the new rent fee will be set by the judge. This is regulated under Article 344/2 of the Turkish Code of Obligations:
“If the parties have not made an agreement on this matter, the rent fee shall be determined by the judge in accordance with the principle of equity, considering the condition of the leased property, provided that it does not exceed the twelve-month average change rate of the consumer price index (CPI) from the previous rental year.”
For example, in a lease agreement made in January 2013 with a monthly rent of 1,000 TL, the parties may have agreed on a 15% increase rate. In this case, the new rent would need to be 1,150.00 TL. However, since the CPI rate for the relevant year is 7.49%, and no increase above this rate is allowed, the judge may decide that the rent fee should be a maximum of 1,074.90 TL.
Temporary Regulation (25% Rent Increase)
As mentioned above, the rent increase amount is determined between the parties in accordance with Article 344 of the Turkish Code of Obligations (TCO). If not determined, it will be set by the judge, taking into account the condition of the leased property, without exceeding the CPI rate, in accordance with Article 344 of the TCO. However, with the addition of a new provision (Temporary Article 1) to the TCO, which was published in the Official Gazette No. 31863 on June 11, 2022, a 25% (twenty-five percent) limit was imposed on the increase of residential rents. According to the relevant provision:
“For residential rents, agreements regarding the rent fee to be applied in renewed rental periods between the date this provision enters into force and July 1, 2023 (inclusive), are valid only if they do not exceed 25% of the rent fee of the previous rental year. If the change rate based on the twelve-month average of the consumer price index (CPI) for the previous rental year is below 25%, that change rate will apply. This rule also applies to lease agreements longer than one year. Agreements made that exceed this rate will be invalid with regard to the excess amount. This provision also applies to decisions made by the judge in accordance with the second paragraph of Article 344.”
Starting from July 1, 2023, no rent increase can exceed 25%. However, if the CPI rate is below 25%, Article 344 of the Turkish Code of Obligations (TCO) will apply.
This period has been extended to July 1, 2024, by the provision added to the Turkish Code of Obligations, published in the Official Gazette No. 32249 on July 15, 2023 (Temporary Article 2):
“For residential rents, agreements regarding the rent fee to be applied in renewed rental periods between July 2, 2023, and July 1, 2024 (inclusive), are valid only if they do not exceed 25% of the rent fee of the previous rental year. If the change rate based on the twelve-month average of the consumer price index (CPI) for the previous rental year is below 25%, that change rate will apply. This rule also applies to lease agreements longer than one year. Agreements made that exceed this rate will be invalid with regard to the excess amount. This provision also applies to decisions made by the judge in accordance with the second paragraph of Article 344.”
For example, as mentioned above, if a lease agreement was made in January 2015 with a monthly rent of 1,000 TL and renewed at the end of one year, considering that the CPI rate was 7.67%, the new maximum rent as of January 2016 would be 1,076.70 TL.
However, if a lease agreement was made in January 2022 with a monthly rent of 1,000 TL, the rent should have been 1,723.10 TL at the end of the year according to the CPI rate (72.31%). However, in accordance with Temporary Article 1, starting from January 2023, the rent will be limited to a maximum of 1,250.00 TL due to the 25% cap.
Rent Increase Rate After July 1, 2024
Unless the provision of Temporary Article 1 added to the Turkish Code of Obligations is extended, starting from July 1, 2024, Article 344 of the TCO will apply without the 25% cap, and increases will be made based on the CPI rate.
How is the Rent Increase Rate Calculated After 5 Years?
In cases where the rent fee is determined in Turkish lira, according to Article 344/3 of the Turkish Code of Obligations,
“Regardless of whether the parties have made an agreement on this matter, in lease agreements longer than five years or those renewed after five years, and at the end of every subsequent five-year period, the rent fee to be applied in the new rental year will be determined by the judge in accordance with the change rate based on the twelve-month average of the consumer price index, taking into account the condition of the leased property and comparable rent fees, and in a manner that is fair. The rent fee determined in this way for the rental year following every five-year period can be adjusted according to the principles mentioned in the previous paragraphs.”
Therefore, in cases where the tenant and the lessor cannot agree on the rent fee for lease agreements longer than five years or those renewed after five years, a rent determination lawsuit can be filed. As a result of the lawsuit, the judge will make a decision in accordance with Article 344/3 of the Turkish Code of Obligations.
However, there is no requirement for five years to pass in order to file a rent determination lawsuit. In fact, according to Article 345 of the Turkish Code of Obligations, “A lawsuit regarding the determination of the rent fee can be filed at any time.”
“However, if this lawsuit is filed no later than thirty days before the beginning of the new period, or if the lessor has provided written notice to the tenant within this period stating that the rent will be increased, and the lawsuit is filed before the end of the following new rental period, the rent fee determined by the court will bind the tenant from the beginning of this new rental period.” (TCO Art. 345/2)
“If there is a provision in the contract stating that the rent fee will be increased in the new rental period, the rent fee determined by the court in the lawsuit filed before the end of the new rental period will also be valid from the beginning of this new period.”
For lease agreements longer than five years or for rent increases at the end of five years, the judge will not be bound by the 25% cap.
How is the Rent Increase Calculated When the Rent Fee is Determined in Foreign Currency (Forex)?
If the rent fee is determined in foreign currency, no increase can be made in the rent fee until five years have passed. This is regulated under Article 344/4 of the Turkish Code of Obligations:
“If the rent fee is agreed upon in foreign currency, and subject to the provisions of the Law No. 1567 on Protecting the Value of Turkish Currency dated 20/2/1930, the rent fee cannot be changed until five years have passed. However, the provision of Article 138 of this Law, titled ‘Excessive Difficulty of Performance,’ remains reserved. After five years, in determining the rent fee, changes in the value of the foreign currency will also be taken into account, and the provisions of the third paragraph will apply.”
At the end of five years, the new rent fee will be determined according to Article 344/3 of the Turkish Code of Obligations.
“Regardless of whether the parties have made an agreement on this matter, in lease agreements longer than five years or those renewed after five years, and at the end of every subsequent five-year period, the rent fee to be applied in the new rental year will be determined by the judge in a fair manner, taking into account the change rate based on the twelve-month average of the consumer price index, the condition of the leased property, and comparable rent fees. The rent fee determined in this manner for the rental year following every five-year period can be adjusted according to the principles outlined in the previous paragraphs.”
In this case, the judge is not bound by the 25% cap under Temporary Articles 1 and 2.
However, it should be noted that, as a general rule, there is a prohibition on making lease agreements in foreign currency for residential and covered workplace leases.
Court of Cassation Rulings
In the statement of claim, the plaintiff summarized that they rented the leased property from the company … Metal Sanayi Limited on 08/02/2011 through an oral agreement, with the annual rent amount set at 12,000.00 TL. It was stated that no increase rate was determined in the contract between the parties, and the rent was being paid annually based on the TEFE-TÜFE (consumer and producer price index) rate. The leased property was transferred to the defendants on 10/02/2014 through a sale by … Metal Sanayi Ltd. Şti. The new owner would be a party to the contract, and the rent receivable should be calculated according to the lease agreement made with the previous owner. The defendants initiated a collection procedure with a claim amount of 13,145.59 TL under the file numbered 2014/6783 at Tokat 1st Enforcement Office on 10/02/2014 and 10/08/2014 for unpaid rents. Due to the threat of enforcement, the plaintiff deposited the disputed amount into the enforcement file. The defendants had made an excessive increase in the rent amount. The monthly rent amount they demanded was far above the amount that would result from applying legal increase rates. The plaintiff, stating that according to Article 344 of the Turkish Code of Obligations, the rent increase should be made based on the producer price index increase rate of the previous year, requested the court to determine the rent amount between 01/01/2014 and 01/01/2015 through judicial intervention, and requested the collection of the excess rent of 100.00 TL, along with its legal interest, reserving the right to claim additional amounts.
In their response, the defendants summarized that the monthly rent fees for shops in the industrial area are approximately between 700.00-800.00 TL. They stated that enforcement proceedings were initiated under file number 2014/6783 by Tokat 1st Enforcement Directorate due to the plaintiff’s failure to pay rent. The plaintiff did not object to this enforcement and made a payment. However, after this enforcement file, the plaintiff failed to pay the rent fees. The defendants argued that the lawsuit was in the nature of an objection to the rent amount, and they defended that the plaintiff’s claims were unfounded, requesting the rejection of the lawsuit.
The court ruled that the payments made by the plaintiff without objection or reservation regarding the rent, in the absence of a written contract, would imply an implicit acceptance of the rent. It was concluded that there was no imbalance in the rental amount that would distort the contractual balance to an intolerable extent between the market rent and the implicitly accepted rent amount. Therefore, the court rejected the plaintiff’s request for rent determination and claim for overpaid rent, reasoning that these claims were unjustified. The decision was appealed by the plaintiff, and the court of appeal, in its judgment numbered 2017/1881 E 2017/2690 K, ruled that since no notice had been sent on time or no lawsuit had been filed, the determination of the rental amount for the period before 01.01.2014 was not possible. It directed the lower court to request clarification from the plaintiff and to separately evaluate both claims. If the plaintiff requested rent determination for the period starting from 01.01.2015, a decision should be made for this period. Regarding the restitution request, if there were any overpayments based on the determined rent amount, the excess should be refunded. The court of appeal found that the decision made by considering the payments as implicit acceptance, without proper clarification, was incorrect and overturned the ruling.
The court decided to comply with the appellate decision and granted the plaintiff time to clarify their request. The plaintiff’s attorney, in a petition, stated that they were requesting the determination of the rental amounts for the years 2014 and 2015 and the return of the overpaid rent amounts. In line with this, the plaintiff increased their request to 3,996.00 TL based on the expert reports obtained for the determination of the rental amount, through an amended petition dated 09.04.2012.
The plaintiff initiated enforcement proceedings with the Tokat 1st Enforcement Directorate, case number 2014/6783 E, against the defendant for the collection of monthly rent arrears of 1,833.00 TL for the period from 10.02.2014 to 10.08.2014, inclusive, amounting to a total of 12,831 TL. Upon the notification of the payment order, the defendant paid the debt in question. In line with the appellate decision, the plaintiff was asked to clarify their request.
The second section of the Code of Civil Procedure No. 6100 regulates the principles governing the trial. Article 25 of the law addresses the principle of bringing the case by the parties, Article 31 outlines the judge’s duty to clarify the case, and Article 33 regulates the principles of applying the law. In civil procedural law, the obligation to present factual circumstances is assigned to the parties according to Article 25 of the HMK, while the duty to make legal qualifications and clarify the case lies with the judge under Articles 31 and 33 of the HMK. Although the judge is bound by the factual circumstances presented by the parties, they are not bound by the legal qualifications and must apply Turkish law ex officio.
The specific dispute concerns whether the plaintiff has overpaid rent amounts in relation to the enforcement proceedings initiated against the defendant, and if so, how much. Based on the manner in which the facts were presented and the statements made, it is understood that the plaintiff’s attorney’s request for the “determination of the rent amounts for 2014 and 2015” is not a request to determine the rental amount in a technical sense. Rather, it pertains to determining the amount of rent that should have been paid for the period subject to the enforcement proceedings within the framework of the rules of evidence related to the parties’ claims and defenses regarding the lease agreement.
As a general rule, the burden of proof regarding the existence of the lease relationship and the amount of the monthly rent falls on the lessor, while the burden of proof regarding the payment of the rent amount accepted by the tenant falls on the tenant. If the annual rent amount requested by the lessor exceeds the limit for proof by a document as determined under Article 200 of the Civil Procedure Code (HMK), the lessor must prove the rent amount with written evidence. If this is not proven with written evidence, the amount accepted by the tenant should be taken as the basis. Similarly, if the annual rent amount exceeds the document-based proof limit under the same conditions, the tenant must also prove that the rent debt has been paid with written evidence.
In the concrete case, the plaintiff, the tenant, states that a verbal lease agreement was signed on 08.02.2011, and the annual rent was 12,000 TL. The tenant accepts that the annual rent increase should be made in accordance with Article 344 of the Turkish Code of Obligations (TBK), based on the producer price index change of the previous year. The burden of proof for the rent amount lies with the lessor, and the lessor has not fulfilled their obligation to prove the rent amount in writing for the amount subject to the enforcement. Therefore, within the framework of the aforementioned rules of proof, it is accepted that the rent amount is the amount agreed upon by the defendant and communicated by the defendant. The rent amount for 2011, which was accepted by the tenant as 12,000 TL, is taken as the basis, and the increase made according to Article 344 of the TBK is applied. Based on this, the monthly rent for the period subject to enforcement is determined, and whether the plaintiff has overpaid is calculated. Considering that no amendments can be made after the judgment is overturned, the decision should have been made based on this calculation. The incorrect evaluation and insufficient examination leading to a written decision is contrary to procedure and law and has been found to require a reversal.
For the reasons explained above, it has been decided that the judgment should be REVERSED in favor of the plaintiff, in accordance with Article 428 of the Code of Civil Procedure (HUMK). (Court of Cassation, 3rd Civil Chamber, 2019/3381 E., 2019/9536 K., 02.12.2019)
The plaintiff has requested the determination of the monthly rent amount as 6,300 TL, starting from 01.11.2014, instead of the last paid rent of 1,655 TL, and the collection of the unpaid rent amount since 01.11.2014 based on the determined rent.
The defendant has requested the dismissal of the case.
The court, in accordance with the principles of justice and fairness, decided that the monthly rent for the rental period from 01.11.2014 to 01.11.2015 be set at 6,000 TL. The judgment has been appealed by the defendant’s attorney.
Regarding our case, there is no dispute between the parties that the property was leased by the plaintiff to the defendant under a land lease agreement dated 01/11/2011, with a term of one year. According to Articles 344 and subsequent provisions of the Turkish Code of Obligations (TBK), a rent determination request can only be applied in disputes arising from residential and roofed business premises leases. Therefore, it is important to determine the dominant nature of the property. However, based on the file, the dominant nature of the leased property cannot be determined. In this case, the court should first determine the dominant nature of the leased property. If the property is determined to be an open area, the lease will fall under the general provisions of the Turkish Code of Obligations, and a rent determination cannot be requested, leading to the dismissal of the case. On the other hand, if the dominant nature of the leased property is understood to be a roofed business premise, a decision regarding the determination of the rent can be made. In this situation, considering the start date of the lease agreement between the parties, the requested rental period for 01.11.2014 – 01.11.2015 cannot be considered a period of fairness and justice.
It is incorrect to make a decision with insufficient examination and without considering the need to determine the rent amount by applying the Producer Price Index (ÜFE) as per Article 344 of the Turkish Code of Obligations (TBK).
The judgment should therefore be overturned. (Court of Cassation, 3rd Civil Chamber, 2017/3152 E., 2018/6523 K.)
The plaintiff stated that the defendant tenant has not paid the rent since December 2014 and unjustly objected to the enforcement for the collection of the rent debt, requesting that the objection be annulled.
The defendant requested the dismissal of the case.
The court stated that the rent amount was increased from 350.00 TL to a net 437.50 TL as of 01/05/2015. However, it was determined that the provision stipulating a 25% rent increase according to Article 344 of the Turkish Code of Obligations (T.B.K.) is not valid, and that the plaintiff could only request an increase of …% and, due to the defendant’s lack of acceptance, the rent increase rate could be determined by filing a rent determination lawsuit. It was considered that the rent amount remained at 350.00 TL per month. When it was accepted that the landlord had paid the janitor compensation and elevator maintenance expenses on behalf of the tenant, deducted from the rent, it was understood that the defendant had no rent debt. However, it was stated that the rent payment was made on 09/11/2015, 30 days after the date of service of the payment order, 17/09/2015. The court partially accepted the case and ruled that since the debt for the months subject to enforcement was paid in the 2015/5005 Enforcement Office file, the case was dismissed and the enforcement was canceled. It also annulled the objection to eviction since the debt for the relevant months was paid more than 30 days after the date of notification, continued the enforcement, and rejected the request for a 20% bad faith compensation. The judgment was appealed by the attorneys of the parties.
1-) Based on the documents in the case file, the evidence on which the decision is based, the legally required reasons, and particularly the absence of any error in the evaluation of the evidence, the defendant’s appeals regarding eviction are not justified.
2-) As for the plaintiff’s appeals concerning the claim for receivables;
Article 344/1 of the Turkish Code of Obligations (TBK) stipulates that agreements regarding the rental price to be applied during renewed rental periods are valid, provided they do not exceed the increase rate of the producer price index from the previous year. This rule is also applicable to rental agreements with a duration of more than one year. According to Article 53 of Law No. 6353, which amended the temporary Article 2 of Law No. 6217; in commercial leases involving tenants categorized as merchants under the Turkish Commercial Code, as well as legal entities under private and public law, the provisions of Articles 323, 325, 331, 340, 343, 344, 346, and 354 of the Turkish Code of Obligations (No. 6098) cannot be applied for a period of 8 years starting from 01.07.2012. In such cases, the provisions of the lease agreement regarding the matters mentioned in these articles will be applied in accordance with the principle of freedom of contract.
There is no dispute between the parties regarding the lease agreement dated 01/05/2004, which has a duration of two years. The monthly rent amount is set at 175 TL in the lease agreement, and it is stipulated that the rent will increase by 25% each year. The lease agreement between the parties is for a period of two years, and after the expiration of the contract, the lease is renewed annually under the same terms. The monthly rent amount is clearly specified in the lease agreement, and the manner in which the rent will be increased is explicitly stated in the special conditions in a way that leaves no room for doubt and can be easily calculated. According to the principle of contractual obligation, this increase condition binds the parties, and the defendant tenant must pay the rent in accordance with the increase rate set in the contract over the years. In this case, the court should have determined the rent amount based on the increase rate stated in the contract, taking into account the fact that the defendant is a legal person under private law, and issued a decision regarding the claim for payment accordingly. The decision made in writing, however, was contrary to the procedure and the law, necessitating a reversal.
CONCLUSION: For the reasons explained in the first paragraph above, the defendant tenant’s appeal objections are rejected, and the decision regarding eviction is UPHELD. For the reason explained in the second paragraph, the judgment made in writing is incorrect, and since the appeal objections are valid, they are accepted, and the judgment is REVERSED in favor of the plaintiff regarding the receivable, pursuant to Article 428 of the Code of Civil Procedure. The advance appeal fee is to be refunded to the appellant upon request. As per the reference to Article 3 of the temporary provisions of Law No. 6100 and Article 440 of the former Civil Procedure Code No. 1086, the route for correcting the decision is closed. The decision was made unanimously on 28/11/2017. (Court of Cassation 3rd Civil Chamber, 2017/6905 E., 2017/16628 K.)
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