Keywords: rent determination lawsuit, 5-year rent increase, comparable rent, Article 344 of the Turkish Civil Code, rent increase
Rent amounts for properties that have had the same tenant for a long time may fall significantly below market value over time. In such cases, the property owner must file a “rent determination lawsuit” to update the rent amount. Following the expiration of the 25% cap on July 1, 2024, Article 344 of the Turkish Civil Code has once again become applicable on its own. In this article, we explain the rent determination lawsuit.
General Framework of Article 344 of the Turkish Civil Code
According to Article 344 of the Turkish Code of Obligations, the increase in the rent applicable during renewed lease terms may not exceed the rate of change based on the 12-month average of the Consumer Price Index (CPI) for the previous lease year, provided there is an agreement between the parties. If the parties cannot reach an agreement, the judge shall determine the increase in accordance with equity, taking into account the condition of the leased property, provided that it remains within the same CPI cap.
5-Year Indexation Rule (Art. 344/3)
For lease agreements with a term of more than five years or lease relationships that have been in effect for more than five years, at the end of the fifth year and every five years thereafter, the rent to be applied in the new lease year shall be determined in a fair and equitable manner, taking into account the 12-month average CPI, the condition of the leased property, and comparable rent rates. This rule is the most important mechanism enabling the adjustment of rents that have remained below market value for a long time.
When Should You File a Lawsuit?
The law does not specify a definitive time limit for filing a rent determination lawsuit; however, according to the established practice of the Court of Cassation, if the lawsuit is filed or the notice of rent increase is served at least thirty days before the start of the new rental period, the increase may be applied as of the beginning of the new period. Otherwise, the determined increase will not take effect until the following rental year.
Factors the Judge Will Consider
When issuing a rent determination decision, the court obtains an expert report. The expert examines the characteristics of the leased property, the rental rates of comparable properties in the area (comparable rent), inflation data, the condition of the property, and its location. Factors such as the difference in rent between summer and winter in Bodrum, the sea view, and whether the property is located within a gated community are taken into account by the expert.
Competent and Jurisdictional Court
A rent determination lawsuit is filed with the conciliation court in the jurisdiction where the property is located. The competent court is the conciliation court, regardless of the amount of the annual rent increase in dispute. The Bodrum Conciliation Court has jurisdiction over properties located in Bodrum.
A Notice of Demand Instead of a Declaratory Action
In some cases, before filing a lawsuit, the landlord may attempt to reach a mutual agreement with the tenant by sending a notarized notice regarding a rent increase. If the tenant accepts a reasonable increase, the lease is renewed without going through court proceedings. However, if the tenant fails to comply with the notice, it is important to file a lawsuit promptly to avoid wasting time.
Conclusion
A rent determination lawsuit is the most effective way for a property owner to adjust the rent to current market conditions. A lawsuit filed at the right time and supported by comparable data can result in a significant increase in income. If the deadline is missed, the gains are carried over to the following year; that is why timing is crucial.
| ⚖️ This article is for general informational purposes only and does not constitute legal advice. To obtain legal assistance regarding your specific case, please contact Attorney Kaan Özgün. Kaan Özgün Law Office | Bahçelievler Mah., Turgutreis / Bodrum / Muğla |