Hamide HANGUL
The 25 percent increase ceiling on housing rents, which was added to the Code of Obligations on June 8, 2022, expired on July 1, 2024. Thus, lease agreements began to be renewed again according to the 12-month CPI average. August inflation announced by the Turkish Statistical Institute is 51.97 percent annually.
According to the 12-month averages, which also include rent increases, inflation is 64.91 percent. This shows that the rent increase is above inflation. We spoke with the Founding President of the Real Estate Law Association (GHD), Attorney Ali Güvenç Kiraz, about the impact of the end of the housing rent increase ceiling on the litigation processes between tenants and landlords.
The balancing process in rents
GHD Founding President Lawyer Kiraz pointed out that with the 25 percent limit on rent remaining, the increase rate of housing rents returned to the 12-month CPI averages, and said that this situation initiated a relative balancing in the rental market.
Kiraz, who pointed out the 41.5 percent inflation target for the end of this year, said, “If the 12-month CPI continues in the 60-65 percent band and if it is at 40-50 percent next year, this rate will remain above the annual inflation target, and rental prices will become more suitable for market conditions. With the 12-month CPI going high, the rental market will settle into balance. This situation will continue for a while.”
Eviction cases dropped by 20%
Kiraz, who underlined that the intensity in rent determination cases continued after the application, explained that, on the contrary, a decrease was observed in eviction cases. Kiraz continued his words as follows: “After the CPI was turned to for those who wanted to evict their tenants, a balancing began in rental prices. Because after the 25 percent ended, the 12-month CPI remained above annual inflation. Those who came for eviction were mostly coming to increase the rent. Therefore, rent eviction cases did not increase in terms of landlords. It is not as intense as before. In fact, it started to decrease. Eviction cases decreased by approximately 20 percent.”
Settlement in 5 out of 10 cases
Kiraz, who drew attention to the fact that eviction cases, especially those opened after the 25 percent increase in rent, started to end with reconciliation while the court process was ongoing, continued his words as follows: “Approximately 40 percent of the cases opened end with reconciliation during the court process. In other words, almost 4 or 5 out of every 10 cases are resolved with reconciliation while the case is ongoing and before seeing the result. We made 4-5 reconciliations just this week.”
After 25%, the ‘rent determination’ case intensified
Ali Güvenç Kiraz, who pointed out that landlords came to file both eviction and rent determination lawsuits 1-2 years ago, said, “Landlords wanted to file these two lawsuits and also protect the rental value. After the 25 percent is over, they come only for determination lawsuits. Right now, the weight of the lawsuit continues in rent determination lawsuits.
For those who have completed 5 years and whose rent is low compared to current conditions, the litigation processes are more intense. Because, for those who have rented in 2019, the 5-year period expires in 2024,” he said. Pointing out that the caseload in the courts has increased due to the increase in rent determination cases, Kiraz said, “Due to that intensity, the courts are still giving dates for April and May. This shows that the mediation system is not actually yielding results at the desired levels.”
Case journey changes with inflation
Kiraz, who pointed out that the landlord did not want to lose his tenant who made regular payments, emphasized that both parties were aware of both continuity and market conditions, and said, “Both parties are trying to find balance again.” Kiraz, who stated that there has been a frenzy of lawsuits filed in the last 1-2 years, said that the 25 percent rule in particular disrupted the balance for both parties, and said, “For this reason, everyone became a party to a court. Because while the rent in one area rose to 30 thousand, the rent paid remained at 10 thousand liras.
We say, ‘It will take 2-2.5 years, including the appeal’. At first, the landlord was taking the risk. However, as the road continued, the lawsuit journey started to decrease with inflation. The landlord looks at the market and says, ‘If I go up to 70 thousand liras, will he be able to pay it continuously?’ From the tenant’s perspective, he says, ‘If I go up now, there are places that are 60-70 thousand liras, will I be able to pay it?’ Now the tenant is looking to increase it a little bit, and the landlord is looking to decrease it a little bit. In the context of newly opened lawsuits, the rent determination lawsuits, which do not make this compromise anyway, are continuing with the same intensity.
Source: www.dunya.com
