The increase rate to be applied at renewal periods in lease contracts is limited by the mandatory provisions of the Turkish Code of Obligations; the parties cannot validly agree on an increase rate above this limit.
The Statutory Ceiling: The Twelve-Month Average of the CPI
Under TCO Art. 344, even in lease contracts with a term longer than one year for residential and roofed workplace leases, the rent increase may not exceed the rate of change according to the twelve-month averages of the consumer price index (CPI) in the previous rental year. Even if a higher rate has been agreed in the contract, that rate is invalid for the portion exceeding the CPI limit; the tenant is only obliged to pay the increase up to the statutory limit.
Where No Increase Rate Is Specified in the Contract
If there is no agreement between the parties regarding the rent for the renewal period, the rent is determined by the judge in an equitable manner, taking into account the twelve-month average rate of change according to the CPI, the condition of the leased property, and comparable rental prices (TCO Art. 344/2).
Rent Determination Lawsuit for Leases Longer Than Five Years
In lease contracts with a term of more than five years, or renewed after five years, either party may request that the rent be determined according to comparable rents, without regard to the CPI increase rate limit; in that case, the judge determines the rent by evaluating comparable rental prices, the condition of the property, and the CPI rate together (TCO Art. 344/3).
Conclusion
The rent increase rate is subject to the statutory CPI limit, regardless of the figure written in the contract. Checking whether the increase requested by the landlord exceeds this limit is important to avoid unnecessary payments.
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