A rent determination lawsuit is one of the legal processes filed to bring the rent amount in line with the market value. In rent amount disputes between landlords and tenants, the relevant provisions of the Turkish Code of Obligations (TCO) come into play to resolve these disputes. In particular, Article 344 and subsequent articles of the TCO regulate the processes of determining and adapting the rent amount. Additionally, during the rent determination lawsuit process, legal reasons for the tenant’s eviction may also come up. For more detailed information on this subject, you can read our article titled Legal Reasons for Tenant Eviction.
Turkish Code of Obligations (TCO) Article 344
“The parties’ agreements regarding the rent amount to be applied in renewed rental periods are valid provided that they do not exceed the rate of change according to the twelve-month averages in the consumer price index in the previous rental year. This rule also applies to rental contracts with a duration longer than one year.
If no agreement has been made by the parties on this matter, the rent amount is determined by the judge according to equity, taking into account the condition of the rented property, provided that it does not exceed the rate of change according to the twelve-month averages in the consumer price index of the previous rental year.
Regardless of whether an agreement has been made by the parties on this matter, in rental contracts lasting longer than five years or renewed after five years and at the end of each subsequent five years, the rent amount to be applied in the new rental year is determined by the judge in accordance with equity, taking into account the rate of change according to the twelve-month averages in the consumer price index, the condition of the rented property, and comparable rent amounts. The rent amount determined in this way in the rental year after each five years can be changed according to the principles in the previous paragraphs.“
In rent determination lawsuits, this article sets out the basic principles that the court will apply when determining the rent amount.
Points to Consider in Rent Determination Lawsuit
When filing a rent determination lawsuit, the following points should be considered:
- Documents: Documents such as the rental contract, payment receipts, and market value research should be prepared completely.
- Expert Report: Obtaining a correct expert report in rent determination lawsuits is critically important.
- Costs: Lawsuit filing costs should be planned in advance.
To be able to file a rent determination lawsuit, the following conditions must be met:
- The rental contract must be valid.
- The rent amount must be low or high according to market conditions.
- The documents required for the lawsuit must be prepared completely.
Turkish Code of Obligations (TCO) Article 345
“A lawsuit regarding the determination of the rent amount can be filed at any time. However, if this lawsuit is filed at a date at least thirty days before the start of the new period or if the landlord has given written notice to the tenant within this period that the rent amount will be increased, provided that it is filed by the end of the following new rental period, the rent amount to be determined by the court binds the tenant from the beginning of this new rental period. If there is a provision in the contract that the rent amount will be increased in the new rental period, the rent amount to be determined by the court in a lawsuit to be filed by the end of the new rental period is also valid from the beginning of this new period.“
How is the New Rent Amount Determined in Rent Determination Lawsuit?
In rent determination lawsuits, the expert report is at the center of the process. The expert examines the real estate market in the area where the property is located and determines whether the rent amount is in accordance with the market value.
In rent determination lawsuits, the court must have experts conduct an examination, investigate the condition of the property and comparable rent amounts. The following criteria are considered by the judge in determining the rent amount:
1- CPI Change Rate:
The twelve-month CPI average of the previous year is used as a critical reference in determining the rent amount. The use of the annual change in CPI in determining the rent amount is of great importance. It is evaluated as a basic indicator for determining the rent amount. We think it is important to note the following point here. According to TCO 344/3, CPI is not the upper limit but the lower limit in determining the rent amount. Therefore, the court should pay attention to whether the increases made until the date of the lawsuit are below or above the CPI.
2- Condition of the Rented Property:
In the rent determination process, factors such as the location of the rented property, its intended use, physical condition, features, etc. are taken into account. Therefore, when determining the rent amount, a decision is made by considering the condition of the property and environmental factors. We can classify the elements separately as follows:
- Location and surroundings
- Facade
- Material and workmanship quality
- Floor it is on
- View
- Proximity to neighboring building
- Whether it is well-maintained
- Usage pattern
- Rental start date and rental periods
3- Market Rent Amount:
In determining the rent amount, the court also examines the rent amounts of other properties with similar characteristics located in the area where the property is located. In other words, market rent amounts in the same area are taken into account.
4- Equity Reduction
In Article 344/3 of the Turkish Code of Obligations, there is the expression “in accordance with equity”. For this reason, equity is taken into account by the judge in rent determination lawsuits. The court makes an equity reduction for the rent amount determined for the property subject to the lawsuit in the expert report. This concept of equity can be called “existing tenant discount”. In rent determination lawsuits, the court applies an “equity” or “existing tenant discount” of between 15% and 20% for the rented property. The discount made represents an advantage arising from the tenant being a previous tenant.
When is a Rent Determination Lawsuit Filed?
To determine when a rent determination lawsuit can be filed, Article 344 of our Turkish Code of Obligations and whether any rent increase amount has been determined in the rental contract between the parties are examined. If an annual rent increase rate has been determined in the rental contract, a rent determination lawsuit can only be filed at the end of the 5th rental year. However, if no rent increase amount has been determined in the rental contract, a rent increase can be requested at the end of each rental period without waiting for the 5th rental year.
For a rent determination lawsuit to be filed, a period of 5 years must have passed from the contract date.
For example; For a rental contract dated 01.01.2020, the earliest period for which determination can be requested will be the rental period between 01.01.2024-01.01.2025.
According to TCO 345/2, if there is no provision regarding the increase in rent amount in the contract, if a lawsuit is filed 30 days before the start of the new rental year or if a notice is given to the tenant that the rent amount will be increased, the determination ruling will be valid from the new rental year.
For example; For a rental contract dated 01.01.2020, the earliest date on which the determination decision can take effect will be 01.01.2025. If a lawsuit is filed up to 30 days before this date, the determination ruling will be valid from 01.01.2025.
According to TCO 345/3, if there is a provision regarding the increase in rent amount in the contract, in a lawsuit to be filed during the renewed rental year, upon request, a determination ruling can be established to be valid from the beginning of the rental period in which the lawsuit was filed.
For example; For a rental contract dated 01.01.2020, the earliest date on which the determination decision can take effect is 01.01.2025. If there is an increase clause in the contract, a lawsuit can be filed in the new period without being subject to the 30-day period and notification conditions. A determination ruling can be requested to be established from the beginning of the renewed rental period, i.e., from 01.01.2025.
Notice in Rent Determination Lawsuit
A notice in a rent determination lawsuit is important especially to officially convey the request for re-determination of the rent amount to the other party and to ensure that the process proceeds in accordance with the law. The notice helps the parties to clearly express their requests before or during the lawsuit.
Is Sending a Notice Mandatory?
According to the Turkish Code of Obligations (TCO), sending a notice before filing a rent determination lawsuit is not a mandatory requirement. However, the notice is useful in terms of showing the good faith of the parties and the seriousness of their requests during the lawsuit process. A notice is generally sent in the following situations:
- If a request will be made to determine the rent amount before the new rental period,
- If the landlord or tenant wants to seek a settlement ground outside the court,
- If it is necessary to clearly inform the other party that there is a dispute over the rent amount.
How is a Notice Sent?
A notice in a rent determination lawsuit can be made through a notary or in writing. A notice sent through a notary is the most legally valid evidence. The following points should be included in the notice:
- Details of the Rental Contract: The address of the rented property, information about the parties, and the start date of the rental contract.
- Request: Request for the rent amount to be increased or determined in accordance with the market value.
- Date and Period: The date the notice was sent and the period given to the addressee for a response should be specified.
Relevant Provisions According to the Turkish Code of Obligations
- TCO Article 344: The parties’ agreement on determining the rent amount is a priority. In case of disagreement, a lawsuit can be filed.
- TCO Article 347: A rent determination lawsuit can be filed before the new rental period or during the rental period. However, notification must be made to the other party at least 30 days before the end of the rental period.
Advantages of Sending a Notice
- Informing the Other Party: With the notice, the parties convey their requests to the other party in writing.
- Evidence in the Lawsuit Process: The notice shows the good faith of the parties and that their requests have been clearly expressed in court.
- Creating Settlement Ground: Thanks to the notice, the parties can try the settlement route before filing a lawsuit.
Sample Notice Text
NOTICE
NOTIFIER:
Name Surname (ID No.:)
(Address)
ADDRESSEE:
Name Surname (ID No.:)
(Address)
SUBJECT:
This is a notice regarding the payment of the monthly rent amount as net 10,000.00 TL under the rental contract dated X, to be valid from X date.
EXPLANATIONS:
Dear Addressee,
- Under the rental contract dated X, you are residing as a tenant in the rented property at X address with a monthly rent of 2,009.00 TL.
- From X date, which is the beginning of the new rental year, I believe that the current rent amount needs to be re-determined as 10,000.00 TL due to the fact that it is low compared to its equivalents and the economic conditions in our country. Therefore, I request that you pay me this determined amount in the new rental period.
To be valid from X date, I request that the rent amount under the rental contract be paid as monthly 10,000.00 TL. I inform you that if this amount is not accepted by me or if payment is not made at the specified amount, I will file a rent determination lawsuit against you. I also importantly notify you that you will have to pay costs such as litigation expenses as a result of the lawsuit.
Respectfully,
(Date)
Notifier
Name Surname
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