Rent Determination Lawsuit

A rent determination lawsuit is a legal action that allows a court to set the rent payable for a renewed rental period in residential or roofed commercial leases. It is the main route to take when the parties cannot agree on the rate of increase, when the contract contains no valid increase clause, or when the rent has stayed far below market value over many years.

This lawsuit is different from an eviction lawsuit: the aim is not to remove the tenant, but to bring the rent into line with the law and with fairness while the lease continues. Tenants, just as much as landlords, may file a determination request when they believe the rent is excessive.

What rules govern how the rent is determined?

Article 344 of the Turkish Code of Obligations subjects rent increases to two different regimes. During the first five rental years, increase agreements made by the parties for the renewed period are valid provided they do not exceed the rate of change in the twelve-month average of the consumer price index in the previous rental year. If the parties have not agreed, the judge decides based on fairness, taking the condition of the leased property into account, again without exceeding this rate.

The picture changes for contracts longer than five years or contracts renewed after five years. In that case, and at the end of every subsequent five-year period, the judge sets the new rent by evaluating together the change in the consumer price index, the condition of the leased property and the comparable rent levels. Known in practice as the "five-year rule," this provision is the most frequently relied-upon basis for updating old rents that have fallen behind.

The rate used as the legal limit is announced anew every month; you can check the rate that applies to your own period with our rent increase rate calculation tool. The temporary increase cap that applied to residential rents in past years is no longer in force; however, which rule applies to each period must still be assessed separately.

When should the lawsuit be filed? Deadlines and their effect

A rent determination lawsuit can be filed at any time during the rental period (TBK Art. 345). However, when the lawsuit is filed directly affects from which period the determined rent will apply:

• If the lawsuit is filed at least thirty days before the start of the new rental period, the rent set by the court applies from the beginning of the new period. If the landlord has notified the tenant in writing within that time that the rent will be increased, the same result follows when the lawsuit is filed by the end of the new rental period.
• If these conditions are not met, the lawsuit can be filed during the new rental period; however, the determined rent will apply from the next rental period onward.
• If the contract contains a clause stating that the rent will be increased, the decision will also take effect for the new period when the lawsuit is filed by the end of that period.

For this reason, a step taken without planning the timing can result in the loss of a full year's difference. The time the mediation stage takes should also be factored in.

The mandatory mediation stage

For disputes arising from a lease relationship, since 1 September 2023 applying to a mediator before filing a lawsuit is a prerequisite for suit (Law on Mediation in Civil Disputes Art. 18/B). If the parties agree on a new rent during mediation, the signed settlement agreement is binding. If no agreement is reached, the final report issued is attached to the petition. A lawsuit filed without applying to a mediator is dismissed on procedural grounds.

When applying to a mediator, having a copy of the lease agreement and a short calculation table showing the current rent and the requested new rent speeds up the negotiations. If one of the parties fails to attend the meetings, that also ends the process and opens the way to litigation.

The competent court and jurisdiction

In lawsuits arising from a lease relationship, the competent court, regardless of the amount in dispute, is the civil court of peace (HMK Art. 4). As for territorial jurisdiction, the general rule is the court of the defendant's place of residence; in lawsuits arising from a contract, the court of the place where the contract is to be performed is also competent. If the location of the leased property differs from the parties' places of residence, which courthouse the case will be filed in should be clarified in advance.

The process step by step

1. Preliminary assessment: The contract's start date, the rental periods, the current rent and the increase clause in the contract are reviewed; whether the five-year rule applies is determined.
2. Notice: If necessary, written notice of the increase is given before the new period begins.
3. Mediation: An application is made to the mediation office at the courthouse; the negotiations are concluded.
4. Lawsuit: If there is no agreement, the lawsuit is filed, stating the requested rent.
5. Site inspection and expert: The court usually orders an on-site inspection of the property; the expert prepares a report based on the location, age and use of the property and comparable rents in the area.
6. Decision and appeal: After objections to the report are assessed, a decision is issued; if the conditions are met, an appeal (istinaf) may be filed.

Required documents and the importance of comparable rents

• The lease agreement and any additional protocols
• Bank receipts showing rent payments
• Written increase notice or notarized warning letter
• The final mediation report
• Comparable lease agreements for similar properties in the same area

In lease relationships exceeding five years, comparables are the factor that most determines the outcome. It is important that the agreements submitted as comparables be recent, of similar size and type, and if possible for properties in the same building or street. In practice, courts may take into account that the current tenant has lived in the property for years and, rather than going straight to the comparable rent, apply an equitable reduction.

Points to watch and our firm's support

A rent determination lawsuit should not be confused with an eviction claim; re-determining the rent does not end the lease relationship. While the case is ongoing, the tenant should keep paying the current rent; otherwise, a separate dispute may arise due to default. For files with an eviction dimension, our article on rental disputes and eviction offers additional information.

Every case is unique; because the start of the rental period, the contract's provisions and the comparables may lead to different outcomes, the specific situation must be assessed separately. At our office in Bakırköy, we support landlords and tenants with contract review, mediation negotiations and litigation. For other topics related to real estate disputes, you can visit our real estate law page.