Is the 25 Percent Limit on Rent Increase Reasonable?

Although the 25 percent legal limit on residential rent increases expires next month and the Minister of Treasury and Finance Mehmet Şimşek stated that the continuation of this limitation is not necessary, it remains unclear whether the practice will continue. Altınbaş University Faculty of Law, Department of Civil Law Faculty Member Assoc. Prof. Dr. Meliha Sermin Paksoy made important evaluations on whether the issue, which concerns both tenants and landlords, is constitutionally appropriate.

Assoc. Prof. Dr. Meliha Sermin Paksoy said that there were examples in the past regarding the limit imposed on the rental price, but that the current 25 percent limit should no longer be continued because it is far below inflation. Assoc. Prof. Dr. Paksoy said:

"The introduction of a limit on the rental price in residential and workplace rents is in line with Article 344 of the Turkish Code of Obligations. Similar limitations have been made in the past; for example, rent increases were limited to 25 percent in 2000 and 10 percent in 2001. In addition, the 1955 Law on Real Estate Rents also imposed limits on the determination of the rental price. However, the focus of the current debate is that the 25 percent limit is far below the high inflation rates. Inflation rates have been quite high in Türkiye in recent years: 64.77 percent in 2023, 64.27 percent in 2022 and 36.98 percent in 2021. Under these circumstances, the 25 percent rent increase limit causes the rent to depreciate against inflation. In addition, the prohibition of determining rents in foreign currency causes the rents in ongoing contracts to remain far below the fair value. This situation causes economic damage to property owners and constitutes an interference with the right to property and freedom of contract." 

Reminding that the 25 percent limit should also be considered in terms of its inability to effectively ensure the right to housing and the fight against inflation, Paksoy said, “According to Article 13 of the Constitution, fundamental rights and freedoms can only be restricted by law and under certain conditions. The principle of legality requires the law to be specific, accessible and predictable. However, the continuous change of the rent increase limit and the uncertainty as to whether the limit will continue or not undermines this condition. The principle of proportionality requires the intervention to be appropriate, necessary and proportionate to achieve its purpose. The 25 percent limit does not prevent the increase in rental prices in general, nor does it serve as an effective method to meet the housing needs of low-income people. This limit only protects tenants who are parties to ongoing contracts without discriminating between rich and poor. However, the intervention is not proportionate as the rental price in the ongoing contracts is far below the market rate due to this limitation."

Altınbaş University Faculty of Law Faculty Member Assoc. Prof. Dr. Meliha Sermin Paksoy added that the limit is unconstitutional and continued her words as follows

"As a result, the extension of the 25 percent rent increase limit is contrary to the constitutional principles of legality and proportionality. This limit violates the property rights and freedom of contract of the lessor-owners and causes the rental price to erode against inflation. Therefore, the continuation of this practice would not be constitutionally appropriate. As a matter of fact, the Constitutional Court canceled the increase limit in 2001, which was far below the inflation rate, on the grounds that it was unconstitutional."