Real Estate Attorney’s Guide — Att. Rafet Aslan

The determination of rent, which constitutes one of the most dynamic and dispute-prone areas of tenancy law, represents the judicial re-establishment of the economic balance between the right to property and the right to housing/work. While the Turkish Code of Obligations (TCO) No. 6098 recognizes the freedom of will of the parties in lease agreements, it aims to protect the tenant, who is considered the weaker party, especially in residential and roofed workplace rentals. However, changing economic conditions, the decrease in the purchasing power of money, and exorbitant increases in real estate values have necessitated the protection of the rights of lessors as well. In this context, a rent determination lawsuit is a legal remedy that ensures the determination of a price based on objective criteria through court intervention in cases where an agreement regarding the rent cannot be reached between the parties.

What is a Rent Determination Lawsuit and Its Legal Nature

A rent determination lawsuit is not, in essence, an action for performance (eda davası), but a "declaratory" (tespit) action that determines the amount of rent to be applied in the new period of the existing lease relationship. The primary purpose of this lawsuit is to clarify the disputed rent within the framework of the limitations provided by law and the criteria of equity. As emphasized in the settled jurisprudence of the Court of Cassation, the duty of the court in these cases is to determine a price that will resolve the dispute between the parties.

Court of Cassation, 6th Civil Chamber, 2013/10354 E., 2014/3164 K.:

"The lawsuit is not an action for performance but a rent determination lawsuit. Since the court was applied to due to the dispute between the parties regarding the amount of rent and the determination of the rent through a lawsuit was requested, the court should have rendered a determination decision in a way to resolve the dispute between the parties; dismissing the case with written justification was not correct."

This decision demonstrates that rent determination lawsuits are a procedural necessity, and even if there is the slightest dispute regarding the price between the parties, the court must strictly perform a rent determination instead of dismissing the case. In a concrete case, the failure of the parties to agree on the rent increase rate or the starting price is a sufficient reason to enter into the merits of the case. At this stage, the court is obliged to render a judgment by considering the nature of the immovable property, the terms of the contract, and legal limitations.

Legal Interest in Filing a Lawsuit and the Current Approach of the Court of Cassation

In the law of civil procedure, for a lawsuit to be heard, the plaintiff must have a current legal interest in filing that lawsuit. In rent determination lawsuits, legal interest arises automatically in cases where there is no definitive price determined by judgment or agreed upon by contract between the parties. A situation frequently encountered in practice is that the tenant begins to pay the price requested by the landlord or an amount close to it during or before the litigation process. Defendant parties generally argue that the lawsuit has become moot or should be dismissed due to lack of legal interest, citing this payment. However, the Court of Cassation finds this defense devoid of legal basis.

Court of Cassation, 6th Civil Chamber, 2015/11584 E., 2016/1767 K.:

"Since there is a dispute between the parties regarding the amount of rent and the court has been applied to, even if the tenant pays the requested amount or more, the case should not be dismissed and the rent should be determined. Since there is no rent determined by judgment or agreed upon by contract, the plaintiff has a legal interest in requesting the determination of the new period rent by the court."

This jurisprudence proves that a rent determination lawsuit does not only aim to "collect money" but also provides legal certainty for future periods of the lease relationship. A tenant may stop paying the increased rent tomorrow. Unless there is a determination decision rendered by the court, the lessor cannot force the tenant to pay this high price. Therefore, the fact that the payment has been made does not require the dismissal of the case; the court must still determine the market value or the index-based price.

Rent Increase Rates and Index Limitation in the First Five Years

Article 344 of the Turkish Code of Obligations envisages two basic scenarios regarding the determination of rent. The first is the index limitation covering the first five-year period of the lease agreement. The legislator has commanded that the increase to be made in the renewed periods of lease agreements cannot exceed the rate of change according to the twelve-month averages in the consumer price index (CPI) in the previous lease year. This rule concerns public order, and even if the parties agree on an increase above this rate, the exceeding part will be considered invalid.

Pursuant to TCO Art. 344/2, the path the court will follow in case the parties have not made an agreement on the rent increase rate is determined. Court of Cassation, 3rd Civil Chamber, 2017/3698 E., 2017/18270 K.:

"If no agreement has been made by the parties on this matter, the rent is determined by the judge according to equity, taking into account the condition of the leased property, provided that it does not exceed the increase rate in the producer price index of the previous lease year." (Note: WPI was taken as basis on the decision date; in current legislation, this rate is the CPI twelve-month average.)

The point to be noted here is that in rent determination lawsuits filed within the first five years, the court does not have the authority to conduct a "market value" (rayiç bedel) research. The judge is obliged to determine a price by calculating only the index rate and not exceeding this rate, also considering the condition of the property. In contracts that have not completed five years, precedent rent prices do not affect the outcome of the case.

MARKET VALUE DETERMINATION AND EQUITY CRITERIA FOR TENANTS EXCEEDING 5 YEARS

Upon the completion of the fifth year of the lease relationship, the legal regime between the parties transitions from "index limitation" to the "market value determination" stage. This stage is vital for protecting property rights and adapting the rent to current economic conditions. For a tenant who has completed five years, the rent determination lawsuit process is not just a mathematical increase calculation, but a redefinition of the market value of the property with legal criteria.

Determination Over Market Value After the Fifth Lease Year

The completion of five years from the start of the lease agreement allows for the "ceiling rate" of CPI (twelve-month averages) limitation to be exceeded. The provision of TCO Art. 344/3 has specially regulated this period and left the determination of the rent in contracts longer than five years or renewed after five years to the discretion of the judge. In this process, the judge determines a price in accordance with equity by considering the increase rate in the consumer price index, the condition of the leased property, and, most importantly, the precedent rent prices.

Court of Cassation, 3rd Civil Chamber, 2017/8181 E., 2019/6293 K.:

"Regardless of whether an agreement has been made by the parties on this matter, in lease agreements longer than five years or renewed after five years and at the end of every five years thereafter, the rent to be applied in the new lease year is determined by the judge in an equitable manner, taking into account the increase rate in the producer price index, the condition of the leased property, and precedent rent prices."

Determination of Precedent Rent Prices and Expert Examination

The most critical stage in market value determination is the collection of precedent rent prices and the comparison of these precedents with the subject property using scientific methods. The court appoints a committee consisting of experts (usually property management experts, real estate valuation experts, and civil engineers) to manage this technical process.

Court of Cassation, 6th Civil Chamber, 2015/4359 E., 2015/8025 K.:

"The rent price that the leased property can bring according to the starting date of the lease must be determined according to right and equity (hak ve nesafet) pursuant to the Court of Cassation Internal Merging Decision dated 18/11/1964 and numbered 2/4. While making such a determination, lease agreements of similar places should be examined; they should be compared separately with the subject place, and the matters affecting the rent price should also be emphasized separately."

Right and Equity Discount: The Court's Discretionary Power

The market value determined by the expert is not the final figure. In Turkish law, a "right and equity discount" (hak ve nesafet indirimi / equity discount) is applied as a protection mechanism in favor of the "old tenant." The basic reasoning for this discount is that the existing tenant does not have the risk of vacating the property, no real estate agent commission is paid, and the lessor is saved from the cost of the property remaining vacant during the process of finding a new tenant.

In Court of Cassation practices, this discount rate generally varies between 10% and 20%. Court of Cassation, 3rd Civil Chamber, 2023/118 E., 2023/1431 K.:

"Considering that the defendant is an old tenant and has been a tenant in the property since 2001, a 10% discount should be made pursuant to the rules of right and equity."

MANDATORY PRE-LITIGATION PROCESSES: MEDIATION AND NOTICE STRATEGIES

Mandatory Mediation as a Condition of Action

As of September 1, 2023, applying for mediation before filing a lawsuit in disputes arising from lease relationships has become a "condition of action" (dava şartı). This is the first legal threshold that must be crossed. If the parties reach a compromise, the minutes of compromise turn into a document in the nature of a judgment. If no compromise is reached, the "final minutes" (son tutanak) prepared by the mediator must be submitted to the court.

Notice Periods and Commencement of the New Period Rent

Article 345 of the TCO envisages very clear and strict periods. Pursuant to TCO Art. 345/2, the lawsuit must be filed at the latest thirty days before the beginning of the new period, or a written notification (ihtarname) must have been made to the tenant within this period stating that the rent will be increased. If this condition is met, the rent determined by the court becomes valid from the beginning of that new lease period.

Court of Cassation, 3rd Civil Chamber, 2019/4866 E., 2019/8469 K.:

"Since the notice regarding the increase was not served 30 days in advance pursuant to TCO Art. 345/2, it was requested to determine the rent as of 01.06.2013 instead of 01.06.2012."

TRIAL PROCEDURE, TAX OBLIGATIONS, AND PRECEDENT DECISIONS

Distinction Between VAT and Withholding Tax in Rent Determination

One of the most critical points of the judgments rendered by the courts is whether the determined price is "gross" or "net."

Court of Cassation, 6th Civil Chamber, 2015/11584 E., 2016/1767 K.:

"The Court of Cassation rules that for real person plaintiffs, the rent should be determined including withholding tax (stopaj), not with VAT. The decision explains that whether the defendant has paid the amount to be determined is effective on the result in terms of whether they caused the filing of the lawsuit and the determination of their responsibility for litigation expenses."

Litigation Expenses and the Effect of the Defendant's Payment Status

Court of Cassation, 3rd Civil Chamber, 2020/2382 E., 2020/3713 K.:

"In case the rent paid by the defendant is the same as or more than the rent adjudged by the Court, it must be accepted that the defendant is not responsible for litigation expenses and attorney fees as they did not cause the filing of the lawsuit."

The Role of Professional Legal Support in Preventing Loss of Rights

Rent determination lawsuits are a field that does not accept errors due to technical concepts such as "equity discount." Court of Cassation, 3rd Civil Chamber, 2025/572 E., 2025/3948 K.:

"The court determined that the gross rent the property would bring if leased vacant on 01.07.2022 was 176,112.50 TL and accepted the request by making a 10% equity discount. Article 344 of the TCO is based on the application of this discount in an equitable manner."

CONCLUSION

As explained in detail, rent determination lawsuits filed under Article 344 of the TCO are a critical legal protection mechanism. For lessors and tenants experiencing lease disputes in Antalya, managing these processes under the guidance of an attorney is the most reliable way to prevent irreparable loss of rights.