Leasing properties, whether residential or commercial, in Turkey presents unique opportunities and challenges for landlords. As a foreign property investor in Turkey, understanding the legal landscape is crucial to safeguarding your investments and maximising returns. This guide provides an overview to the essentials of leasing properties in Turkey, focusing on what to consider before letting a unit and the options available for lease termination.
Understanding Turkish Lease Agreements
In Turkey, lease agreements are governed by the Turkish Code of Obligations (TCO). There are three main types of lease contracts:
Ordinary Lease (Adi Kira): General lease agreements not specifically classified under other types.
Residential and Roofed Workplace Lease (Konut ve Çatılı İş Yeri Kirası): Specifically for living spaces and roofed commercial properties.
Product Lease (Hasılat Kirası): For leasing agricultural lands or properties generating income through products.
For this guide, we will focus on residential and roofed workplace leases.
Key Considerations Before Letting a Property
1.Lease Agreement Formalities:
Written vs. Oral Agreements: While written contracts are not mandatory, they are highly recommended to avoid disputes. Oral agreements are valid but challenging to enforce without concrete evidence.
Registration: Lease agreements can be annotated in the title deed registry to ensure enforceability against third parties.
2.Lease Duration and Renewal:
Fixed-term Leases: If a fixed-term lease expires without termination, it converts to an indefinite-term lease. For residential and roofed workplace leases, if not terminated by the tenant with a 15-day prior notice, the lease automatically extends for one year.
Automatic Renewal: Leases for residential and roofed workplaces automatically renew unless the tenant notifies the landlord of termination.
3.Subletting and Lease Transfer:
Subletting: The tenant can sublet the property with the landlord's written consent.
Transfer: The tenant can transfer the lease relationship with the landlord's written consent, and the former tenant remains liable for the rent and ancillary costs for up to two years.
4.Security Deposit (Depozito):
Limit: The deposit cannot exceed three months' rent.
Management: If the deposit is in cash, it must be deposited in a bank account, accruing interest. It can only be released with mutual consent, a finalised execution proceeding, or a court decision.
5.Rent Determination and Adjustment:
Initial Rent: Can be a fixed amount or a percentage of the tenant’s turnover (for commercial leases).
Adjustment: Rent increases must align with the consumer price index (CPI) and cannot exceed the average increase in the CPI over the past twelve months. For leases over five years, adjustments consider the property’s condition and comparable rents.
Terminating a Lease as a Landlord
1.Statutory Grounds for Termination:
Personal Use: The landlord, their spouse, descendants, or dependents require the property for personal use.
Reconstruction and Major Renovation: Significant renovations necessitating vacancy can be grounds for termination.
New Owner Requirement: If a new owner requires the property for personal use, they must notify the tenant within one month and can terminate the lease after six months.
2.Termination Procedures:
Fixed-term Leases: Tenants can terminate without cause at the end of the term with 15 days' prior notice. Landlords cannot terminate merely because the lease term ends; they must have a statutory reason.
Indefinite-term Leases: Tenants can terminate at any time with the proper notice period. Landlords must wait until the end of the 10-year extension period and provide three months’ notice.
3.Legal Recourse for Non-Compliance:
Eviction Proceedings: Landlords can initiate eviction proceedings if tenants refuse to vacate after a valid termination notice.
Damage Claims: If the tenant fails to pay rent or causes property damage, the landlord can claim compensation through legal channels.
Early Termination by the Tenant
Lease Forfeiture: The tenant can end the lease early due to severe defects, personal hardship, or other valid reasons, but may owe compensation for the landlord's loss of rent until the property is re-let.
Navigating the leasing landscape in Turkey requires a solid understanding of legal obligations and rights. Ensuring your lease agreements are well-drafted and compliant with Turkish law is paramount to protecting your investments.
At CCS Law, we specialize in landlord-tenant disputes and lease agreements. If you need assistance with your residential or commercial leases in Turkey, our expert team is ready to help. Contact us today for a case evaluation and comprehensive support.
Disclaimer: This article is intended for informational purposes only and does not constitute legal advice.