TÜRKIYE Law and Practice Contributed by: Serkan Gül, Nazım Kurt and Türkay Avanaş, Hergüner Bilgen Üçer Attorney Partnership
which case the lessor is relieved from its duties to keep the property in operable condition. Now that the market has suffered the effects of the pandemic, lease agreements entered into recently include pandemics as a force majeure event to the extent that they pre - clude the tenant from using the leased property. 6.5 Rent Variation As per the Turkish Code of Obligations, if the rent is agreed to in TRY, the rent may be increased accord - ing to the consumer price index (12 months’ average), but not higher. Rent may not be increased within the first five-year period if the rent is agreed to in foreign currency. 6.6 Determination of New Rent If the parties fail to mutually agree on a new rental amount, either of the parties can apply to the court to render a new rental amount according to the market price at the end of each five-year lease term. 6.7 Payment of VAT If the lease property is part of a commercial enterprise or is owned by a limited liability company/corporation, VAT is applicable at 20% of the rent. Withholding tax is applicable to commercial entities for leases of natural person-owned real estate. 6.8 Costs Payable by a Tenant at the Start of a Lease A commission to the real estate agency and a deposit to the real estate owner are generally paid by the ten - ant at the start of a lease as per current market prac - tice. 6.9 Payment of Maintenance and Repair The areas used by several tenants, such as car parks, gardens or swimming pools, are classified as common areas, and expenses arising out of the use of these areas are divided among tenants according to certain criteria (eg, land share, square-metre size of property). 6.10 Payment of Utilities and Telecommunications If the building housing the premises has been convert - ed to condominium use, then each tenant is able to obtain an individual utilities account for their own use. Expenses incurred for common areas are generally
allocated among tenants on the basis of the square metres of the property. Managers of such proper - ties usually reserve for themselves, by contract, the authority to take into account other factors such as the tenant’s location within the property, the extent to which the presence of the tenant generates busi - ness for the facility as a whole, the tenant’s business volume, etc. The allocation of common expenses among tenants in shopping centres is governed by the Regulation on Shopping Centres ( Alışveriş Merkezleri Hakkında Yönetmelik ). The regulation specifies mandatory rules to be used when allocating common expense contri - bution amounts to tenants in shopping centres. The common expenses are, in principle, allocated accord - ing to the square metres of the respective stores, res - taurants, etc. 6.11 Payment of Property Taxes Under Turkish law, unless otherwise specified by the parties, landlords, as property owners, are responsi - ble for paying real estate taxes associated with rental properties. Additionally, according to the Turkish Code of Obligations, it is not permissible for parties to allo - cate additional costs to the tenant alongside the rental fee in the lease of residential units and roofed work- places. As such, for the leasing of residential units and roofed workplaces, the parties may not agree to transfer the responsibility for payment of real estate tax to the tenant. 6.12 Insurance Issues Generally speaking, landlords insure the property against structural risks, and tenants insure the prop - erty against operational risks. Landlords also insure the common areas of shared-use properties and can increase the cost of this insurance depending on the parties’ bargaining positions. The law imposes the cost of mandatory insurance on landlords by default but permits reassignment of these costs. Landlords typically insure properties against fire, hurri - canes, explosion, water damage, flooding, landslides, snow damage, aircraft impact and earthquakes. Ter - rorism insurance is also sometimes taken out. A les - see typically takes out renter’s all-risk insurance as well as third-party liability insurance.
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