TÜRKIYE Trends and Developments Contributed by: Merter Özay, Özay Law Firm
Market Overview Türkiye’s real estate and lease market maintained a resilient and adaptive structure throughout the 2024– 2025 period, despite macroeconomic volatility and a more active and evolving regulatory framework. While the statutory framework continued to play a defining role, market practice has also been shaped by com - mercially driven contractual arrangements developed between the parties. This dual structure, combining a well-established legal framework with commercially driven practice, positions Türkiye as a structured and increasingly attractive market for real estate invest - ment. In this context, lease relationships have evolved into a space where the interaction between mandatory legal provisions and contractual autonomy is of both legal and commercial significance. The ability to structure agreements within these constraints has become a significant factor for market participants. Key Legal Developments in the Real Estate Market Rent regulation, inflation pressure, and legal adjustment mechanisms The Turkish Code of Obligations (TCO) introduces a Consumer Price Index (CPI)-based framework for rent increases in residential and roofed commercial leases. This framework enhances predictability while, in peri - ods of high inflation, it may also give rise to differences between contractual rent levels and evolving market conditions. To address this, Turkish law provides two principal mechanisms: • rent determination actions (TCO Article 344), ena - bling courts to reset rent to market levels after five years; and • adaptation (hardship) actions (TCO Article 138), allowing contractual revision where extraordinary and unforeseeable circumstances materially affect the contractual balance. In the current economic climate, where inflationary pressures have influenced market rent levels, these mechanisms have evolved from primarily exceptional remedies to increasingly relevant strategic tools. In particular, where the statutory five-year threshold has
not yet been reached, adaptation claims have gained prominence as a means of addressing differences between contractual arrangements and market con - ditions. The increasing reliance on these mechanisms reflects the adaptability of Turkish lease law within the frame - work of applicable legislation, as well as the challeng - es that may arise in maintaining contractual balance under dynamic market conditions. At the same time, the interaction between rent deter - mination actions and adaptation (hardship) actions has given rise to a well-recognised doctrinal debate. One line of argument prioritises legal certainty, assert - ing that the specific regime governing rent determina - tion should limit recourse to general hardship provi - sions. A competing view, however, recognises that exceptional economic conditions may justify judicial intervention beyond the confines of the rent determi - nation framework. From a practical standpoint, this divergence highlights the importance of carefully structured and integrated legal strategies, where timing, claim selection, and evidentiary positioning are aligned with both statu - tory requirements and prevailing market conditions. Taken together, these mechanisms demonstrate a structured and well-established legal approach to rent adjustment, offering investors a degree of pre - dictability alongside the flexibility required to respond to changing market conditions. Penalty clauses and the limits of contractual engineering The enforceability of penalty clauses in lease agree - ments has become an increasingly relevant issue in recent disputes, particularly where landlords explore alternative mechanisms within the framework of rent regulation. Under the provisions of the TCO (notably Articles 346 and 325), contractual terms that impose additional financial obligations on tenants ‒ whether directly or indirectly ‒ may be subject to invalidity assessments. Recent case law indicates that penalty clauses which effectively operate as rent-related supplements may
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