TÜRKİYE Law and Practice Contributed by: Serkan Gül, Nazım O Kurt and Türkay Avanaş, Hergüner Bilgen Üçer Attorney Partnership
• high inflation and the search for reliable investment options; • he government’s incentives leading to the general elections that dominated the coun - try’s agenda; • worries about a major earthquake in Istanbul after the earthquake that took place in South - eastern Türkiye in early 2023; and • the Russian-Ukrainian and Palestinian-Israeli conflicts, resulting in a surge of immigration into Türkiye. Türkiye’s Return to an Orthodox Economic Policy Shortly after the 2023 general elections, the Central Bank of the Republic of Türkiye began increasing interest rates to slow down infla - tion, heralding a change to a more orthodox economic policy. However, these measures have not yet led to a significant decrease in real estate prices. The latest available statistics indi - cate that, in December 2023, the Housing Price Index increased by 75.5% in TRY compared to December 2022 even though banks no longer offer low interest rates on loans to customers. Residential Real Estate Sales All of the factors explained above led to a decrease in residential real estate sales. Accord - ing to the statistics published by the Turkish Statistical Institute, the number of residential real estate sales in 2023 decreased by approxi - mately 17.5% compared to 2022, amounting to 1,225,926 sales in total. The number of houses sold to foreign individuals, which had increased in recent years due to the “golden passport” possibility, also decreased by 48.1%, amount - ing to 35,005 sales in total. Mortgages play a significant role in the hous - ing market by providing essential financing to consumers. The Association of Real Estate and
Real Estate Investment Companies indicated that, as of September 2023, the total volume of mortgages reached approximately TRY445.9 billion, a 26% increase from the previous year. This growth trend reflects the ongoing demand for housing financing. It is worth noting that as of October 2023, home loan interest rates have surged to the highest levels seen in the past two decades. Impact of High Inflation As per the Turkish Code of Obligations, if the rental fee is denominated in TRY, the rental fee may be increased according to the consumer price index (12 months’ average) but no higher. With the consumer price index skyrocketing, rent variation rates have had a crippling impact on the average consumers’ budgets. In an attempt to curb this effect, in June 2022, the Turkish parliament promulgated a law that temporarily capped rental increase rates at 25% for residen - tial leases. Accordingly, leases that have been or will be renewed for a new lease term between 11 June 2022 and 1 July 2023 may not be renewed at a rental fee that exceeds the previous lease term’s rent by more than 25%. This regulation was also extended for one more year on 14 July 2023, and the law that temporarily capped rental increase rates at 25% will remain in force until 1 July 2024. Whether it will extend beyond 1 July 2024 is yet uncertain. Tourism and Short Term Leasing The Ministry of Culture and Tourism reported that 2023 was a highly successful year for tour - ism in Türkiye. According to data released by the Ministry, 56.7 million individuals visited the country in 2023. These numbers resulted in the implementation of new legal regulations regard - ing short-term accommodation options, which are commonly utilised by tourists.
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