As it is known, as per the Decree Dated 16.11.2018 And Numbered 2018 /32-52 On Amendment Of Decree On Protection Of Value Of Turkısh Currency (Decree No: 2008-32 /34) (“Decree”), without prejudice to the exceptions mentioned in the Decree, it has been prohitibed that payment liabilities arising from certain contracts to be executed between the persons resident in Turkey are determined in foreign currency or indexed to foreign currency and certain regulations have been made with regards to conversion of such amounts determined in foreign currency or indexed to foreign currency under present contracts into Turkish Lira.

One of the contracts covered by the said prohibition is residential and roofed workplace leases. Pursuant to the regulation stated in the Decree for residential and roofed workplace leases, without prejudice to the exceptions mentioned in the Decree, the rent amounts determined in foreign currency or indexed to foreign currency arising from the residential and roofed workplace leases shall be converted into Turkish Lira in accordance with the method stated in the Decree and such amounts shall be increased as per the increase rate[1] stated in the Decree for 2 years following 13.10.2018.

With regards to this subject, Ministry of Treasury and Finance of Republic of Turkey made an announcement on 13.10.2020. In this announcement, it is stated that re-application of rent amount in foreign currency following expiry of above stated 2 years period is prohibited. In addition, according to the announcement, the provisions of Turkish Code of Obligations regarding lease agreements should be taken into account with respect of increase rate, after expiry of the said period. As per Turkish Code of Obligations, the annual maximum rate of increase that can be applied to rent amounts for residential and roofed workplace leases is the change rate in the consumer price index according to the averages of the last twelve months.

In this regard, after 13.10.2020, it will not be possible to re-apply the rent amounts that have been already converted into Turkish Lira as per the Decree in foreign currency and such amounts will continue to be paid in Turkish Lira; otherwise the Decree would be breached. In the same context, it is forbidden to determine the rent amounts in foreign currency.

[1] Increase of previous lease year’s rent amount by taking into account monthly change rates of consumer price index determined by Turkish Statistical Institute.