Gov’t working to bring rent hikes under control

Gov’t working to bring rent hikes under control

Gov’t working to bring rent hikes under control

The government is looking at ways to bring high rent increases under control, focusing on different options such as introducing a cap and fines.

Work to tackle the growing rent problem is being coordinated by the relevant ministries and the ruling Justice and Development Party (AKP).

Authorities are currently focusing on three options: Imposing fines in cases where rent increase exceeds the inflation rate, introducing a cap on rents in large cities and launching a scheme under which municipalities and companies build houses only to be rented.

Officials from the Environment, Urbanization and Climate Change Ministry and the Treasury and Finance Ministry and senior officials from the AKP have been discussing those alternatives for some time.

Some officials argue that some of those options are against the free market principles and would be difficult to implement.
“We are looking at the policies in place in other countries, such as the Netherlands, which announced that it would introduce a cap on rent increase in certain areas,” AKP officials said.

They noted that the rent increase is quite substantial in some quarters in Istanbul. “Those locations may be identified and a cap may be imposed.”

The other option on the table is increasing the housing supply. In some European countries, companies build commercial units or houses only to rent them for a certain period, and Turkish authorities are considering this scheme.

Officials said that Housing Development Administration (TOKİ) and municipalities could build houses and offer them at affordable rates. The construction cost of the houses to be built under this scheme will be lower due to tax exemptions to be granted.

Authorities are also looking at the problems related to lease contracts and rent increases. According to the existing law, rent should be increased in line with the consumer price inflation for five years, and the increase cannot exceed the inflation rate.

However, after five years, landlords can demand an increase above the inflation rate.

Officials reckoned that due to the rampant inflation, landlords are asking for large raises from tenants and that a mechanism could be set to monitor the rent increases.

Proposals will be presented to President Recep Tayyip Erdoğan and officials later to put the final touches on them before being made public.

The annual consumer price inflation accelerated from 61.14 percent in March to 69.97 percent in April.

A recent study conducted by Endeksa showed that rents across Turkey increased by 95.5 percent over the past year, while the increase was 133 percent in the past four years. Consequently, house rents hit 3,746 Turkish Liras (around $235) on average.

Rents went up by 6.3 percent in January, 13.6 percent in February and 15.7 percent in March, according to the study.

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