Rents for Business Premises in Turkey

A lease agreement can be defined as a contract in which the lessor undertakes to leave the use of a thing or the use and benefit from it to the lessee, and the lessee undertakes to pay the agreed rental price in return.

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In Turkish law, lease agreements are regulated under the Code of Obligations. The Code of Obligations regulates lease types under three main headings: ordinary leases, residential and roofed workplace leases and product leases.

The definition of residential and roofed workplace is defined under Law No. 6570 on Real Estate Leases, which is not in force today, and this definition has been preserved and applied by Turkish jurisprudence. Accordingly, residential and roofed workplace refers to masonry real estates (excluding those without roofs) in municipalities, piers, harbours and stations.

What Is A Bussiness Rent?

A workplace can be defined as a place where professional or commercial activity is carried out. Accordingly, if a place is rented for the purpose of carrying out professional or commercial activities, workplace rents can be mentioned.

It can be also referred to as commercial rents or workplace rents as well.

Which Workplaces Can Be Considered As Roofed Workplaces under Turkish Law?

According to the jurisprudence of the Court of Appeals, the dominant characteristic of the workplace and the person in the workplace are evaluated in determining whether the rent of a workplace falls within the scope of a roofed workplace. In many cases, the Court of Appeals, while determining the dominant characteristic, calculates the square metres and concludes that if the open area is more than the square metres, then the dominant characteristic is unroofed.

If we give examples, workplaces in the form of apartments or plaza floors, stores in shopping malls, multi-storey car parks with or without roofs, and roofed warehouses will be considered as roofed workplaces.

On the other hand, workplaces suitable for uses such as open car parks, open-air cinemas, open-air entertainment venues, and concert areas will not be within this scope.

On the other hand, workplaces such as fuel stations, which have both open and closed spaces, are not considered roofed workplaces in accordance with the case law of the Court of Appeals.

What Are The Differences Between Ordinary and Roofed Workplace Rents?

There are distinctive provisions in the aforementioned Law in terms of housing and roofed workplace agreements and ordinary lease agreements. In ordinary lease agreements, if the tenancy relationship continues despite the expiry of the fixed-term lease agreement, then the lease agreement may turn into an indefinite-term lease agreement. On the other hand, in the lease of residential and roofed workplaces, if the lease agreement is not terminated by the lessee with 15 days prior written notice, the contract will be deemed to be extended for 1 year under the same conditions. In ordinary leases, unless otherwise agreed in the contract, the lessee may sublease the leased property. However, it is not possible for the lessee to sublease the leased property without the written permission of the lessor in the lease of residential and roofed workplaces.

In addition to all these, if the lease is within the scope of residential and roofed workplace lease, in accordance with the principle of “prohibition of regulation against the lessee”, the provisions of the Law in favour of the lessee in residential and roofed workplace leases are mandatory and the provisions of the contract made against them cannot be valid.

Which Points Should Be Considered When Making A Workplace Rent Agreement in Turkey?

In light of the above, it is important to first determine the nature of the place to be rented. Also, a comprehensive business premise rental contract should include details such as the identification of parties, property description, lease term, rent amount and payment details, maintenance responsibilities, termination conditions, and dispute resolution mechanisms. Additionally, specify the permitted use of the premises, insurance requirements, security deposit terms, and any unique provisions agreed upon by both the lessor and lessee.

Form of Contract:

In workplace leases, it should be preferred that the contract be in writing in order to prove its proof. In addition, depending on the need, it may be decided that the contract will be notarized or prepared by a notary.

The form of the contract is also important in terms of annotating the lease contract to the title deed. In real estate leases, it is possible to annotate the lease relationship in the land registry. In this way, the tenant can claim the lease agreement and its separate conditions against the new owners of the leased property. If the lease agreement is drawn up in the presence of a notary, it is possible for the tenant to make an annotation to the title deed with a unilateral application. If the contract is not drawn up in the presence of a notary, both the tenant and the lessor must apply to the title deed together in order for the lease agreement to be annotated in the title deed.

Party Information:

Party information must be included in the lease agreement. It will be useful to write the location information of the party and the leased person accurately and completely in the contract. Particularly the parties; If it is a company, documents such as tax certificates and signature circulars can be added to the lease agreement.

Surety:

By law, there is no obstacle to obtaining the rent with a guarantor. If there is a guarantor, their identity information must be added as they will be responsible like the tenant. However, for the guarantee to be valid, the upper monetary limit and duration of the guarantee must be clearly determined in the contract. Otherwise, the provisions regarding guarantee within the scope of the contract will be invalid.

Rental Fee and How It Will Be Paid:

The rental fee is one of the essential elements of the contract. Accordingly, it is important to write the net monthly and annual rent figures in the contract.

It should also be noted that; With Article 8 of the Bulletin on the Decision No. 32 on the Protection of the Value of the Turkish Currency (Bulletin No: 2008-32/34), Turkish residents are required to determine the rental fee and other payment obligations in foreign currency or indexed to foreign currency in the real estate rental contracts they will conclude. It is prohibited as a rule. Accordingly, the rental fee must be determined in Turkish Lira.

Although there are some exceptions to this prohibition, within the scope of these exceptions, in lease agreements where the rental fee is determined in foreign currency, there is a regulation stating that the rental fee will be changed in foreign currency unless 5 years have passed since the contract, provided that the provisions of the Law No. 1567 on the Protection of the Value of Turkish Currency are reserved. Determination with units has become disadvantageous. After 5 years, it is also possible to re-determine or update the rental fee through litigation, taking into account the change rate according to the CPI 12-month averages, the condition of the leased property, comparable rental prices and the change in the value of foreign currency.

Additionally, how the rent will be paid should also be written into the contract. According to Turkish legislation, it is mandatory for workplace rentals to pay the rent to the bank. For this reason, it is important that the bank account information to which the rent will be deposited is also included in the contract. In lease agreements, the parties can choose the rent payment time as they wish; annual, monthly or several-month periods; They can decide. It is important that the specified payment times are written into the contract.

Rent Increase Rate

Another important issue in lease agreements is the rent increase rate. The law does not allow the parties to freely determine the rent increase rate in residential and roofed workplace lease agreements and has introduced regulations that protect the tenant. Accordingly, the parties may determine the rent increase rate in the contract, provided that it does not exceed the rate of change in the consumer price index based on the twelve-month averages in the previous rental year.

Redetermination of the rental fee by the judge is only possible after 5 years have passed within the scope of the same contract.

Condition and Fixtures of the Leased Property:

Another important point is to write down the condition of the leased property at the time of the contract and the fixtures, if any. This issue is important for both parties in terms of how the leased property will be delivered at the end of the lease agreement.

Rental Period:

The duration of the contract must also be specified in the lease agreement. Generally, one-year periods are preferred. In this way, the determination of rental periods becomes easier and procedural errors are prevented in rent determination and eviction cases.

Penalty Clause:

In residential and roofed workplace leases, it is prohibited to impose any payment obligation on the tenant other than the payment of the rent and side expenses (heating, lighting, cleaning, security expenses for common areas, etc.). Accordingly, regulations stating that if the rent is not paid on time, the tenant will pay a penalty and the rent for other months will become due will be invalid.

Deposit:

The deposit, also known as the security fee, is one of the important elements of the rental agreement. Details of the deposit received as a security for the owner, how much it is and how it is given, should be written in the contract. The law states that the deposit can be a maximum of 3 months’ rent. Accordingly, the amount of the deposit received, the currency in which it was received, whether it was cash, promissory note, or check, and how it was given must be recorded in the contract.

Taxes:

Some taxes may arise from the rental relationship. The first that comes to mind among these taxes are withholding tax, real estate, environmental and stamp taxes. It must be stated who will pay these and/or other taxes and how they will be paid. Traditionally, taxes arising from the leased real estate are left to the lessor, while taxes arising from its use are left to the tenant.

Conclusion

In conclusion, guiding the complexness of business premise rents in Turkey requires a comprehensive understanding of the legal framework governing lease agreements. The Code of Obligations, particularly under the scope of residential and roofed workplace leases, establishes specific regulations that differentiate them from ordinary lease agreements.

In preparing the contract, the nature of the workplace, contract form, party information, surety regulations, rental fees and payment methods, rent increase rates, conditions and fixtures of the rented property, rental periods, penalty terms and determination of deposits stand out as the main issues. Complying with Turkish legislation, such as regarding the prohibition of determining rental fees in foreign currency, is crucial. Ensuring adherence to these legal nuances will contribute to a secure business premise rental arrangement under Turkish Law.

For further guidance on these legal aspects, consult our law firm’s expertise in real estate and business law.

How We Can Assist You?

As Viridis Legal Partners, we understand the complexities and nuances involved in the legal landscape of business premise rents in Turkey. Our team of real estate attorneys and business lawyers in Istanbul provides tailored assistance to ensure that your business premise rental agreements comply with Turkish legislation and legal standards. Whether you need guidance on drafting comprehensive lease agreements, reviewing rental agreements, or navigating legal implications associated with the rental relationship, our lease agreement specialist attorneys are here to assist you. Our commitment is to provide you with thorough legal support, ensuring transparency, security, and compliance throughout the entire process.

Contact us today to benefit from our expertise and ensure a smooth and legally sound business premise rental experience tailored to your specific needs.