Turkey's removal of restrictions on rent increases raises concerns about further hikes in rental rates and inflation. The Ministry of Finance announced that starting in July, limits on rent increases will be lifted, despite current economic difficulties. The 25% cap on annual rent increases was introduced in 2022 and extended for a second year to alleviate inflationary pressure on households.
However, even with these restrictions, housing costs in Turkey have risen significantly. In May 2024, housing prices increased by 93% year-on-year, surpassing the overall inflation rate of 75%. Eurostat also reported that Turkey topped the list of countries for rent increases over the past year, with a rise of 125%.
Expert opinions are divided. Nizamettin Aşa, the chairman of the Istanbul Chamber of Real Estate, believes that lifting the cap will not significantly impact the market, as the supply of rental properties is currently quite high. However, economist Ahmet Büyükduman warns that high interest rates and difficulties in purchasing homes will sustain rental growth in the short term.
There are also concerns that new taxes on rental income, which the government plans to implement, could lead to further increases in rental prices. Despite this, some studies indicate that rental rates in major cities have already begun to decline when adjusted for inflation. However, it remains unclear whether this trend will continue, especially in light of the potential introduction of new taxes and the removal of restrictions.
