(Bloomberg) —
Turkey aims to cap annual increases in home rentals at 25% as a surge in inflation pressures the government a year ahead of scheduled elections.
Anger is deepening over soaring rents, which online marketplace sahibinden.com said rose an average 147% in Istanbul for new tenants who signed deals in May.
Landlords are attempting to evict occupants and sign up new ones at much higher prices, with the number of lawsuits launched against tenants doubling, Sozcu newspaper reported in April.
Justice Minister Bekir Bozdag said on Wednesday that officials would include a new clause in the code of obligations stipulating the change, which might apply from July and would run for a year.
Under current law, once-a-year price hikes for existing tenants are capped at the average annual rate of inflation over the past 12 months.
In May, that level stood at 39.3% and is set to jump further.
Consumer inflation last month surged to 73.5% and President Recep Tayyip Erdogan has signaled there’s little chance of the central bank raising interest rates anytime soon as he seeks to boost the economy before seeking re-election.
Turkey Will Continue Cutting Interest Rates, Erdogan Says
“This is not a normal market anymore,” said Nizameddin Asa, head of an association of Istanbul realtors.
“Over the past three months, we’ve seen fights, threats, intimidations and lawsuits. Both the landlord and the tenant are right, both have been struggling to make a living.”
Inflation Is Erdogan’s Old Nemesis and His Key Rival Standing
A parliamentary whip for Turkey’s main opposition party said the rental cap “embodies the bankruptcy of a 20-year-long economic policy” focused on helping the construction industry.
Engin Altay of the Republican People’s Party urged the president to instead “cap hikes in natural gas, diesel and electricity.”
(Updates with opposition reaction in final paragraph.)
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