Rental trends in Türkiye and Istanbul 2025-2026: How has the law changed? And have long-term rentals become a profitable investment?

Introduction

The rental market in Turkey especially in Istanbul has witnessed major developments over the past three years, both in terms of legislation governing lease contracts and actual market prices. After many years in which long-term rentals were less profitable due to high inflation and fixed annual increases, 2025 came with legal changes that have had a clear impact on investors, property owners, and tenants alike.

As real estate investments enter a new phase based on monthly and annual increases linked to inflation averages, it has become essential to understand how rent increases are calculated and how investors can benefit from this new system to achieve higher and more stable returns.

The New Rental Increase Law: What Has Changed?

For many years specifically since 2022 annual increases in residential rents in Turkey were capped at 25%, regardless of inflation. This cap was a temporary exception imposed by the government to protect tenants during a period of high inflation.

However, at the beginning of 2024, this exception expired, and the original law was reinstated, based on a key principle:

The annual rent increase is calculated according to the average annual inflation rate (CPI – TÜFE) over the last 12 months.

As a result, rent increases became directly linked to economic indicators, meaning rents now rise in line with actual inflation rather than a fixed percentage. This change helped restore balance between landlords and tenants and increased the real return on rental investments.

Monthly Rental Increase Rates in Turkey During 2025

The following data shows the rental increase rates adopted by the Turkish government for residential properties, based on the 12-month average Consumer Price Index (CPI – TÜFE). These figures represent the maximum legal limit that landlords can apply when renewing a lease contract.

Monthly Rent Increase Report (2025):

• January 2025: 58.51%
• February 2025: 56.35%
• March 2025: 53.83%
• April 2025: 51.26%
• May 2025: 48.73%
• June 2025: 45.80%
• July 2025: 43.23%
• August 2025: 41.13%
• September 2025: 39.62%
• October 2025: 38.36%
• November 2025: 37.15%
• December 2025: 35.91%

What Do These Rates Mean in Practice?

• These percentages are not applied automatically; they are used only when renewing an annual lease contract.
• The agreement between the landlord and the tenant may be higher or lower than the legal cap.
• These values reflect a significant annual increase compared to previous years when increases were frozen at 25%.
• Such increases have a direct impact on investment returns, especially in major cities like Istanbul.

Analysis: Why Were Long-Term Rentals Previously Unprofitable?

Between 2018 and 2022, inflation in Turkey rose sharply, while annual rent increases remained limited to low rates and were later frozen at 25% for more than two years.

This resulted in a clear imbalance:

• Inflation exceeded 60%–70% in some months.
• Rental contracts increased by only 25%.
• The real value of rent declined when adjusted for purchasing power.
• Many landlords earned low returns compared to the market value of their properties.

Example:

If an apartment rent was 10,000 TRY and increased by only 25%, it became 12,500 TRY, while actual inflation was 60%. This means the landlord effectively lost around 35% of the real annual return.

2025: A Turning Point That Made Rental Investment Profitable Again

With the return to an inflation-linked increase system (CPI – TÜFE) and rates exceeding 50% in the first half of 2025, the market landscape changed entirely:

• Rent levels now keep pace with or closely follow inflation, preventing erosion of returns.
• Actual rental yields increased to 6%–8% in many areas of Istanbul.
• Some central districts reached yields of 9%–10%.
• Market rental prices exceeded legal increases due to strong housing demand in Istanbul.
• Investors returned to purchasing properties for long-term leasing after years of absence caused by weak returns.

Why Are Rents Rising So Strongly in Istanbul?

1. Increased Demand vs. Limited Supply

Istanbul has a population exceeding 16 million. With a slowdown in housing projects during 2023–2024, supply became limited compared to demand.

2. Rising Construction Costs

Global increases in construction material prices raised the cost of new properties, which in turn pushed rents higher.

3. Internal and External Migration

Population inflows to Istanbul continue from other Turkish cities and abroad, especially students, employees, and the middle class.

4. New Transportation Projects

Projects such as the Bağcılar–Mahmutbey–Istanbul Airport metro line and infrastructure upgrades increase the value of surrounding areas.

Real Investment Return Examples in Istanbul (2025)

Example 1: Apartment in Istanbul – Kağıthane

• Rent in 2023: 15,000 TRY
• 2024 increase: capped at 25% → 18,750 TRY
• 2025 increase (12-month average): approx. 43% → 26,812 TRY

Annual rental income rose from 180,000 TRY to 322,000 TRY within two years—an increase of 79%.

Example 2: Apartment in Istanbul – Başakşehir

• Rent in 2022: 8,000 TRY
• By 2025, average rent reached 17,000–19,000 TRY

This means rental income nearly doubled within three years.

How Can Investors Benefit from Long-Term Rentals Today?

1. Buy Property in High-Demand, Developing Areas

Such as:

• Maslak
• Kağıthane
• Zeytinburnu
• Beşiktaş
• Başakşehir (new districts)
• Florya
• Topkapı

These areas experience higher-than-average rent growth compared to the rest of the city.

2. Rely on the New Increase Law

Annual inflation-linked increases create a steadily growing return year after year.

3. Furnished Rentals Generate Higher Returns

In Istanbul, furnishing a property can increase returns by 15%–30%.

4. Carefully Select Tenants and Use Legally Sound Contracts

Why Renting in 2025–2026 Is Better Than Previous Years

1. New Increases Reflect Real Market Conditions

Unlike the frozen 25% cap, which was unfair to landlords.

2. Improved Real Returns Despite Inflation

Since rents rise with inflation, purchasing power is preserved.

3. Continuous Growth in Housing Demand in Istanbul

Which pushes prices upward.

4. Market Rents Exceed Legal Levels

In many districts, increasing profitability.

Al-Hafez Real Estate Services in Rental Management

The Role of Al-Hafez in Ensuring Safe and Legal Returns

Al-Hafez Real Estate offers comprehensive solutions for investors seeking stable and secure rental returns in Turkey through:

• Managing and renewing lease contracts in compliance with modern Turkish laws.
• Accurately determining annual increases based on official inflation averages.
• Professionally managing landlord–tenant relationships to protect both parties’ rights.
• Providing detailed studies of average rents by area and comparing them with expected returns.
• Monitoring all legal updates related to rentals in Turkey and Istanbul.

The Legal Team at Al-Hafez

The company has a fully integrated legal team specializing in real estate and rental laws in Turkey, responsible for:

• Reviewing and drafting contracts correctly.
• Resolving legal disputes when they arise.
• Ensuring tenants comply with payment obligations within the legal framework.
• Protecting investors from legal risks that may affect returns or property ownership.

This makes the leasing process more secure and increases investor confidence—especially for foreign investors who require close monitoring of all details.

Conclusion

Turkey and Istanbul in particular experienced a fundamental shift in the rental market in 2025 with the reinstatement of annual increases based on average inflation rather than a fixed cap. This change revitalized long-term rental investments, improved real returns, and created significant opportunities for investors seeking stable and sustainable income.

With strong ongoing demand in Istanbul, substantial monthly rent increases, and precise legal oversight from specialized companies such as Al-Hafez Real Estate, long-term rental investment has become safer and more profitable than ever before.

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