Recent Development

The Ministry of Treasury and Finance (“Ministry”) published a press release regarding agreements denominated in foreign currencies or indexed to foreign currencies. The press release includes answers to frequently asked questions (“FAQs”).

The FAQs provide a sample calculation for the conversion of foreign currency payments into Turkish lira including the calculation of the CPI monthly rate changes, lease year, increase rate at the end of the lease year and the following lease years. (Please click the following link to reach the FAQs, in Turkish: https://hazine.gov.tr/sikca-sorulan-sorular-dovize-endeksli-sozlesmeler?type=icon)

The CPI monthly rate changes will be calculated based on the cumulative total of the CPI monthly rate changes, as indicated in our previous Legal Alert. Please click here to reach our previous Legal Alert. The majority of the real estate market disagrees with this CPI calculation. ​

Conclusion

If the parties to lease agreements denominated in foreign currency or indexed to a foreign currency fail to agree on a conversion rate to Turkish lira, the parties should consult the sample calculation the Ministry shared, for the determination of rent amount until the end of current lease year and the following lease years.