Should the government investigate rising rental costs?

Should the government investigate rising rental costs?

At the moment rental prices or more specifically the increase in rent, is the main topic of discussion around Turkey. Rental prices have increased exponentially these past few months. 

Data from Bahcesehir University Centre for Economic and Social Research has revealed that rent inflation in Turkey in July is at 28.2% however, in Ankara it is 30% and in Istanbul it is 42.3%. Prices seem to be rising uncontrollably especially after lock down eased and schools returned to face to face teaching. Whilst the rate of increase in rents in Turkey is rising, it seems to be echoed the same around the world. 

Global Increase 

According to a report from a real estate website, in the USA, housing prices reached the highest levels seen in the last thirty years. Rent increased by 11.3% within the first six months of the year but under normal circumstances the USA increases rent by around 3%. Ninety-eight of America’s largest cities exceeded the pre-pandemic levels. 

In the UK, reports from real estate companies reveal that the annual price increase for new tenants was 6.6% in July. Rents in London did not increase by anything but negligible amounts during the pandemic period, this rate increases by 8.8%. 

In all the largest cities globally, the increases in rental prices have exceeded inflation and therefore wage increases. The gap between increase in salaries of wage earners and the increase in rent is leading to a severe housing crisis, particularly in countries where home ownership is low. 

What can we do to control this? 

Well different states can implement different measures. Interventions have been a huge subject of discussion in places like Germany and China. So, one of the measures which Turkey implements is where there is a free bargaining process at the beginning of the transaction and then a limit is placed on the amount the rent can increase after the tenant has moved in. This is the most common form of control as Turkish rates are determined by the CPI (Consumer Price Index) wheras in a country like France the rates are determined by the Construction Cost Index. 

Ceiling Prices 

This is a system whereby states try to protect the tenant by setting a maximum rental fee. This is usually determined as a percentage over the value of the property. This method is still being used by Sweden and parts of the USA. 

Rent Freeze 

This method is generally used to halt the progress in rising rental prices. Using this system means that rent is prohibited from increasing. Berlin attempted to use the system and froze rents for five years. However, the Federal court decided that this was unconstitutional and unlawful. This has resulted in tenants having to pay back huge amounts of money. Some countries have chosen to use rent freezing options for the most disadvantaged citizens in their country such as the USA, Philippines and the Czech Republic. 


In September 2020, the Catalonian Parliament decided to regulate leases. In regions where rental prices exceed the average household income, rent ceiling price application was started. It was decided that rent should not exceed the increase in the previous five years. Low-income families were exempt from this law. It is thought that this new law would limit investors and large property owners. 

New York’s Measures 

In New York city rents increased exponentially during the Corona virus pandemic. So, the Rental Rules Board froze the rent for more than one million rental apartments for a one-year time period. This freeze is due to expire on September 30th. Some areas of New York City have rent ceilings in place and the decision taken last year was only valid for residences where rent controls were in place. 


London is one of the highest cities in the Uk, closely followed by Newcastle and Bristol, to have out of control rental prices! The Uk is experiencing a severe housing crisis with the average cost of rent in inner London at £2,219 per month and outer London at £1,723. These prices are unaffordable for so many people on low and middle incomes. The Mayor of London, Sadiq Khan, has proposed a number of measures that he would like to implement if he is re-elected. He also wants low rent to be capped for London’s Key workers. 

From this we can ascertain that the whole world is experiencing high rental problems. It remains to be seen which government will succeed in controlling these spiralling costs and bring stability to the rental markets.