Foreign Business Invests Heavily in a Rented Property in Turkey: Can Renovation Costs Be Recovered? (2026 Updated Guide)

A foreign company spends heavily renovating leased commercial property in Turkey. Learn when renovation, fit-out and improvement costs may be recovered from the landlord after early termination, eviction or lease disputes.

Foreign businesses leasing offices, restaurants, hotels, factories, warehouses, clinics and retail premises in Turkey frequently spend substantial amounts adapting the property to their commercial operations. Fit-out expenses can include electrical systems, ventilation, flooring, partitions, kitchens, machinery infrastructure, fire-safety installations and structural improvements. A dispute often begins when the lease ends earlier than expected, the landlord seeks eviction or the tenant is forced to leave before recovering its investment. Whether the foreign business can recover renovation costs depends heavily on the lease agreement, landlord’s consent, nature of the improvements, reason the lease ended and evidence proving the expenditure.

Can a Foreign Tenant Recover Renovation Costs in Turkey?

Potentially, but there is no universal rule requiring the landlord to reimburse every improvement made by a commercial tenant.

The first document to examine is the lease agreement. Commercial leases frequently contain detailed provisions allocating responsibility for fit-out expenses and determining what happens to improvements when the tenant leaves.

Start With the Lease Agreement

Before calculating a compensation claim, examine clauses concerning:

• renovation and alterations;
• landlord approval;
• construction permits;
• fit-out expenses;
• removal obligations;
• reinstatement of the property;
• improvements remaining with the property;
• compensation at termination;
• early termination;
• eviction;
• rent-free fit-out periods; and
• fixtures and equipment.

A single contractual clause can materially affect the claim.

Was the Landlord’s Consent Obtained?

This is often one of the most important questions.

If the landlord expressly approved the renovation project, the tenant’s position may be considerably stronger than where extensive structural changes were made without permission.

Written consent is preferable.

Emails, messages, signed plans, construction protocols and correspondence can also become important evidence.

Verbal Permission Can Create Evidentiary Problems

A landlord may initially encourage the tenant to renovate and later argue that no consent was given.

Foreign businesses should therefore avoid relying exclusively on oral conversations when making major investments in rented property.

Renovation and Ordinary Maintenance Are Different

Not every expenditure is a recoverable improvement.

Painting, routine maintenance and minor repairs should be distinguished from substantial investments that permanently increase the property’s utility or value.

The legal characterization of each expense may affect the claim.

Permanent Improvements Require Special Analysis

Examples can include:

• electrical infrastructure;
• plumbing systems;
• ventilation and air-conditioning infrastructure;
• fire-protection installations;
• structural strengthening;
• permanent partitions;
• flooring;
• industrial utility connections; and
• other construction incorporated into the property.

Whether compensation is available depends on the contractual and factual circumstances.

Movable Business Equipment Is Different

Equipment that can be removed without materially damaging the property should be separated from permanent improvements.

Restaurant equipment, furniture, computers, removable shelving and certain machinery may remain the tenant’s property depending on the agreement and circumstances.

Create an Asset Classification Before Leaving

The business should classify every investment into:

1. permanent improvements;
2. removable fixtures;
3. machinery and equipment;
4. ordinary maintenance;
5. decoration; and
6. landlord-funded work.

This can prevent valuable tenant-owned assets from being abandoned unnecessarily.

Can the Tenant Remove Improvements?

Sometimes.

Whether an item can be removed depends on its nature, the lease agreement and whether removal would damage the property.

A foreign tenant should not dismantle substantial installations without first reviewing its contractual obligations.

What If the Lease Says Improvements Belong to the Landlord?

Commercial leases sometimes provide that alterations and improvements remain with the property at the end of the lease without compensation.

Such clauses can substantially affect a later reimbursement claim and should be analyzed carefully according to the circumstances of the particular lease.

What If the Lease Specifically Promises Reimbursement?

The tenant’s position can be significantly stronger where the landlord expressly agreed to reimburse defined renovation expenses.

The company should preserve the agreement, invoices, payment records and evidence demonstrating that the work falls within the reimbursement clause.

Rent-Free Periods May Be Relevant

A landlord may grant several months without rent because the tenant is expected to finance the fit-out.

In a later dispute, the landlord may argue that the rent-free period already constituted consideration for renovation expenses.

The commercial structure of the entire agreement should therefore be examined.

Early Termination Can Change the Analysis

A business that expected to occupy a property for ten years may invest heavily because it planned to amortize the renovation over that period.

If the lease ends after only one or two years, the tenant may suffer substantial unrecovered investment.

Why the lease ended becomes critically important.

What If the Landlord Wrongfully Terminates the Lease?

If premature termination results from the landlord’s contractual breach or another legally attributable act, the tenant may have a stronger basis for seeking damages arising from the premature loss of its investment.

The claim should distinguish renovation loss from other business damages.

What If the Tenant Terminates the Lease?

If the foreign business voluntarily leaves, recovery may be more difficult, particularly where the lease allocates renovation expenses entirely to the tenant.

However, the reason for termination should still be examined.

A tenant forced to leave because of serious defects or landlord breach is not necessarily in the same position as a tenant simply changing business strategy.

What If the Property Cannot Legally Be Used for the Intended Business?

This can create a significant dispute.

Suppose a foreign company leases premises for a restaurant, clinic, hotel, factory or other regulated business and later discovers that zoning, occupancy, licensing or structural problems prevent the intended operation.

The lease, representations made before signing and responsibility for regulatory suitability should be reviewed together.

Renovation Expenses May Become Part of a Larger Damages Claim

Where the property was represented as suitable for a particular commercial purpose but cannot lawfully be used that way, the tenant may need to consider not only renovation expenses but also rent, relocation costs and other provable losses depending on the circumstances.

What If the Landlord Sells the Property?

A sale of the property does not automatically mean that the tenant’s renovation investment disappears.

The effect on the lease and any compensation claim should be analyzed according to the lease relationship and the circumstances of the transfer.

What If the New Owner Wants the Tenant Out?

A foreign business that has invested heavily in the premises should immediately review the lease, termination grounds, notices and renovation provisions.

The existence of expensive improvements does not by itself create an unlimited right to remain in the property, but it can materially affect the financial consequences of the dispute.

Evidence of Renovation Costs Is Essential

A tenant claiming substantial amounts should be able to prove what was actually spent.

Important evidence can include invoices, bank transfers, contractor agreements, architectural plans, project documents, delivery records, photographs and accounting records.

Cash Payments Can Be Difficult to Prove

Large renovation expenditures paid informally in cash can create serious evidentiary problems.

Companies should maintain formal accounting and banking records for commercial fit-out projects.

Contractor Agreements Should Be Preserved

Contracts can establish the exact work performed, materials used, project price and date.

They can also help distinguish permanent property improvements from removable tenant equipment.

Before-and-After Photographs Are Valuable

Photographs taken before possession and after renovation can demonstrate the extent of the improvements.

Videos, architectural drawings and inspection records can provide additional evidence.

Obtain Evidence Before Vacating

Once the tenant leaves and the landlord takes control, proving the previous condition of the premises may become much harder.

The tenant should document the property comprehensively before returning possession.

Expert Examination May Be Necessary

A court-appointed or independent expert may need to determine:

• which improvements remain in the property;
• whether they increased its value;
• whether they can be removed;
• their current value;
• their useful life;
• depreciation; and
• the extent of any benefit remaining for the landlord.

The original invoice amount is not necessarily identical to the amount that may ultimately be recoverable.

Depreciation Can Matter

A renovation costing a large amount several years earlier may no longer have the same economic value.

The period during which the tenant already benefited from the improvement may become relevant when assessing the remaining loss or benefit.

Added Property Value and Tenant Cost Are Not Always the Same

A tenant may spend a substantial amount on highly specialized decoration that adds relatively little market value to the building.

Conversely, infrastructure improvements may provide long-term value to the landlord.

These concepts should be separated.

Unjust Enrichment May Become Relevant

Depending on the contractual structure and facts, claims concerning the benefit retained by the property owner may require analysis under unjust-enrichment principles.

However, the existence of a lease agreement and its provisions must be considered carefully before relying on such a theory.

Contractual Claims Usually Require the Lease to Be Examined First

Where the parties expressly regulated renovation costs, compensation and ownership of improvements, those contractual provisions can be central.

A claim should not be structured without analyzing the agreement as a whole.

Was the Renovation Required by the Landlord?

The tenant’s position may differ where the landlord specifically demanded certain construction or improvements as a condition of the tenancy.

Preserve written instructions and negotiations showing who requested the work.

Was the Renovation Necessary Because of Property Defects?

Suppose the tenant had to replace defective electrical infrastructure, repair major plumbing problems or correct building deficiencies merely to use the premises.

These expenses should be separated from voluntary aesthetic improvements.

Notice to the Landlord Can Be Important

When defects require urgent expenditure, the tenant should document the defect, notify the landlord and preserve evidence of the response whenever circumstances permit.

Undocumented unilateral expenditure can be more difficult to recover.

Can Renovation Costs Be Deducted From Rent?

A tenant should not simply stop paying rent or deduct construction expenses unilaterally without analyzing the legal basis.

An incorrect set-off or deduction can create rent arrears and potentially expose the tenant to termination or eviction proceedings.

Foreign Businesses Should Avoid Self-Help Measures

Disputes over renovation expenses do not automatically authorize withholding rent, retaining possession indefinitely or damaging installations before departure.

Legal and contractual remedies should be assessed separately.

What If the Landlord Keeps Tenant-Owned Equipment?

Prepare an inventory and evidence of ownership immediately.

Invoices, serial numbers, photographs and accounting records can help distinguish tenant-owned assets from fixtures belonging to the property.

Prepare a Handover Protocol

When leaving the premises, the parties should ideally sign a detailed handover document recording the condition of the property, keys delivered, fixtures remaining, equipment removed and disputed items.

Avoid signing broad waivers without understanding their consequences.

Be Careful With “No Further Claims” Clauses

A termination or handover protocol may contain wording stating that the parties have no remaining claims against each other.

Signing such language can materially affect a later renovation-cost claim.

The document should therefore be reviewed before signature.

Mediation May Be Required Before Litigation

Depending on the nature of the lease dispute and claim, mandatory mediation requirements under Turkish law may apply before a lawsuit can proceed.

The specific procedural route should be determined according to the parties and claims involved.

Limitation Periods Should Be Checked Early

Do not allow negotiations with the landlord to continue indefinitely without reviewing limitation and procedural deadlines.

Different legal bases can involve different limitation questions.

Foreign Companies Should Preserve Turkish Accounting Records

The claimant should be able to demonstrate that renovation expenditures were actually borne by the company.

Invoices and bank payments should correspond with company accounting where applicable.

Currency Loss Can Complicate International Investments

Foreign businesses may have financed construction in euros, dollars or another currency while contractors were paid in Turkish lira.

The contract currency, payment dates and nature of the damages claim should therefore be documented carefully.

Lost Profit Is a Separate Claim

The fact that renovation costs may be recoverable does not automatically mean that projected future profits are recoverable.

Lost-profit claims generally require separate proof concerning causation and amount and can be significantly more difficult to establish.

Relocation Expenses Should Be Documented Separately

If wrongful termination forces the company to relocate, preserve evidence concerning removal, new installation, transportation, temporary storage and other transition costs.

Do not combine every commercial loss into a single unsupported renovation figure.

Review Insurance Coverage

If renovation loss arises from fire, flood, structural damage or another insured event rather than ordinary lease termination, relevant property or business insurance should also be reviewed promptly.

Due Diligence Before Renovating Is Critical

Before spending substantial amounts on leased commercial property in Turkey, a foreign company should verify:

• the landlord’s authority;
• title information;
• permitted use;
• zoning;
• occupancy status;
• licensing feasibility;
• structural limitations;
• condominium restrictions where relevant;
• renovation permissions; and
• contractual reimbursement rules.

A legal review before construction is often considerably less expensive than litigation after termination.

Negotiate an Investment Protection Clause

Foreign tenants making substantial investments should consider contractual provisions addressing what happens if the lease terminates early.

The agreement can potentially establish an amortization schedule under which the landlord compensates the tenant for the unamortized portion of approved improvements if termination occurs for specified reasons.

Use an Approved Renovation Budget

Attach the approved project and budget to the lease or a supplementary protocol.

This reduces later disputes over whether particular works were authorized.

Define Ownership of Every Major Installation

The contract should specify which equipment remains the tenant’s property and which improvements become part of the premises.

This is especially important for factories, restaurants, hotels and medical facilities.

Immediate Action Plan After a Lease Dispute

A foreign business facing termination after substantial renovation should immediately preserve the lease and amendments, collect landlord approvals, secure invoices and bank records, photograph the premises, inventory removable assets, obtain contractor documentation, calculate the unamortized investment, preserve evidence concerning the reason for termination and avoid signing a final handover or waiver before evaluating potential claims.

Frequently Asked Questions

Can a foreign company recover all renovation costs from its Turkish landlord?

Not automatically. Recovery depends on the lease, consent, nature of the improvements, reason for termination and other circumstances.

Does landlord approval help?

Yes. Written approval can be highly important in establishing that the improvements were authorized.

Can the tenant remove its equipment?

Potentially, particularly for removable tenant-owned equipment, subject to the lease and the effect removal would have on the property.

What if the lease says improvements remain without compensation?

That clause can materially affect the claim and should be examined carefully together with the circumstances of termination and applicable law.

Can the tenant recover costs if the landlord wrongfully ends the lease early?

Potentially. Premature termination attributable to the landlord can strengthen claims for provable losses, depending on the contractual and factual circumstances.

Is the original renovation invoice enough to prove damages?

Not necessarily. Current value, depreciation, remaining useful life and the nature of the improvement may also become relevant.

Can renovation costs simply be deducted from rent?

A tenant should not make unilateral deductions without establishing a proper legal basis because this can create a separate rent-default dispute.

What should the tenant do before leaving?

Photograph the premises, inventory equipment and improvements, preserve invoices and approvals, document the handover and review any settlement or waiver before signing.

Can the landlord keep machinery purchased by the tenant?

Not automatically. Ownership and whether the item became part of the property should be determined from the agreement, nature of the installation and surrounding facts.

What is the most important protection for a foreign business before renovating?

The lease should expressly regulate landlord consent, ownership of improvements, removal rights and compensation for the unamortized investment if the lease ends early. Spending heavily first and negotiating these issues later substantially increases the risk of litigation.

Client-Focused Legal Support for Commercial Lease and Renovation Disputes

A foreign business that invests heavily in rented commercial property can face substantial losses if the lease ends before the investment is recovered. Fırat Fesih Kaya Law Office assists foreign companies, investors, landlords and commercial tenants in Turkey with disputes involving commercial leases, early termination, eviction, renovation and fit-out costs, tenant-owned equipment, property defects and compensation claims. Lawyer Fırat Fesih Kaya provides legal assistance in reviewing lease and renovation agreements, preserving evidence, calculating potential claims, conducting negotiations and mediation, and pursuing or defending commercial lease litigation.

Phone: +90 312 434 22 22

Mobile: +90 532 769 22 22

Email: info@firatfesihkaya.av.tr

Address: Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey