Serviced Apartments Business Model With Hotel Consept And The Lack Of Legislation İn Turkish Law Regarging This Business Model

November 8, 2023

1. WHAT IS THE SERVICED APARTMENTS?

 

 

Serviced apartments are a leasing business model that has increased in number in our country in recent years. In this business model, the independent units are sold to the buyers then the independent units subject to the sale are subleased from the Owner by a contractor or a manager company (‘’Manager’’). The leased independent units are used short- and long-term accommodation in the hotel concept on a daily, weekly, and monthly basis. In this business model, the Manager carries out both the leasing of the independent units and the management of the common areas.

2. WHAT ARE THE MANAGEMENT MODELS IN SERVİCED APARTMENTS?

 

In the serviced apartments business model, the Landlord leases the independent unit registered in his name to the Manager. The Landlord is entitled to the rental income in line with the management model to be determined by the Manager. In this management model, pool system and independent unit-based system are the most common management models. The main difference in these models is the calculation method used apportion the rental income to be received by the Landlord.

 

1. In the pool system, the revenue from the leasing of all independent units in the project is collected in a pool. First of all, certain expenditure items are deducted from the pooled amount as expenses and the remaining amount is divided in proportion to the goodwill of the independent units then the rental income to be paid to the Landlord is calculated.

 

2. In the independent unit-based system, certain expenditure items are deducted as expenses from the revenue obtained by leasing the relevant independent unit and the remaining amount is paid to the Landlord as rent.

 

The expenditure items to be deducted from the revenue include the expenses incurred for the management of the independent units. In addition to the expenses related to the essential services such as electricity, heating, water and cleaning, these expenditure items may vary in line with the provided facilities.

 

The important point here that the Manager manages the leasing of the independent units in the main real estate and carries out the management services of the main real estate. In this case, the Manager shall receive the service fee due to the management of the leasing in the main real estate.

3. IS THE SERVİCED APARTMENTS A TOURISM/ACCOMODATION BUSINESS?

 

 

The serviced apartments business model is not a tourism/accommodation business. In tourism/ accommodation model, the Manager is the owner of the facility and all income generated from the accommodation service provided to the guest belongs to the Manager.

 

In serviced apartments, each independent unit in the main real estate where condominium ownership has been established is subject to the sublease by leasing the real estate from the relevant Landlord. The Manager manages the leasing services of the independent units and provides management services such as cleaning, maintenance, and security of the main real estate. The revenue from the leasing service and the management of the facilities in the project are shared between the Manager and the Landlord at the determined rates.

 

 

4. THE RELATIONSHIP BETWEEN SERVICED APARTMENTS and SHORT-TERM RENTAL

 

Pursuant to the Turkish Code of Obligations (‘’TCO’’), shor-term lease is regulated within the scope of the lease of an independent unit for 6 (six) months or less. In addition, the Regulation on the Amendment of the Regulation on the Implementation of the Identity Information Law (‘’Regulation’’) published by the Ministry of Interior in the Official Gazette dated June 17, 2022, and numbered 31869 includes the definition of ‘’daily rented house’’. Pursuant to the Regulation, houses rented on a daily basis are referred to as accommodation businesses or facilities such as hotels, motels, hostel, etc. by being used as a residence or operated as an workplace.

 

With the Circular of the Ministry of Interior dates 26.11.2013, the definition of accommodation was made, and it was stated that the aforementioned places are workplaces subject to the provision of the ‘’Regulation on Workplace Opening and Management Licenses’’. It is regulated that these workplaces must obtain opening and working license from the administration and that these places shall be sealed and closed as a result of a contrary practice.

 

As explained, the lease relationship is regulated under the TCO, and there is no complete regulation under the Turkish Law regarding the lease made within the scope the serviced apartments business model. Therefore, there is no authority to control the quality and control of the provided service, and issues such as the inability to report the identity of the accommodation guests to the relevant institutions a problem in terms of security.

 

CONCLUSION

 

Serviced apartments are an increasing number of business models in our country in recent years. The Manager is leases the sold real estate from the Landlord and sub-leases for short and long-term periods as daily, weekly, and monthly in this business model. This type of business is not within the scope of a tourism/accommodation service as it is a rental of independent units subject to the condominium ownership. Therefore, the business is carried out without having a license or permit, in other words, there is no control mechanism for the management.

 

 

The fact that the business model is carried out without a license or permit prevents the service from being provided within a certain standard and security.

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