Egypt to review ‘unconstitutional’ decades-old rent law

Egypt’s lower-house of the parliament is slated to amend an over 40-year-old rent law related to residential units following a recent ruling deemed the much-criticised legislation as “unconstitutional”.

On 9 November, the Egyptian Supreme Constitutional Court annulled the first two articles of Law 136 of 1981 that regulates the tenant-landlord relationship, dubbed “the old rent law”.

Law 136 of 1981 dictates that the rental value can only be raised annually by 7% based on the price of land at the time the construction licence was granted, failing to take into account economic variables such as inflation and currency devaluation.

In the reasons of the judgment released on Sunday, the constitutional court said the articles in question are “unfair” to landlords, constitute “a violation” of their “ownership rights,” and are “against the Islamic Sharia law.”

The verdict is final and cannot be appealed.

Islamic Sharia law is the basis for legislation in the predominantly Muslim country, as dictated by the Egyptian constitution.     

‘Historic responsibility’ 

“We currently have a historic responsibility towards amending the ramifications of the law…in a way that guarantees the rights of all parties involved, the tenants and the landlords,” Parliament Speaker Hanafi El-Gebali said during a televised parliamentary session a few hours after the ruling. 

Gabali noted that a joint committee would be formed between the parliament’s housing, development, and public utilities committee and the local, constitutional, and legislative affairs offices.

“The joint committee will be tasked with conducting a comprehensive and detailed analysis of the reasons’ judgment […] to reach suitable alternatives based on vigilant methodology,” he told MPs.

The speaker added that the parliament will seek the opinions of top officials, including the ministers of housing, utilities, and urban communities, justice, and social solidarity

To obtain accurate data, the parliament will also seek input from the head of the National Council for Human Rights and the head of the Central Agency for Public Mobilisation and Statistics, as well as professors of law and sociology

The House of Representatives is expected to release an amendment to the law that regulates the tenant-landlord relationship within the next eight months, marking the remaining part of the parliamentary round, the head of the Housing Committee, Mohamed Attiya El-Fayoumy, told local news outlets.

Last year, Egyptian President Abdel Fattah al-Sisi raised the on changing the rent law on several occasions, urging the parliament to review the rather controversial law which he described as “unfit for the era”.

Sisi argued the old rent law was impeding the use of up to two million residential units worth about one trillion Egyptian pounds. A US dollar equals 49.40 EGP at the time of publication.

However, regime critics argue that Egyptians refraining from buying units built in remote areas and the suburbs prompted Sisi to push for a law amendment.

Unclear who will benefit

In recent years, supply has exceeded demand for residential units amid an economic crisis in Egypt. 

There is no accurate data on rental units in Egypt, because lease rights have been extended to next of kin in most cases. But it is believed they account for nearly 1,800,000 units, almost 450,000 of which are unoccupied.

It remains unclear what criteria the new rental value of units will be based on after the law is amended, amid concerns among limited and average-income tenants who for decades reside in units worth millions of pounds for limited leases.

One tenant, an 81-year-old retiree, told The New Arab that he has been living in his place in northern Cairo‘s overpopulated middle-class Shoubra neighbourhood for over half a century.

“I receive a monthly pension of almost 5,000 pounds [about US$101] that hardly covers anything now. I am not sure how much the rent will increase after the law is amended,” he said, on condition of anonymity.

“I admit this is unfair to the landlord, his heirs, and almost all landlords in the country. But this has been the situation since we were born,” he added. 

When approached by TNA, several landlords declined to comment, saying they want to wait to see what happens with the law. 

Whether the amendments will be of any satisfaction to real estate owners is also subject to speculations in the coming months as the debate rages on in the Egyptian parliament.