Will the Old Rent Law Ever Change?
Old rent law continues to be a controversial topic that’s difficult to navigate without negatively impacting either the landlord or the tenant.
Old rent law remains to be an issue that’s talked about as it affects almost half of the rented properties in Egypt.
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This law was implemented in 1964 as a form of rent control to
make housing affordable by not allowing landlords to increase the prices of their properties. In 1996, a new rent law was issued that removed any type of control over the prices of newer or vacant properties.
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Old rent law allows the tenants to be paying prices as low as seven Egyptian pounds and allows the rented property to be inherited by the tenant’s wife or children. It also doesn’t allow the landlord to evict the tenant.
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Many landlords see this law as unfair and want it to change. However,
abolishing old rent law might cause many tenants to become homeless
as many Egyptians can’t afford to pay the current prices of rent.
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“Ideally, rent should make up a third or a quarter of someone’s salary […] But today you could find a normal property that’s priced at 6000 pounds for no reason. That means that the tenant should have an income of 18,000 pounds,” Omnia Khalil, co-founder of a research space called 10Tooba, said.
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Almost 75 percent of the population in Cairo can’t afford to pay the median rent, which is around 1100 Egyptian pounds.
Every few years a proposal gets submitted to the parliament in hopes of changing the law, but it often gets dismissed due to worry that the changes could negatively impact one of the parties involved.
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Last year, the House of Representatives’ Committee for Housing and Utilities approved a bill to amend the old rent law for non-residential areas. Another proposal was submitted by Economist Walid Jaballah in February 2021 to change certain regulations enforced on the landlords.
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His proposal states that the tenant could be evicted if the property has been closed for three years since this indicates that the property is no longer needed. The only exception would be if the tenant is living abroad.
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“We assume that, as Egyptians, they will eventually come back to Egypt and will need a place to stay,” Jaballah said.
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A tenant would also be evicted if three years have passed since they obtained a building permit in their spouse’s, minor children, or their own name since this indicates that the tenant has alternate housing.
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Mostafa Emadeldin, a landlord who owns a property under old rent law, hopes that these two suggestions will come into effect as he mentioned that in the building he owns, most of the tenants have other houses or are not using the apartment.
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“There has to be a way for the government to accurately measure whether the tenant needs the apartment or not. It isn’t fair to us as landlords that they continue to hold on the rented property because the price is so cheap,” Emadeldin said.
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The third case is related to the inheritance of the property. It states that the children of the writer of the original lease would only be allowed to stay 50 years in that property to give them sufficient time to adjust their living situation and move out.
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Jaballah’s proposal also has different methods to determine the values of old rents.
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“I understand that not all cases are the same and it isn’t fair to try and change the pricing in general. That’s why I included three different options. Depending on the circumstances of the tenants the rent may differ,” Jaballah said.
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Some of the suggestions would be setting a minimum rent of 200 pounds with an annual increase of 10 percent or calculating the average of what was paid for in gas, water and electricity utilities in the year preceding the implementation of the law and set that number to be equal to the rent.
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Khalil states that raising the price of rent according to the price of water, electricity, and gas might still be unfair to the tenant.
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She continues to say that the price of water is mostly stable in all places in Egypt. However, she points out that people who don’t have access to clean water will have to buy water suitable for drinking which adds to their monthly spending.
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She suggests that the rent would be based off the tenant’s income. However, to be able to do this, Khalil says that a database containing the information of everyone in old rent properties and the income of the tenants living there will be needed.
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“But then does it make sense that in the same building one person would be paying 400 pounds, and another would be paying 2000 pounds? Is that justice? For me, I’d say yes, but that’s if we’re socialists; whoever can pay should, and those who can’t, shouldn’t,” Khalil said.