Arab Finance: The effects of the issuance of the ruling you issued Supreme Constitutional Court In Egypt, the unconstitutionality of the first paragraph of both Articles (1 and 2) of Law No. 136 of 1981 regarding some provisions related to renting places and regulating the relationship between the landlord and the tenant created a state of satisfaction among landlords at a time when some fears leaked among tenants for fear of… Rents for residential units are excessively high.
The Supreme Constitutional Court in Egypt, headed by Counselor Boulos Fahmy, had issued a ruling last Saturday, November 9, 2024, that the first paragraph of both Articles (1 and 2) of Law No. 136 of 1981 regarding some provisions related to renting places and regulating the relationship between landlord and tenant. . What they included regarding the stability of the annual rent for places licensed to be established for residential purposes as of the effective date of the provisions of this law. The court set the day following the end of the current regular legislative session of the House of Representatives as the effective date of its ruling.
According to the monthly bulletin of the Central Agency for Public Mobilization and Statistics in October 2024, a copy of which was obtained by Arab Finance, the inflation rate for the actual rent for housing in 2019 reached 0.2%, bringing the inflation rate for the actual rent to 7.9% in 2023.
Chairman of the Housing Committee: The new law will take into account the interests of both parties
For his part, Representative Dr. Mohamed Attia Al-Fayoumi, Chairman of the Housing Committee in the House of Representatives, said in exclusive statements to Arab Finance that the ruling of the Constitutional Court regarding the old rental law is an effective ruling, and it is not permissible to revoke it, and we in the House of Representatives have all opinions that take into account the rights of both sides, the landlord. And the tenant, and we will not need hearings now due to the speed of legislation and the issuance of the law. The new law will take into account the interests of both parties, the landlord and the tenant. This matter aims to restore the balance between the landlord and the tenant regarding the rental value, pointing out that The court ruling relates to the rental value, not the lease contract.
Al-Fayoumi explained that the court set the end of the current regular legislative session of the House of Representatives to finalize the law, and we in the Council will actually finish the law before this period.
Regarding whether the increase in the new law is a percentage of the rental value or a number in Egyptian pounds, Al-Fayoumi stressed that the matter is being studied and the increase may be a percentage of the rental value or a value in Egyptian pounds.
Submit a memorandum to the House of Representatives presenting the owners’ demands
For his part, Ahmed Al-Behairi, the legal advisor for the Association of Those Victimed by the Old Rental Law, said in exclusive statements to Arab Finance that the ruling issued by the Supreme Constitutional Court this week regarding the abolition of the old rental law is a “death blow” to the old rental law, as it opened the door to amending the law, pointing out that President Abdel Fattah El-Sisi, President of the Republic, previously directed that the crisis regarding the old rental law be resolved.
Al-Behairi explained that the amendment to the law will be a comprehensive amendment that includes vacant and closed residential apartments, pointing out that the number of residential apartments that will be covered by the old rental law is about 3 million apartments, and these people do not currently pay real estate taxes. The new amendments to the law will lead to paying these taxes to the state, which increases… Its resources, stressing that the 3 million real estate units covered by the old law, if offered in the real estate market, will lead to a decline in real estate prices in Egypt. There are also properties of the Ministry of Endowments in Cairo and a number of governorates that were leased by the state some time ago at 3 pounds and 5 pounds per month per real estate unit, and the new law will allow its rental value to increase.
Al-Behairi revealed that he had previously submitted, in his capacity as the legal advisor to the Wafd Party, a memorandum to the House of Representatives that included the most prominent amendments required in the old law, where he “demanded the abolition of the old law with an increase in the rent, as well as state support for tenants whose income is less than 6 thousand pounds,” noting. He is currently preparing a new memorandum to be presented to the House of Representatives, especially with the urgent developments in this matter, noting that there are some owners who receive a few pounds in exchange for renting a villa whose price reaches 8 billion pounds.
The crisis must be managed wisely
On the other hand, Ayman Essam, legal advisor to the Tenants Association, said in exclusive statements to Arab Finance that he is currently preparing a memorandum to present to the House of Representatives to present the tenants’ point of view and their demands in the new amendments, pointing out that the crisis of the old rent law must be managed wisely, especially since it has social and economic dimensions. Demanding that the Defense and National Security Committee join the House of Representatives Housing Committee to discuss the rental law and amendments to it after a ruling was issued to abolish it.
Essam warned of social reactions and problems that may occur between the landlord and the tenant, especially since there is a state of excitement on both sides, the landlord and the tenant, after the issuance of the Constitutional Court’s ruling, demanding that the social dimension be taken into account and the crisis be managed wisely so that it does not have bad effects on society, especially since most of the tenants are from different classes. Poor and middle-income people, including pensioners, widows, and low-income people.
Issam estimates that the number of residential real estate units to which the old law applies is 7 million real estate units, which represents more than 25% of the population, as their number exceeds 35 million people, and that in light of the country’s current economic conditions, the social dimensions must be taken into account, so I called for the inclusion of the Defense and Security Committee. The National Housing Committee was appointed to take into account national security and to prevent anything disturbing the social peace among citizens, especially since the same ruling of the Constitutional Court issued in this regard stated that the landlord should not be a sword drawn over the tenant.
Issam believes that the increase in rent should be through a specific percentage that increases over certain periods.
Warning of the backlog of cases in the courts between the landlord and the tenant
Essam also warned of a large number of tenants filing lawsuits from both the landlord and tenant, which will lead to a backlog of cases in the courts and the impossibility of implementation, and will ultimately lead to an exaggerated rise in the price of real estate.
Issam pointed out that those who are eligible for the old rent are those who contracted for their housing units during the period from 1900 to 1996, pointing out that the money in that period had a great value and there were those who paid the “age fee” as an advance to obtain housing in order to live in upscale places. Such as Heliopolis and Garden City.
It is noteworthy that the current legislative session of the House of Representatives began last month, and is scheduled to continue for at least 9 months – according to the text of Article 274 of the internal regulations of the House of Representatives – and this is the fifth and final legislative session of the second legislative term of Parliament before the end of its term.
After the Supreme Constitutional Court’s ruling on the old rental law, the House of Representatives announced, in an official statement, its intention to discuss exceptional laws for renting places, and the necessary legislative amendments to implement the Supreme Constitutional Court’s ruling.
Parliament revealed that the Housing, Public Utilities and Construction Committee has prepared an initial report on the old rental laws, and it will be announced during the next plenary session, noting that the report contains several limitations, the most important of which are: studying the historical background of special legislation, and reviewing all rulings of the Supreme Constitutional Court related to this matter. By studying and analyzing all statistical data that contribute to developing a formulation that ensures arriving at the best possible alternatives that are compatible with international and constitutional standards regarding the right to adequate housing and social justice.
The Supreme Constitutional Court set the date for implementing the ruling on the day following the end of the current regular legislative session of the House of Representatives, justifying this by giving the legislator a time frame to study and implement appropriate amendments that would prevent any legislative vacuum.
The first paragraph of Article 1 of Law No. 136 of 1981, which was ruled unconstitutional, stipulates: “With the exception of luxury housing, the annual rent for places licensed for residential purposes as of the effective date of the provisions of this law may not exceed 7% of the value.” Land and buildings, provided that the area rented for these purposes shall not be less than two-thirds of the area of the real estate buildings.”
As for the first paragraph of Article 2 of the law, which was also ruled unconstitutional, it stipulates: “The value of the land in relation to the places stipulated in the first paragraph of the previous article shall be estimated according to the equivalent price when licensing construction, and the value of the buildings shall be estimated according to the actual cost at the time of construction. If laxity is proven.” The owner deliberately refrained from preparing the building for exploitation, and the cost of the buildings is estimated according to the prices that prevailed at the time the construction work was scheduled to be completed, without prejudice to the right of the competent governorate to complete the work in accordance with the rules regulating that.”
The House of Representatives is awaiting the draft of the old rent law from the government, after the Supreme Constitutional Court issued a ruling invalidating some articles that established the rental value dating back decades. This ruling paves the way for the House of Representatives to reformulate the law to suit the current conditions.
In October 2023, President Abdel Fattah El-Sisi called for the preparation of an integrated law on old rent, explaining the reason for this by saying that the original tenant of the units may have died because the law regulating the relationship between the tenant and the lessor was issued in 1962, and those who benefit from the units at the present time are the heirs, and it was estimated that there are 2 million vacant housing units with an estimated value of one trillion pounds are closed due to this law.
