Egypt’s Supreme Constitutional Court (SCC) ruled on Saturday, 9 November, the Old Rentals Law’s fixed seven percent rate on residential rentals as unconstitutional, urging parliament to amend the law by the end of its current legislative term.
This decision impacts thousands of landlords and millions of tenants governed by Law No. 136 of 1981, known popularly as the ‘Old Rentals Law’, which has, for decades, restricted rent price adjustments.
According to the SCC, the fixed rate, specified in Articles 1 and 2 of the 1981 law, capped annual rent at seven percent of a property’s assessed value.
The court argued that this fixed rate infringes on property rights, noting that rental values should instead reflect economic criteria that balance landlords’ and tenants’ interests —particularly amid Egypt’s inflation and economic challenges.
The Old Rentals Law was originally enacted in the post-World War II era and aimed to stabilize rent prices to protect tenants from sudden increases.
The law was expanded under President Gamal Abdel Nasser’s administration, mandating rental price cuts of up to 20 percent, and later included provisions allowing tenants to pass rental contracts down to their descendants.
While this arrangement has provided stability for low-income residents, it has limited landlords’ ability to generate income from properties, especially as inflation has grown.
Many landlords, including cases reported by state media Al Ahram, have been left with long-term tenants paying rents as low as EGP 10-30 (USD 0.20-0.61) per month for valuable properties in upscale areas like Heliopolis and Maadi.
This stagnation has often left property owners unable to adjust rents to meet maintenance costs or the real market value of their properties.
Current estimates from Egypt’s Housing Ministry suggest that over five million units in the country still operate under the old rental law.
The SCC’s recent ruling signals a shift in the legal landscape, as parliament prepares to address these longstanding issues with rental laws, moving towards a more balanced system that could better accommodate Egypt’s changing economic landscape.
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