Rent laws in review

Soha Hesham , Tuesday 8 Mar 2022

As Egypt’s old rent laws go through a process of review, landlords and tenants voice their concerns to Soha Hesham

Rent laws
Old rent laws go through a process of review

There have always been different kinds of rental contracts for property in Egypt. One of the oldest is in the form of key money, or khelo regl, which can help to secure an apartment and sometimes a reduction in rent. Then there are the arrangements under the country’s old rent laws that are currently being reviewed.

The newer rent laws introduced in recent years are different since they can have much greater financial implications depending on the size and location of the apartments concerned.

Under the old rent laws, which cover houses or apartment in mostly upscale districts of Cairo like Heliopolis, Zamalek, Garden City, and Downtown, apartments worth millions can still be rented out for between LE17 and LE30 a month because of rent freezes.

This situation has been stagnant for decades, despite the complaints of landlords and building owners. The Supreme Constitutional Court (SCC) has issued rulings, and there have been various attempts to attain more balance in a stagnant situation. 

A joint parliamentary committee of six MPs and four government officials began meeting in February last year to review the old rent laws, in place since the 1960s, in order to bring back some fairness between tenants and landlords. Its first stage has been looking at non-residential units like shops and those rented by legal persons such as the headquarters of political parties.

The committee wants to see gradual changes to the law, since property is being rented by tenants that cannot afford a dramatic increase in rents. Many of them are pensioners in areas like Heliopolis, Zamalek, Downtown, and Garden City. 

The final bill is scheduled to be finalised by the end of the year.  

One ruling by the SCC has said that rent contracts must increase with inflation to prevent owners from being able to charge outdated rents. Another challenge confronting landlords has been tenants inheriting rented apartments and passing them onto their children, putting owners in an impossible situation. 

Journalist Sherine Bahaa, the landlord of two buildings jointly owned with her sister and brother, said she had experienced difficult relations with her tenants. One building is in Horriya Street in Almaza, Heliopolis, and the other is in the Helmiya neighbourhood. “One tenant was an old lady who had lived in the apartment for decades, but then one of her daughters came to live in the apartment in order not to give it up. When the old lady passed away, the daughter claimed she was divorced in order not to be evicted from the apartment. But later we discovered she had faked the divorce certificate,” Bahaa said.

“The rent of the apartment is just LE17,” she said. “It is worth a lot due to its location, and yet as the owner I receive nothing from this building. I cannot evict a tenant from his apartment even if the law is on my side, and I cannot understand why apartments can be passed on to children who have not been living there. This is really not fair to the landlord,” she added.

One of the tenants in the Horriya building is living in an apartment there but also owns an upscale apartment in Heliopolis that she rents out for a lot of money. In cases like that, landlords have the law on their side, but filing lawsuits takes time and money, and most choose not to take the legal path. 

Mohsen Fawzi, a retired military officer, is a tenant of an old apartment building in Almaza. “I have lived there most of my adult life, and originally one could count the buildings in that area on the fingers of two hands. The area was called Al-Sabaa Omarat [seven buildings] because there were really just seven buildings there. After the 25 January Revolution, many buildings were demolished and others built, and the owner of my building wanted to negotiate with me and the other tenants. But what was on offer was inadequate to rent another apartment in the same neighbourhood. The tenants collectively refused the offer.” 

This was when four- and five-storey buildings in Heliopolis were being demolished in favour of 10- and 12-storey ones that were destroying the atmosphere of the area. The same thing was happening in Mohandessin, where high pressure on infrastructure was also leading to water and electricity cuts. 

Theatre director Nasser Abdel-Moneim said that “in 2008 I renewed my old rent agreement with the owner of my building,” referring to one in Agouza where he has lived since birth in an apartment rented in his father’s name. 

 “I have a good relationship with the owner of the building that goes way back. They live in the same building, and when I asked him to renew the contract and change it to my name, he asked for a reasonable amount of money and to increase the monthly rent from the LE6.5 it was at the time. I agreed instantly, as the new contract is for 59 years duration, and my son can inherit it if he lives there,” Abdel-Moneim said. 

He said that the apartment above the one he lives in has been empty for 30 years, since the tenant has another house in New Cairo. “There was a water leak in his apartment that affected mine, but when I called him he asked me to fix everything. In my opinion, this is not fair to the owner.”  

CHANGES: A retired translator living in Dokki said that she and her husband had rented her apartment in 1971 when they had paid LE8 in rent. The rent is now LE100, she said. 

“A few years ago, I negotiated with the landlord to buy the apartment, for which I was willing to pay around LE350,000. However, they refused, wanting to sell it for LE750,000, which was too much. I couldn’t pay that amount of money,” she said. The reason she had wanted to buy the apartment was to make sure that she could pass it on to her son who was not living there.

These aspects of the old rent law are already being changed to new ones affecting the political parties and NGOs that rent old apartments in Downtown for their headquarters. They will henceforth be considered as legal persons, exempting landlords from existing rules, though Tagammu Party MP Marcel Samir tried to convince parliament to make an exception for political parties, unsuccessfully as it turned out.  

The draft of the new rent law says that legal persons will be offered a five-year transition period before it takes full effect. In the first year, the owner will be allowed to multiply the rent five times, and then to increase it by 15 per cent over the following four years. At the end of this period, rented apartments will revert to the landlord. 

One store owner in the area who spoke anonymously said he had rented out one of his stores for LE60 since 1987, while his tenant had not been using it and had refused to return it to him. He said he could probably charge LE3,000 a month at least. 

Lawyer Mohamed Fouad told Al-Ahram Weekly that “any rental contract cannot be infinite in length. It must have a beginning and an end to provide justice for both sides. However, laws passed in 1977 and during the rule of former president Gamal Abdel-Nasser were exceptions and did not provide equity for the owner in the long run.

“Considering political parties as legal persons and offering them a five-year time limit to leave the apartments they rent is relatively fair. But reviewing the laws for residential units will face grave problems, so the parliament is still discussing it. Any changes will have to receive the go ahead from the SCC,” Fouad said.  

In 2021, the SCC said that the perpetuation of rental contracts was unconstitutional and that only first-degree relatives can inherit them. It listed 13 cases in which an owner can evict a tenant, such as in cases where a tenant has sublet a unit without informing the owner or has been repeatedly late in paying the rent. 

The present committee that is reviewing the rent laws is doing so for both non-residential and residential property alike. There will be additional challenges in cases like embassies, clubs, government headquarters, and schools. 

Should the laws be changed, the committee has suggested that the government should offer subsidised housing solutions for those not able to pay the new rents. Concerned tenants have been filing complaints and creating pages on Facebook and other social-media outlets to voice their concerns and their rejection of the new laws.

*A version of this article appears in print in the 10 March, 2022 edition of Al-Ahram Weekly.

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