Thousands of landlords and millions of tenants who benefit from rent control laws have been locked in a bitter argument over the fairness of Law 136 of 1981, known as the Old Rental Law, which restricted landlords' ability to amend or terminate deeds.

The ruling deemed the first paragraphs of Articles 1 and 2 of Law No. 136 of 1981—which capped the annual rental value at 7 percent of the actual value of the land and building where the house is located—unconstitutional.

The court stated that rent should always be determined according to objective criteria that balance the interests of both parties in the rental agreement.

The SCC also stressed that legislative intervention is necessary to ensure fairness, prevent landlords from exploiting tenants' housing needs, and protect the value of property investments, including land and buildings.

Furthermore, the court explained that the law's paragraphs that were challenged before it, prohibiting landlords for decades from increasing rents above a certain value, represented an injustice to property owners and a violation of property rights.

The court reasoned that the fixed rent rate decreased the return on rental properties and rendered them nearly worthless amid successive inflationary waves.

Parliament: Step in!
 

On Saturday, the Supreme Constitutional Court directed parliament to amend legislation to implement a fairer deed system between property owners and tenants.

The ruling stipulated that the parliament must address the issue by the end of the current legislative session, which is nine months.

The court said this timeframe allows lawmakers ample time to explore alternative solutions and establish clear guidelines for determining rents for properties governed by Law136 of 1981.