The Housing Committee's approval is preliminary, and the draft will subsequently be submitted for a final vote in a parliament's plenary session expected to be held later this month.
The proposed amendments to the rent laws 49/1977 and 136/1981 have recently sparked a heated social debate. Landlords sought to minimize the termination period and increase rent, while tenants pressed for the opposite.
The Housing Committee passed a 10-article draft, the first nine of which tackle the regulations governing the relationship between landlords and tenants, which have been at loggerheads since a ruling by the Supreme Constitutional Court (SCC) issued last November.
The ruling decided that the 7 percent flat rate in the Old Rental Law for residential properties was unconstitutional and called on the Egyptian parliament to amend the law.
Article 2 of the new draft stipulates that the termination period of rental contracts for residential purposes will be seven years after the law comes into effect and 5 years for non-residential purposes unless an earlier termination is mutually agreed upon.
Article 3 stipulates that each governor must form a committee to categorize areas containing rented residential properties into premium areas, middle-class areas, and economic areas.
The classification will consider geographic location, including the area's nature and street, construction quality, utilities available, roads, transport networks, and access to health, social, and educational services.
Committees must complete their tasks within three months of the law's enactment, which can be extended once by a Prime Minister's decision. The governor shall publish the final results in the Official Gazette and notify local administrations.
Article 4 stipulates that rent in premium areas will be 20 times the current legal rent, with a minimum of EGP 1,000, and 10 times in middle-class areas, with a minimum of EGP 400. In economic areas, the rent will be 10 times with a minimum of EGP 250.
The article also stipulates tenants shall pay EGP 250 monthly until the classification committees complete their work. Once the governor’s decision is published, tenants must pay any rent differences due in monthly installments equal to the accrual period.
Article 5 stipulates that rent for premises rented to natural persons for non-residential use shall be 5 times the current legal rent.
Article 6 stipulates that rents determined under Articles 4 and 5 shall increase annually by 15%.
Article 7 stipulates that tenants or their legal successors must vacate the premises at the end of the rental term specified in Article 2 if the tenant or successor leaves the premises closed for more than one year without justification or if the tenant or successor owns another usable unit for the same purpose as the rented property.
In case of refusal to vacate, the landlord may seek a court order from the summary judge for eviction without prejudice to the right to compensation.
The tenant may also file a separate civil case, which does not suspend the summary judge’s decision.
Heated debate
The Housing Committee has held several hearings on the amendments, and Mustafa Abdel-Rahman, head of the Landlords Coalition, rejected those regulating rent increases and the duration of the lease contract.
He proposed a three-year transitional period during which tenants would be obliged to pay market rents or be evicted from their units.
He also suggested that during the transitional period, monthly rents for units in low-income districts will not be less than LE2,000, LE4,000 for units in average-income districts, and LE8,000 for high-class districts.
Lawyer and representative of the Tenants Coalition George Makram warned earlier that passing the government’s amendments would cause massive social harm.
He directly referred to the five-year transitional period, now extended to seven in the final draft.
Makram insisted that the government’s new rent bill seriously threatens national security and social peace.
According to Abdel-Hamid Sharafeddin, advisor to the head of the Central Agency for Public Mobilisation and Statistics, seven percent of Egypt's buildings are regulated by old rent contracts, compared to 15 percent in the 2006 census.
Sharafeddin explained that approximately three million units, including 1.8 million residential units, are subject to old rents.
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