BEO | Egypt’s Constitutional Court Annuls Fixed Old Rents
Implications and Next Steps
In Part I of a three part series that tackles the Supreme Constitutional Court ruling annulling fixed rents for Egypt’s Old Rent law, we analyse the constitutional court ruling’s key opinions, outline parliament’s response and stakeholder reactions, and summarise the possible implications and next steps that should be taken to ensure a fair, workable outcome
Introduction
On November 9, 2024, Egyptians woke up to a legal bombshell. In a landmark ruling, Egypt’s Supreme Constitutional Court deemed Articles 1 and 2 of Rent Control Law 136/1981, popularly known as the “Old Rent” law, unconstitutional.The ruling particularly addressed the fixed rent aspect of the law, which fixed rental values for units as far back as the 1940s, without allowing for any annual increases. Egypt’s long-standing Old Rent law has been a deeply entrenched and contentious topic within the country’s housing market. According to the 2017 census, Old Rent affects a significant share of housing tenure at 1.6 million households, or roughly 6.4 million people. Rent freezes were first introduced in the 1940’s in an attempt to protect tenant rights amid price gouging during World War II. Eight decades onwards, this has resulted in extreme disparities between what older tenants pay (contracts made between the 1940s and 1996) and current market rates. Since deregulation in 1996, landlords have been free to set prices, terms and rent raises on non-rent controlled units, through New Rent (market rent) contracts, which have seen prices soar on an annual basis. For instance, some tenants in more desirable areas under old rent pay less than LE100, while comparable New Rent apartments in the same buildings are rented at 100 times the amount. While landlords who receive minimal income from their properties are resentful, many tenants, particularly elderly and low-income individuals, cannot afford market values, and face the threat of displacement should rents be significantly raised. Many have also invested in their property, where some have taken them unfinished, and put in the plumbing, floors, electricity and painted them. Almost all Old Rent tenants have also paid khilew rigl to the landlord, upfront key money that represented a portion of the property’s value, in order to get a contract. This imbalance has created a deadlock, with both sides feeling aggrieved.
The recent ruling by Egypt’s Supreme Constitutional Court declaring Articles 1 and 2 of the Old Rent law unconstitutional has forced lawmakers and the government to confront this long-avoided problem. The court has mandated that parliament conceptualize legislation by June 2025 to address the issue, prompting numerous proposals and debates. Usually constitutional court rulings are effective the next day, but in this specific case, the court gave parliament seven months, due to the complicated nature of the issue and high possibility of dire social implications if many tenants could not pay the higher rents. Potential solutions being debated range from gradual rent increases and regional rent assessments to providing government support for vulnerable tenants. However, each proposal presents its own set of challenges, including determining fair increase percentages, ensuring market stability, and avoiding mass displacement of low-income individuals. In this brief, we will analyse the constitutional court ruling’s key opinions, outline parliament’s response and stakeholder reactions, and summarise the possible implications and next steps that should be taken to ensure a fair, workable outcome.
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