Egypt’s Supreme Court rules that the “Old Rent” system is unconstitutional

Egypt Daily News – The recent ruling by the Supreme Constitutional Court, led by Counselor Boulos Fahmy, has declared the unconstitutionality of certain provisions in Law No. 136 of 1981 pertaining to the regulation of residential rental agreements.

This decision is particularly significant for millions of landlords and tenants, as it challenges the long-standing practice of fixing annual rents under the old rental system, which has resulted in little to no adjustments for inflation and changes in property values over the decades since the law’s enactment.

Key Aspects of the Ruling:

1. Unconstitutionality of Fixed Rent Provisions: The court ruled that the provisions ensuring fixed rental rates from the law’s enforcement date violate principles of justice and property rights. The static nature of rents, set for prolonged periods, has led to inequities that necessitate correction.
2. Need for Legislative Action: The court emphasized that it is essential for the legislature to establish regulations that ensure a fair balance in the landlord-tenant relationship. This includes protecting tenants from exorbitant rents while also ensuring that landlords receive a fair return on their investments.
3. Legislative Timeframe: The ruling will take effect the day after the conclusion of the current legislative session. The court allows the legislature time to devise a framework for determining rent, suggesting that immediate action is necessary to prevent potential turmoil in current leases governed by older regulations.
4. Balance of Interests: The court’s reasoning highlights the need to prevent scenarios where landlords could exploit tenants’ needs for housing, while also ensuring that fixing rents does not lead to losses that undermine investment in property.
5. Inflation and Economic Factors: The decision acknowledges the impact of inflation and economic shifts over time. By allowing for rent adjustments, it seeks to maintain the viability of investments in residential properties.

Implications:

• Urgency for Legislative Response: The House of Representatives is urged to act quickly to create new regulations that will govern rental agreements, as there is a risk of disorder in rental contracts currently under the old law once the court’s ruling takes effect.
• Potential for Future Legal Conflicts: The ruling sets a precedent that could lead to disputes over existing agreements, highlighting the need for clarity in any new legislation to avoid confusion among landlords and tenants.
• Balance in the Rental Market: The intent of the court is to foster a rental market where both landlords and tenants can coexist with a fair set of regulations that reflect changing economic realities.

In summary, this landmark ruling reflects a significant shift in the approach to rental agreements in Egypt, focusing on justice and property rights while calling for legislative action to refine the framework for landlord-tenant relationships in the future.