Escaping the minefield of Egypt's old rent law
The maxim that “a court ruling is the embodiment of truth” remains a cornerstone of the rule of law.
Although judicial decisions are not beyond scrutiny—and can be challenged through appeals, petitions for annulment, or applications to set aside judgments on the basis of newly discovered evidence—the authority of court rulings, and their consistent application, is vital to the integrity of any legal and judicial system.
This principle does not preclude legal avenues for contesting rulings. Indeed, procedural mechanisms such as appeals or annulment suits serve to reinforce justice, particularly when new facts emerge that may undermine the basis of a judgment.
But in jurisdictions where the separation of powers is ill-defined, judicial independence can be compromised. In such settings, the reliability of court decisions may reasonably be called into question. Nevertheless, the defense of judicial authority—and the consistent enforcement of its rulings—remains essential to upholding the legitimacy of the legal system.
It is within this legal and constitutional framework that the recent decision by Egypt’s Supreme Constitutional Court must be viewed. The court ruled that the longstanding practice of fixing rent rates in so-called “old rental contracts” is unconstitutional. This ruling carries significant implications—not least that the legal structure underpinning the old rent regime can no longer be sustained after decades of structural imbalance.
For years, property owners have borne the brunt of this system. Millions have been effectively denied the economic use of their property, primarily due to two entrenched legal features: the automatic extension of rental contracts and the imposition of fixed rents. These provisions, originally introduced to serve social and economic purposes in a different era, have long ceased to reflect current realities.
Egypt’s “Old Rent Law,” formally known as Law No. 136 of 1981, was introduced to regulate the relationship between landlords and tenants. Among its most consequential provisions was the imposition of a rent ceiling: annual rent was capped at 7% of the property’s assessed value as determined at the time the building licence was issued. This formula, effectively frozen in time, severely restricted landlords’ ability to adjust rental income in line with economic developments.
Over the ensuing decades, this fixed-rate regime remained unchanged—even as inflation surged and the cost of living rose dramatically. In many cases, landlords found that rental income dwindled to negligible levels, insufficient even to maintain the properties in question.
Today, the challenges are no longer purely legal or economic—they are deeply social. Chief among them is the state’s failure to pursue a comprehensive and equitable resolution that balances the rights of both landlords and tenants. This is despite sustained warnings and repeated demands for reform.
Tensions have spilled beyond legal and administrative channels. Disputes once confined to police stations and courtrooms now play out across social media platforms and in national news coverage. The result is a volatile public discourse.
For landlords, the sense of injustice has intensified. Many view the continued enforcement of fixed-rent contracts as a denial of their constitutional right to benefit from private property. At the same time, tenants—particularly those on low incomes—fear that any sweeping reform could leave them vulnerable to eviction or homelessness.
A crisis left to fester
At its core, this issue reflects a classic constitutional tension between two foundational rights: on one hand, the protection of private property as a pillar of economic freedom; on the other, the right to adequate, safe, and dignified housing—a right the state is constitutionally bound to uphold in pursuit of human dignity and social justice.
While these principles may appear to be in conflict, legal and policy frameworks can—and must—seek to reconcile them. A national housing strategy that raises the standard of living while safeguarding property rights could offer a viable path forward, one that does justice to both present and future generations.
This tension has not gone unnoticed in Egypt’s constitutional jurisprudence. Over the course of successive constitutions, numerous challenges to the old rent regime have come before the Supreme Constitutional Court. The persistence of these cases underscores the enduring unease surrounding the law’s compatibility with fundamental rights.
What remains uncertain, however, is why the state has allowed the issue to drift unresolved for nearly a quarter of a century. Despite mounting pressure and recurring legal challenges, the authorities have consistently failed to take substantive action to address the impasse—raising questions about whether this inaction was the result of political calculation, institutional inertia, or a reluctance to confront the social costs of reform.
The art of creating crises
Over the years, the problem has grown more complex. As generations passed, and both beneficiaries and affected parties multiplied through inheritance, the dispute over old rental contracts became a legal and political minefield. Worsening economic conditions only sharpened the stakes.
The first significant judicial intervention came in 2012, when the Supreme Constitutional Court was asked to consider the legality of extending rental contracts for legal entities—such as government bodies and private corporations. That deliberation culminated in a landmark 2018 ruling, which found such extensions unconstitutional.
The court granted Parliament until July 2019 to adopt legislative measures in response. Yet political disagreements stalled the process. It was not until March 2022—nearly four years after the judgment and three years beyond the court’s deadline—that the relevant law was enacted. Even then, the statute was limited in scope, addressing only commercial and administrative leases, and leaving residential contracts untouched.
The absence of a comprehensive policy response persisted. While the latest constitutional challenge made its way through the court, relevant case details were publicly accessible. Despite this transparency, no government authority moved to anticipate the implications or prepare a policy response. This, in spite of two advisory reports issued by the court’s commissioners—in February and July 2023—recommending dismissal of the case.
Irrespective of the commissioners’ view, the scale of the issue demanded far greater engagement. The old rent regime affects millions of Egyptians and represents a constitutional and socio-economic fault line that merits sustained public and legislative attention.
Indeed, the urgency of this matter arguably outweighs many of the topics recently tabled in Parliament, including amendments to long-standing legislation such as the Code of Criminal Procedure and the Labor Law. Questions inevitably arise over legislative priorities—especially as the current parliamentary term nears its end. It is telling that the last publicly documented action from the legislature on this file was a request, made seven months ago by the Housing Committee, for data on old rental units.
Avoiding the inevitable confrontation
With inflation continuing to rise and the disparity between historic and current rental values becoming ever more stark, it is increasingly clear that incremental fixes are no longer sufficient. The Supreme Constitutional Court’s ruling underscores the urgent need for a comprehensive legal framework—one that breaks decisively with the legislative compromises typified by the 2022 statute on institutional leases.
In its judgment, the court refrained from prescribing a detailed policy solution, as such matters lie within the legislature’s domain. However, it did articulate guiding principles that any future law must observe. Chief among these are:
- A fair balance between the rights of property owners and tenants
- Recognition of inflationary pressures and the erosion of purchasing power
- A prohibition on setting fixed rent values
- Protection against measures that could reduce returns on property investment
Central to these principles is the requirement for “objective criteria,” as expressly stated by the court, to guide the determination of rental values. The importance of this cannot be overstated. A failure to ground legislation in neutral, transparent benchmarks risks reigniting legal conflict and undermining the legitimacy of any reform.
Experience with the 2022 law is instructive. That statute, which fixed rent at five times the previous rate and imposed a 15 percent annual increase, prompted a wave of legal action from landlords dissatisfied with the formula. The absence of a tailored, criteria-based system has already strained judicial resources and exacerbated uncertainty.
Tempting though it may be to replicate that approach—on grounds of expediency or political convenience—such a course amounts to legislative deferral. It postpones the inevitable reckoning with a deeply rooted legal and social challenge.
Applying the same model to residential tenancies risks flooding the civil courts with cases brought by landlords seeking to enforce the constitutional ruling against tenants reluctant or unable to meet steep rent hikes. This would impose a heavy burden on the judiciary and on citizens alike.
What is now required is a carefully “engineered” legal framework—one that avoids arbitrary figures and instead relies on clearly defined, evidence-based criteria. Only by doing so can the law both serve its constitutional purpose and shield citizens from drawn-out, costly legal battles. In this way, the state may begin to resolve a decades-old conflict in a manner that respects rights, reflects economic realities, and restores balance to Egypt’s rental market.
Defining rental criteria
The creation of an objective framework for determining rent values cannot proceed without a clear-eyed assessment of the factors involved. Any viable legislative model must account for a range of economic and property-specific indicators to ensure fairness and legal sustainability.
Several variables will need to be weighed carefully. At the macroeconomic level, these include prevailing inflation rates and average income levels—indicators essential to gauging affordability and purchasing power. At the property level, considerations may include the unit’s location, prevailing market rents in the area, the nature and intended use of the premises, building size, construction value, age, condition, amenities, and any structural deficiencies.
Other, more subjective questions also arise. Should the length of a tenant’s residency factor into the calculation, particularly where decades of occupancy have created strong personal ties to the unit? Should a tenant’s financial circumstances—including ownership of other property—be relevant in calibrating a just rent?
These are not merely rhetorical queries. They are central to constructing a framework that aligns with constitutional obligations while recognizing real social and economic contexts.
Data from the Central Agency for Public Mobilization and Statistics (CAPMAS) may offer a starting point. Its most recent comprehensive report on household spending and consumption, conducted in 2020, found that Egyptian households allocate between 18.4% and 23.1% of their income to housing and associated costs. The data also revealed that around 6.7% of households occupy old rental units, predominantly in urban areas.
Whether the state now holds more recent or granular data that could inform the setting of rent benchmarks remains an open question. The availability—and public transparency—of such information will be critical if the government is to deliver on the court’s call for “objective criteria” and ensure that forthcoming legislation is both fair and durable.
Institutional responsibilities and constraints
If, as the Supreme Constitutional Court recommends, objective criteria are to guide the determination of rental values, the question of institutional responsibility becomes unavoidable. The task of property evaluation—or the setting of rental benchmarks—must be formally assigned to a competent authority equipped with legal and technical capacity.
Egypt has past experience in this area. Rental valuation committees, historically linked to governorates and local administrative bodies, have been tasked with assessing property values. These committees allowed landlords to challenge assessments based on criteria such as land value, construction costs, infrastructure quality, and labor expenses.
An alternative model exists under the Real Estate Tax Law. Property valuation in that context is carried out by committees formed through ministerial decree, composed of both state representatives and taxpayers. These bodies follow a structured and standardized methodology, taking into account location, construction quality, and access to utilities. Their independence from local authority structures and reliance on a transparent valuation framework offer potential advantages.
However, reviving or expanding either system faces a fundamental obstacle: the diminished capacity of Egypt’s local administration. Years of understaffing across governorates and municipalities have left many public services overburdened. This has been especially visible in the backlog surrounding building violation settlements—an issue that has prompted the government to repeatedly amend the reconciliation process in an effort to reduce procedural delays.
This administrative fragility is not incidental. It reflects broader structural neglect. The state continues to pay the price for having systematically weakened its bureaucratic institutions: reducing personnel even as the population grows, failing to invest in the modernization of public services, and embracing digital transformation in rhetoric more than in practice. Efforts to curb corruption have often translated into an avoidance of institutional development rather than its reform.
Equally significant is the state’s longstanding disregard for its constitutional obligation to establish a decentralized system of local governance. Had such a framework been realized, it could have provided the administrative backbone to manage rental reform, staffed with trained personnel capable of resolving disputes and facilitating implementation. Instead, the absence of this infrastructure has left the executive with few tools to address mounting litigation and housing policy challenges.
A chance to reform—not retreat
Some critics oppose the introduction of objective rental criteria, fearing it may unsettle the broader new rent market—an arena that has grown increasingly deregulated, especially in recent years. Factors such as the devaluation of the Egyptian pound and the arrival of migrants from crisis-affected Arab states have exerted additional pressure, fueling demand and driving up prices.
Amid these dynamics, many property owners have called for a complete liberalization of rental contracts. In their view, any form of regulation—even targeted reforms—risks impeding market flexibility and undermining potential returns.
But while the protection of private property and the right to profit from it are foundational principles, it bears remembering that even the most market-driven economies maintain robust legislative and executive frameworks to regulate the rental sector. Such mechanisms are not merely protective of landlords and tenants; they are central to a broader housing policy aimed at securing affordable shelter for all.
Countries such as the United Kingdom, Germany, France, and the United Arab Emirates offer examples of regulatory systems built on five key pillars:
- A detailed reference guide for rental values, broken down by district and property characteristics
- Public, regularly updated online platforms that reflect inflation, interest rates, and supply-demand shifts
- Financial incentives designed to encourage landlords to offer more competitive rental prices
- Accessible channels for landlords and tenants to register complaints and seek redress
- Mediation services to resolve disputes without resorting to litigation
Adapting any of these elements to the Egyptian context would require institutional commitment and sustained investment. Yet the long-term gains—from easing the housing crisis to reducing litigation and unlocking vacant housing stock—would almost certainly outweigh the costs.
The ruling from the Supreme Constitutional Court has been met with mixed reactions. For many, it offers long-overdue redress. For others, it represents a new wave of uncertainty. The state itself may view the decision as a complex and costly challenge. Critics warn of social disruption if implementation falters.
And yet, this moment represents more than a legal inflection point—it is a rare policy opportunity. Egypt has been handed a constitutional mandate and a legal framework from which to construct a fair, transparent, and modern rental system. Failing to act would only deepen existing tensions and delay the inevitable reckoning. Seizing this moment, on the other hand, could mark the beginning of a much-needed transformation in Egypt’s approach to housing and property rights.
(*)A version of this article first appeared in Arabic on November 11, 2024