Prime Minister Mostafa Madbouly assured that the state is considering all possible scenarios for implementing the Constitutional Court ruling regarding old rents.
The Prime Minister stated in a press conference on Thursday that the government is working in coordination with the House of Representatives to develop various scenarios for implementing the court’s ruling.
Last Saturday, Egypt’s Supreme Constitutional Court ruled that the fixed annual rent for residential properties, as stipulated in Law No. 136 of 1981, is unconstitutional.
The ruling stated that the legislature must intervene to achieve balance, preventing landlords from exploiting tenants’ need for housing by imposing exorbitant rents while also safeguarding the return on investment for property owners.
The court’s decision included a provision granting the legislature a sufficient period to develop appropriate regulations governing the determination of rents for properties subject to Law #136 of 1981. The effect of the ruling will be implemented on the day following the end of the current regular legislative session of the House of Representatives.
The court also found that the first paragraph of Articles 1 and 2 of Law #136 of 1981, concerning certain provisions governing the rental and sale of properties and regulating the relationship between the lessor and lessee, to be unconstitutional insofar as they provided for the fixed annual rent for places licensed for residential purposes as of the date of the law’s enforcement.
The court based its judgment on the premise that exceptional laws governing residential leases involve two principles: the legal extension of lease contracts and legislative intervention in determining rent.
Neither of these principles is immune to legislative regulation.
While the legal extension has defined a scope of beneficiaries, the determination of rent must always be supported by objective criteria that seek to achieve a balance between the parties to the lease relationship.
The court added that the challenged provisions had prohibited an annual increase in the rent for places licensed for residential purposes as of the date of the law’s enforcement, capping it at seven percent of the land value at the time of licensing and the actual construction cost of the building.
This meant that the rental value was fixed at a specific point in time and remained unchanged – regardless of the passage of time, inflation rates, the decline in the purchasing power of the annual rent, or the diminishing return on investment in the leased property – which amounted to an infringement on the principle of justice and a waste of property rights.
