- Published on 24 March 2025
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 bet ween 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.
Key Findings from the Court Ruling
The Constitutional Court case dates back 37 years, when a landlord’s attempt to increase tenants’ rent was unsuccessful, leading him to file a lawsuit in an Alexandrian court in 1988. The case eventually reached the Supreme Constitutional Court in 1998, spending 26 years in review. Originally, the plaintiff sought the repeal of Articles 1 and 5. However, in 2006, the court upheld the constitutionality of Articles 4 and 5, making them irrelevant to this case. The court later included Article 2, since it defines the parameters by which rent is determined. According to a lawyer who works on such cases, there are at least 15 cases pending review by the constitutional court regarding different aspects of the rent law— not just for housing units but also commercial purposes.
While the media has presented the ruling as one that fully decontrols Old Rent, the ruling (See PDF) is much more nuanced than that, tackling only specific aspects of the law as rulings do. The key opinions from case are:
- It is unfair to fix rental values without adjusting for inflation, purchasing power, or return on investment.
- The ruling emphasized that the indefinite nature of these rental contracts gives tenants an exceptional privilege outside the normal mandate of a rental contract, which violates the Islamic principle of contractual freedom, as well as the principle of social solidarity, violating the right to private property; all of which are also in contravention of articles 2, 7, 32 and 34 of the 1971 Constitution (in effect at the time the court case was lodged), translating to articles 2, 8 and 35 of the 2014 Constitution (p23).
- One point stressed is that of social justice and the court’s duties towards the people, to balance between public interest and private property rights (p 8-9).
- The ruling acknowledged that while exceptional housing policies were necessary in past crises, they must be balanced with property rights. Effectively meaning that they are temporary, rather than a permanent solution as a main rental law exists (The Civil Law’s articles on rent, from Art 558).
Parliamentary Response and Legislative Outlook
Following the ruling, key parliamentary figures offered initial reactions and proposals:
Hanafy Gebaly, speaker of Parliament, underscored the need for a comprehensive and holistic approach to reform. In a formal statement, he announced plans to form committees representing the different stakeholders, including tenants, landlords, ministers, human rights experts, and researchers, to examine the implications of the ruling and formulate solutions: “We have a historic responsibility to address the legacy of exceptional rental laws. These reforms must be guided by justice and social solidarity to protect the interests of all Egyptian families.”
Ihab Ramzy, a member of the Constitutional and Legislative Committee, questioned whether parliament would amend the existing law or draft entirely new legislation. He called for data-driven rental value estimates to ensure fair adjustments.
Mohamed Fayoumi, head of the Housing Committee, stated that discussions on the court ruling and next steps would begin soon.
Ahmed Seginy, head of the Local Development Committee, welcomed the ruling, stressing the importance of a legislative approach that balances justice for both tenants and landlords: “The new ruling emphasizes that the extension and adjustment of rental laws must be addressed legislatively, ensuring fairness and balance.”
MPs from various political parties also welcomed the ruling.
Stakeholder Reactions: Tenants vs. Landlords
The ruling reignited tensions between tenants and landlords, with both sides advocating for vastly different approaches to reform:
Tenants’ Perspective:
Sherif al-Ga’ar, the head of Egypt Tenants’ Union emphasized that any revised rental value should not exceed five times the current rate, drawing on the precedent set by the 2022 amendment for organizations, corporations and government agencies (juridical persons) which addressed rent adjustments for non-residential units under old rent.
Ayman Essam legal consultant to the Egypt Tenants’ Union, stressed on the court ruling’s exclusive applicability to properties subject to Law 136/1981, so those built on and after 1981. He claimed that since rent was fixed at 7% of land and building value at the time of construction landlords had gotten their return on investment within 10 years. He presented a proposal to increase rents by 10% every year for five years then a pause on increases for five more years and then another 10% change.
Landlords’ Perspective:
Mustafa Abdelrahman, head of the Old Rent Landlords’ Union, demanded that rents be raised to at least LE 2,000, lamenting decades of negligible rental income. We’ve endured 43 years of rents as low as three or four pounds. I’m 65 years old, and I can’t buy anything with my inheritance.”
Ahmed Behery, legal consultant to the Old Rent Landlords’ Union presented a draft law aiming to liberalize rent for residential units within three years (one year for commercial units). His proposal suggests relying on real estate taxes as a reference so that rent rises up to 60% of the value as determined by real estate taxes within the first year. This will go up to 80% in the second year and then 100% in the third year.
Implications & Next Steps
The ruling sets the stage for a complex and politically sensitive legislative process. While the court allowed Parliament until June to draft this legislation, in January the government had still not sent parliament its draft law for review, requesting an extension to amend the contentious law. As we publish this piece in late March, no draft has yet been made public. With parliamentary elections set to take place later in 2025, this presents a predicament, since it would be the new parliament that would oversee the application of the new law, or, in the case a law is not passed, tthe responsibility of amending the law (or drafting a completely new one) would be passed on to the newly formed parliament post-elections, which will not convene till the last quarter of the year, something that would further delay the process severely. Several key questions remain unanswered:
- Will parliament amend the law or draft completely new legislation? Many of Law 131/1981’s articles have been ruled unconstitutional, while further constitutional contests are still being seen by court. A completely new law would comprehensively address these issues, but would take more time to formulate than an amendment.
- Will the amendment/ new law phase out rent control gradually, or implement a more immediate adjustment? A balance must be struck between tenants’ needs to adjust to higher rents, and landlords’ patience awaiting increased income, or, the return of their units.
- How will policymakers protect low-income and pensioner families from displacement? Over the last few years, the government has been rolling back subsidies and implementing austerity measures. It will need to fund enough tenants in need for many years to come.
- Should reforms extend to the deregulated “New Rent” sector to ensure broader market stability? Many Old Rent tenants will be forced into the already saturated New Rent market, creating more opportunity for landlords to further raise prices, pushing former Old Rent tenants to far less adequate housing.
Legislation satisfying the needs of both landlords and tenants will be challenging. While we scoured to find precedents in other countries where existing rent controlled contracts were de-controlled, we were unsuccessful in our search. Most countries that did deregulate rent control, did so only for new contracts, leaving existing contracts untouched. However, Egypt has had a similar case of abolishing rent control on existing contracts.The first was the infamous abolition of agricultural land rent control laws in the 1990’s. This led to cases of extreme violence as farmers resisted eviction from their land, which was the source of their income, and in many cases, their homes over the course of seven years, leading to at least 344 farmers being killed in clashes with police, 2357 injured, and 3330 arrested. The second, more recent case, was when the Constitutional Court annulled Old Rent for juridical persons in 2018,[1] but it took parliament four years before passing legislative amendment 10/2022 regulating the decontrol. In this case the amendment put a flat increase of five times the current rent in the first year of the law’s implementation, followed by a 15% annual increase for five years. Landlords were then free to set rent five years after the issuance of the law, which would probably lead to many tenants having to leave their properties. A legal expert we spoke to criticized the long delay in passing the amendment, which created a “very problematic and conflictual” legal vacuum as contacts were spontaneously considered annulled, and numerous eviction orders were issued, before the amendment came into force .
Parliament now faces the delicate task of balancing the competing interests of landlords and tenants while upholding social stability and preventing a potential housing crisis by the June deadline. If parliament does not successfully pass the amendment or new legislation and is not granted an extension, the ensuing legal vacuum will result in the spontaneous annulment of over a million and a half rental contracts, where courts could be flooded with thousands of cases of landlords attempting to evict tenants. The Built Environment Observatory also sees that reforming the old rent system in isolation is insufficient and that a comprehensive overhaul of the entire rental market, including the deregulated New Rent sector, is necessary to create a fair and sustainable housing system. In a future article, we will discuss possibilities of the rental reform needed to overcome these challenges.
Acknowledgements
Written by: Nadine Abd el Razek
Reviewed by: Yahia Shawkat
Main image: Supreme Constitutional Court, Cairo – The Arab Contractors
Please cite as:
Nadine Abd el Razek. ٍEgypt’s Constitutional Court Annuls Fixed Old Rent – Implications and Next Steps. The Built Environment Observatory. 25 March 2025.
Notes
[1] Juridical persons are not people, but corporations, government agencies, non-governmental organizations, or international organizations.