Supreme Court Orders Amendments to Old Rental Law

The Supreme Constitutional Court (SCC) has ruled that the first paragraphs of Articles 1 and 2 of Law No. 136 of 1981 - which capped the annual rental value at 7 percent of the actual land and building value - are unconstitutional. The court declared that the law violated property rights and called on parliament to amend it.

Originally designed to protect tenants from sudden price hikes, the old law has rendered rental income from properties under its jurisdiction nearly worthless amid repeated inflationary pressures. In some cases, apartments in downtown areas have a fixed rent as low as EGP 20 per month, leading many landlords to neglect property maintenance resulting in safety issues.

In a statement, the SCC emphasized, "Rent should be based on objective standards that aim to achieve a balance between the two parties in the rental relationship." It further explained that legislative intervention is needed to ensure this balance, preventing landlords from imposing exploitative rents based on tenants' housing needs, while safeguarding investment returns in land and buildings from being undermined by fixed rents.

In light of the ruling, the SCC has instructed parliament to amend the legislation, with a deadline set by the end of the current legislative session in nine months. According to the court, the revised law should establish clear guidelines for determining rents for properties governed by the outdated law, ensuring a more equitable arrangement between landlords and tenants.