In a joint statement published today by six human rights and research organisations and lawyers concerned with the right to housing, offered a proposal for reforming the Old Rent Law in the wake of the ruling of the unconstitutionality of fixing rent values last November.  In light of the judgement, and the draft law proposed by the government, and the ensuing discussions in the House of Representatives by MPs, tenants‘ representatives and landlords’ representatives, and the signatory group's experience in housing rights issues, we put forward a set of proposals that safeguard the rights to housing and to private property, in a method that avoids social and economic crises, through four main pillars: Fair treatment of existing contracts, rent increases based on legal rather than market values, cash support for the most vulnerable tenants, and reform of the rental system as a whole, of both Old Rent and New Rent.

Firstly, we reject total liberalisation of contracts. The basis of the draft law should be the continuation of rental contracts under the 2002 Constitutional Court judgement that allows bequethal for one time. It should be taken into account that a large percentage of tenants have paid khilew rigl (key money), and/or paid for the finishing of unfinished units at the date of their rental, in addition to paying for the non-periodic maintenance of the property such as repairing or installing water or electricity infrastructure or renovation (usually the responsibility of the landlord), in agreements with landlords as compensation against the lower fixed rents, thus creating a tenure entitlement that differs from regular rental tenure and becomes a long-term usufructuary right. Immediate liberalisation on a single date will create a new housing crisis and a major disruption in the real estate market when hundreds of thousands of tenants, half of them in Greater Cairo, are forced to look for alternative housing, whether for rent or ownership at the same time, risking monopolistic practices and price gauging, as has happened recently with waves of refugees, and with it the inevitable risk that a large number of tenants will not find alternative housing and end up homeless.

However, there is also an issue of inequality between landlords in the absence of a specific term for the lease. There are as well cases where the legal term can be shortened due to the absence of a primary residential purpose that requires protection and preservation. Therefore, the group proposes to allow individual owners to request one unit for personal use for themselves or one of their first-degree relatives (provided they have reached the age of consent), if the family (husband, wife, minor children or first-degree relatives for whom the unit is to be requested) does not own another residential unit that is not rented out under Old Rent. This would be against cash compensation of the tenant at 10% of the value of the unit (based on real estate tax estimates and not market value), and where the unit would be vacated after a transitional period equal to one month for every 12 months (year) that the tenant has lived in the unit.

As for the units for which the purpose of housing has ceased, we propose to terminate the contracts with the ability to make new leases or vacate the units within 12 months of the adoption of the law in the following cases: When it is proven that the tenant (or the spouse or minor children) owns another residential unit, or an agricultural land plot (within the agricultural zimam) that exceeds one feddan, or an urban land plot that exceeds 100sq. m. If the unit is closed or not used permanently (used for less than 9 months per year) for three years or more, or if the unit is sublet, the Old Rent contract shall be terminated within 6 months of the approval of the law. As for units whose use has been changed from residential to another activity, these cases can be regulated by the proposals for dealing with non-residential units.

Second, the group suggests establishing a methodology for raising rental values as well as annual rent increases with a legal rather than market-based calculation. This can be done by the government establishing an official rent value index as estimated by the real Estate Tax Authority, determined at the level of each neighbourhood. This specific increase is applied gradually over 5 years, starting with 60% of this index and increasing by 10% each year until it reaches 100% of the index at the end of five years. After this period, the rent will increase on an annual basis determined by the government rent index based on the official rate of wage increases (according to CAPMAS data), not the inflation rate.

Third, the government should support low- and middle-income tenants in paying the new rents and staying in rented units, with special criteria for the elderly and pensioners. The group proposes that the government, through the Social Housing and Mortgage Finance Fund (SHMFF), establish a rent subsidy programme for low- and middle-income tenants, with priority for Old Rent tenants, with a legal rent-to-income ratio not exceeding a maximum of 20% (according to official statistics from the Household Income, Expenditure and Consumption Survey), where the programme will subsidise the difference between this limit and the legal rent that will be charged on the units by the official index. The income conditions apply according to the latest SHMFF conditions for social housing (Housing for All Egyptians), which are for low-income earners up to LE 12,000 per month for an individual and LE 15,000 for a family, with the cancellation of the minimum income requirement. For middle-income earners, it is between the upper limit for low-income earners and LE 20,000 for an individual and LE 25,000 for a family. We also emphasise the importance of continuing the subsidies for an open-ended period while re-examining eligibility every five years.

Fourth, the group proposes reforming the entire rental system, both old and new. There is an urgent need to reform New Rent that is the Civil Code articles on rent, which have not seen any amendment or development since it was passed in 1948. This mainstream rental law will receive a large influx of Old Rent tenants when their units are liberalised, in addition to regulating over 1.4 million existing tenancies, though ones that experience runaway prices and eroding tenure security. Therefore, we propose that the government’s official rent index should be generalised to be applied for all tenancies at the level of each neighbourhood and reviewed annually. A minimum contract period of 5 years should also be set, with the ability for the landlord to request the unit for personal use during the period in exchange for compensating the tenant for the unused period. On the other hand, the government should create incentive programmes for renting out vacant units to exploit the large percentage of vacancies – estimated to be 12 million units according to official statistics, by exempting units rented to low- and middle-income tenants from real estate taxes, and establishing dispute resolution associations, to mediate between landlords and tenants as a first resort before seeking legal measures.

The undersigned:

Egyptian Commission for Rights and Freedoms

Diwan Al-Omran

Human and the City for Social Research

Egyptian Initiative for Personal Rights

Built Environment Observatory

Mohamed Abdelazim, Lawyer