New rental law: Nothing but contentious

Watani

3 days ago

The Egyptian street is abuzz with controversy over a highly contentious law passed by the House of Representatives on 2 July 2025.
The law overhauls the more than 60-year-old current rental law which is notorious for favouring tenants to the severe detriment of landlords. The outcome of the current law has greatly impaired Egypt's real estate wealth, and it was hoped that the new long-overdue law would rectify the decades-old problem and bring about justice to long-wronged tenants. Yet the new law was passed in the wake of deep divisions that sparked a walkout by opposition lawmakers.
'Old rents'
The old, fixed rentals go back to the 1960s when, among a bunch of socialist revolutionary decisions taken by Egypt's President Gamal Abdel-Nasser, rental values were frozen indefinitely and rental contracts immortalised. On the face of it, the move favoured tenants, who were then regarded as less privileged than landlords; it practically turned them by law into de-facto owners of the houses they rented. The rights of the actual owners, on the other hand, were thrown to the wind. The result over some 60 years has been a disastrous decline in the value of Egypt's real estate wealth, with grave negligence in the maintenance and facilities of buildings, given that the cost of such maintenance had gone far beyond the rental value collected.
The law which froze the rentals made no provision for any periodic increase in their values. The result was that the rental values which were some 60 years ago consistent with average incomes, purchasing power and day to day expenses, became increasingly inadequate—even laughable—as subsequent decades saw exponential rises in incomes and prices. Some rents ran as low as EGP5 a month, a little over USD0.01 by today's value. The injustice in the tenant-landlord relationship became entrenched; the meagre rentals that pampered—even spoiled—tenants were the epitome of injustice and humiliation for landlords, especially those who depended on rent as a source of income.
The need for a new rental law that would free old rentals and bring them up to free market value and requirements became increasingly dire, even as the needs and wants of tenants under threat of free market requirements became more grave. According to the House of Representatives' Housing and Facilities Committee, some 3 million residential units are currently governed by the old rental law.
'New rents'
The 1990s saw an attempt by the government to free rents. A rental law was passed in 1996 giving free rein to rentals of residential housing units built following that date, but did not apply to old rents. This law worked well for many seeking new homes, but the new rentals were well beyond the means of tenants who paid old rentals; many of these tenants being pensioners or elderly not capable of coming up with the cash needed for new rentals Yet today, the 1996 rental law represents a legislative glitch that calls for revision in order to unify the regulations that govern rentals for all residential housing units, with an eye to averting duplicity or discrimination.
Conclusion: No one in Egypt doubted the need for a new rental law that would rectify the long-entrenched flaws and restore value to Egypt's real estate wealth, covering a significant aspect in the national plan for economic reform. Yet the thorny question was not why, but how.
It helps to remember that Egypt's Constitution stipulates the safeguarding of private ownership in its 35th Article.
On 9 November 2024, Egypt's Supreme Constitutional Court (SCC) deemed Articles 1 and 2 of the Rent Control Law 136/1981, the law popularly known as the 'Old Rent' law, unconstitutional. These articles specifically address the fixed rent aspect of the law. The SCC gave Egypt's parliament until July 2025 to enact the law, July 2025 marking the final date before parliament's summer recess and the end of the current parliament. Elections are scheduled for a new parliament in August 2025.
The new law
Pivotal in the new legislation passed into law on 2 July is the stipulation of a period of transition until the current low rents are phased out and rents are freed of all constraints. This period was defined as seven years for residential units and five for non-residential ones, during which current rents are raised, and after which current contracts between landlord and tenant are terminated. This means tenants will have seven years after the law takes effect to vacate the property and return it to the owner.
The new law also introduces significant rent increases: 20 times the current value, at a minimum of EGP1000 for residential rents in prime areas; and tenfold in other areas, at minimum values of EGP400 in moderate districts and EGP250 in underprivileged ones.
The rents rise 15 per cent annually during the transitional period.
Official committees are to be formed in each of Egypt's governorates to categorise residential neighbourhoods into prime, moderate, and economic (underprivileged) based on geographical location, building quality, infrastructure, and available services. These committees are expected to complete their work within three months of the law's enactment.
The government has pledged to provide alternative housing options, including subsidised units and opportunities to purchase or rent new units, to assist tenants negatively affected by the new law.
Parliament approved an amendment that the tenant may not be evicted before at least one year has passed since a suitable alternative housing option chosen by the tenant has been made available. But landlords may seek eviction if a property has been closed for over a year without justification or if the tenant owns another usable unit for the same purpose.
The new law received final approval from Egypt's House of Representatives and should go into effect once it is published in the Official Gazette.
Opposition walks out
The bill was approved during a House of Representatives general session chaired by Speaker Hanafy Gebaly.
Opposition members, including those from the Justice, Tagammu, and Egyptian Social Democratic Parties, walked out in protest of the bill's approval.
They released a statement declaring their 'disavowal' of the bill and condemning the government's refusal to amend its terms.
The dissenting lawmakers expressed dismay at their failure to secure amendments that would have extended the transitional period and preserved rights for original tenants and their families.
They argued that the government exploited a Constitutional Court ruling, which only addressed rent value adjustments, to push through broader changes that affect legal provisions not covered by the court''s decision.
'We spared no faithful, honest effort, whether during committee discussions or in the general session, to preserve the stability of the nation and the integrity of the internal front and provide a legislative product that maintains the rights of landlords and tenants in a balanced manner,' the opposition statement read.
They added that attempts to exclude original tenants, their spouses, and children from the termination of rental relationships were unsuccessful.
Public response
Predictably, the new law has been the subject of vociferous debate on the street and social media.
Landlords in general applaud the law for finally vindicating them and achieving long-lost justice. They resent opinions that see the law as unjust to tenants, believing such views as biased towards tenants, and tantamount to a call for extension of the injustice inflicted upon landlords for so many decades.
Tenants, however, reject the concept of being evicted once the rental contract is terminated. They fear being priced out of an unpredictable housing market. Given that many of these tenants are elderly, they might very well find the new rentals far beyond their means, which implies they have to move into a neighbourhood that is socially substandard to their long-time one—understandably not something one relishes. But even those with the means to pay high rents may find they have to move out because the landlord wishes to seize the house for family, or even to demolish the old building altogether and build a new one in its place.
The law will impact market stability, social equity, and sustainable urban development in Egypt. While exact financial projections are not officially confirmed, economists view the new law as a step toward revitalising the housing sector. Yet challenges such as housing affordability remain a concern. To address this, the government has earmarked EGP13.6 billion in the 2025/2026 budget for housing subsidies and the expansion of social housing programmes.
Watani International
13 July 2025 Comments
comments Tags: Basma NasserEgypt new rental law 2025Egypt old rents lawSamia Sidhom