The Rental Crisis in Egypt: A Struggle Between Tenants and Market Forces
In recent years, entering the rental market in Egypt has become increasingly challenging. Since the beginning of 2021, the local currency has depreciated by 70% against the dollar, while inflation rates have soared to historic highs of 40%. The rental market has transformed into an incoherent and ever-changing environment where price-setting has become uncertain for both landlords and tenants.
Adding to this instability, in November 2023, the Supreme Constitutional Court struck down a law that had frozen rents for decades and allowed leases to be inherited. This ruling, part of a long-standing legal battle spanning 37 years, leaves the Egyptian Parliament until the end of June to amend the legislation. Without intervention, existing rent caps will disappear.
The deregulation of Egyptian rental contracts initiated by a 1996 law introduced a dual system: contracts signed before that year were subject to old regulations, while newer contracts were free to align with market prices. According to the latest census from 2017, only 14% of families in Egypt live in rented accommodations. While renting may not seem popular on the surface, the reality behind the statistics reveals a different story. In fact, 33 million families live in rental situations, with 16 million tied to old contracts. The majority, about 11 million households, are in the Cairo metropolitan area where 25% of all households are under old rental agreements.
A key complaint from landlords is the stark and growing price gap between old and new rental agreements. In Cairo, for example, around 600,000 households pay monthly rents of less than 50 Egyptian pounds (about $1), while new rentals can be priced up to 100 times higher. This significant disparity has led to many properties falling into disrepair, as landlords are either unwilling or unable to maintain their buildings. Some landlords opt to leave their apartments vacant for years, while others resort to vandalism to clear out spaces for future sale.
Supporters of the old rental system argue that it protects tenants, fostering stability and community ties. They point out that many renters have long borne the maintenance costs and have made personal investments to enhance their living conditions.
However, the situation is precarious for many low-income tenants unable to bear the burden of market-level rents or home purchases. An abrupt liberalization of rent controls could lead to mass evictions. The minimum wage in Egypt's private sector hovers around 1,400 Egyptian pounds (approximately $45) per month, further complicating affordability for the average citizen.
In response to this complex predicament, the pro-market government has proposed a bill that would increase old rental prices by 20%, establishing a minimum base of 1,000 pounds (approximately $20) in cities and half that in rural areas. Rents would further escalate by 15% annually for five years, transitioning to market rates thereafter. The draft legislation includes provisions for social housing prioritization for families facing eviction, although these units may be located far from tenants' current neighborhoods.
As Egypt grapples with these challenges, the future of rental housing remains uncertain. The underlying question persists: why have past policies failed to ensure that the majority of Egyptians can at least afford basic housing? As the deadline for regulatory changes approaches, the outcomes will be critical for countless families who depend on stability amid changing economic tides.
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