- 13
- June
- 2024
The issue of rents for residential units and commercial spaces remains unresolved. Owners and tenants are navigating between new and old leases. The interpretation of laws is causing division among legal professionals and judges alike.
Owners are reluctant to rent out their real estate properties, and potential tenants are hesitant to commit to a lease agreement. The instability of the rent regulatory framework prevents both parties from taking action.
The debate over residential rents revolves around whether the nine-year grace period granted for a gradual liberalization of old leases has come to an end.
A law on the gradual liberalization of residential leases was passed in 2014, and slightly amended in 2017. It stipulates a gradual increase in rents for old residential leases signed before 1993 over a nine-year period. Once this period ends, landlords and tenants have complete freedom to negotiate new residential leases according to their own terms and agreements.
Moreover, this legislation has also enabled low-income tenants to receive temporary financial aid from a dedicated fund established for this purpose.
However, this fund has never been implemented and is unlikely to ever be, given the State's near bankruptcy and staggering debt of over 80 billion dollars. Since the law was passed, 8,000 aid applications have been submitted to this fund.
Based on a 2017 census by the Ministry of Finance, 64,000 old tenants are now left in a precarious socio-economic situation. Meanwhile, the number of cases brought before the relevant courts continues to rise.
Commercial Leases
Regarding commercial leases, the situation remains ambiguous. Owners and former tenants await a decision from Caretaker Prime Minister Najib Mikati on whether to publish the new law passed by Parliament on December 15, 2023, in the official gazette.
A few days ago, the State Council sided with the real estate owners' union in their lawsuit against the prime minister. They accused him of violating current laws and regulations by returning the text to Parliament, despite the government having previously approved it under a decree-law.
The law passed on December 15, 2023, gradually phases out the freeze on old commercial leases over a four-year period.
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