- 13:00
The law on liberalization of old commercial leases continues to stir controversy and an endless debate.
Law No. 11 was adopted in December 2023 and has already been challenged twice before the Constitutional Council: first by the President of the Republic, General Joseph Aoun, and then by thirteen MPs. Parliament passed its latest amendments on Thursday, July 31, 2025, hoping this version would be definitive and escape further invalidation.
However, under the provisions of the Constitution, nothing is certain yet. The text will be forwarded to the head of state, who will have one month to review it. He may either promulgate it or send it back to Parliament for revision. If returned, the situation between landlord and tenant would start over.
Commercial Leases: Non-Retroactivity
The amended law on old commercial leases does not require implementing decrees. Its provisions are explicit: any procedure initiated before Law No. 11 came into force will remain governed by the legislation in effect at the time it began. Thus, eviction proceedings launched during the legislative void, under the Code of Obligations and Contracts, will continue to be handled in accordance with that code. This clarification ends the legal uncertainty and reaffirms the principle of non-retroactivity.
Reference Rent Lowered
Overall, the amendments adopted by MPs could be seen as unfavorable to landlords, particularly due to the reduction in reference rent and extension of lease terms, which can now last up to eight years.
Law No. 11 was revised in three major ways. The first concerns the method for calculating equivalent rent, also known as the reference rent, considered reasonable and fair for a comparable property under similar market conditions.
Previously set at 8% of the property’s market value, it has now been reduced to 5%. This decrease significantly lowers landlords’ expected income, since progressive rent increases are indexed to this benchmark.
According to lawmakers, this measure aims to preserve a balance between the interests of both parties, landlord and tenant, ensuring a fairer transition in the gradual phase-out of old commercial leases.
Renewal of Commercial Leases
Article 3 of Law No. 11, dated December 2023, which sets renewal periods for commercial lease contracts, has also been substantially revised. Until now, landlords could choose between two options: a two-year renewal with no rent increase, or a four-year renewal with progressive rent hikes.
Under the new framework, renewal terms will depend on a four-tier classification of tenants:
First category: tenants who have not paid pas-de-porte (a lump-sum, non-refundable payment made by the tenant to the landlord) will have their contract renewed for five years.
Second category: tenants who paid a pas-de-porte before 2015 will benefit from a six-year renewal.
Third category: tenants who paid a pas-de-porte after 2015 will benefit from a seven-year renewal.
Fourth category: leases held by public administrations or by commercial entities belonging to liberal professions will be renewed for eight years.
Progressive Rent Increases
Rent hikes will now be spread in stages, depending on the tenant category:
For the first and second categories: +30% (of the reference rent) in the first year, +40% in the second, +50% in the third, before the lump-sum compensation or equivalent rent is applied in subsequent years.
For the third and fourth categories: +30% in the first year, +40% in the second, +50% in the third, and +60% in the fourth, followed thereafter by the lump-sum compensation.
Landlord–Tenant Balance
For decades, relations between landlords and tenants of both residential and commercial spaces have been fraught. Both sides felt trapped under a supposedly temporary law. Landlords had long called for an overhaul of an outdated legal framework to account for runaway inflation and the steep devaluation of the Lebanese pound.
Tenants, for their part, sought to remain in place, citing financial hardship and invoking, at various times, war or a multifaceted economic crisis.
Over time, these extended occupations evolved into what many saw as an institutionalized form of squatting.
Comments