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Landlords ready for round two on old-rent law

  • Landlords protest in support of the new rent law in Beirut, Wednesday, May 7, 2014. (The Daily Star/Mohammad Azakir)

BEIRUT: Despite looming legal challenges for the new rent law, the bill was republished in the Official Gazette this week, leaving landlords rejoicing at their victory in a lengthy battle with longtime tenants.

“We have been demanding this law for a while now and the re-publication is a very good step in the process,” Joseph Zoghaib, the head of the Landlords Association, told The Daily Star.

The law has been at the center of controversy since it was proposed by the Cabinet two years ago, with tenants saying such a bill would displace thousands of families who rent in Beirut under an old law governing lease contracts signed before 1992.

Inhabitants pay minimal rent fees that often amount to less than LL1,000,000 annually.

After being approved by Parliament this spring, the law was published in the Official Gazette a day early, which lead to the Constitutional Court rejecting it. Then-President Michel Sleiman had challenged the law and asked the court to review its constitutionality, but the panel rejected both the law and the challenge because of the premature publishing of the law.

Thursday’s publication came two weeks after the Constitutional Court said the bill’s early publication was invalid, leaving the panel unable to rule on the constitutionality of the new law.

However, with Thursday's new printing, the law will go into effect within six months, barring any further challenges.

According to the new law, tenants under pre-1992 rental contracts will face rent increases in yearly increments over a six-year period, until annual rents reach 5 percent of the current market value of the house.

“Rent agreements will be terminated after a nine-year period from the date of the law’s enactment, which is set for six months from now. After that period, the landlord may regain control of his property. He can choose to sell, repair, or rent it under a different contract,” Zoghaib, who has lobbied for the new law, said.

The law takes into consideration low income families, with citizens whose income is less than three times the minimum rent, or those who have an income that is less than LL2 million, eligible for certain benefits, Zoghaib said.

“The nine-year expiration period for the rent contract will be extended to 12 years for low-income families,” he said. “Moreover, the tenant would not be subject to the rent increase since the government will use an aid fund to compensate landlords for the increasing rent charges. The individual pays nothing over what they used to under the previous law.”

Zoghaib said that the fund’s finances would be paid by the national treasury and supervised by the Finance Ministry.

Zoghaib dismissed accusations that the law would hurt longtime tenants, saying the landowners would be able to “get their land back, and they can renovate or even sell land for new real estate projects.”

“As for the tenants, the nine-year period is meant to facilitate the possibility of owning the house. For those whose incomes remain low, affordable housing projects are being touted as a solution.”

But not everyone is celebrating the law, with some activists claiming that the law was vague and needed amendments.

“There is general vagueness around the law, it is not clear how the aid fund will be operated, or where the money is going to come from,” said Mazen Berjawi, a lawyer specializing in rent laws.

According to Berjawi, Lebanese law currently allows for a landlord to take back property at any time after paying a 30 percent compensation fee to the tenants, however, under the new law rent contracts will be terminated after a nine year period, meaning tenants could be asked to abandon the property without receiving any compensation.

 
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Summary

Despite looming legal challenges for the new rent law, the bill was republished in the Official Gazette this week, leaving landlords rejoicing at their victory in a lengthy battle with longtime tenants.

However, with Thursday's new printing, the law will go into effect within six months, barring any further challenges.

According to the new law, tenants under pre-1992 rental contracts will face rent increases in yearly increments over a six-year period, until annual rents reach 5 percent of the current market value of the house.

According to Berjawi, Lebanese law currently allows for a landlord to take back property at any time after paying a 30 percent compensation fee to the tenants, however, under the new law rent contracts will be terminated after a nine year period, meaning tenants could be asked to abandon the property without receiving any compensation.


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