BEIRUT: Dozens of lawsuits have been filed at Lebanese courts amid an ongoing dispute between owners and tenants over rent hikes tied by law to a wage increase passed last year.
There are dozens “of court cases being filed by owners against tenants, who refuse to pay the rent increases stipulated by law,” said Patrick Rizkallah, a member of the committee representing the interests of landlords.
The old rent law, which governs lease contracts signed before 1993, stipulates that rents should rise by half of the percentage increase on the first salary bracket every time a wage hike takes place.
However, tenants and landlords are in disagreement this time on how to calculate the percentage increase pertaining to last year’s wage hike.
In January 2012, the Cabinet passed a decree enacting a 100 percent increase on the first bracket of salaries up to LL400,000.
The decree, however, annulled a LL200,000 wage increase awarded by Parliament in 2008, which experts say is legally disputable because a decree cannot supersede a law.
While landlords insist on the payment of a 50 percent increase in rent in line with the 100 percent hike in the first bracket of salaries, tenants argue that the effective 2012 wage increase amounts to 25.6 percent after the deduction of the LL200,000 and thus translates to a 12.8 percent increase in rents.
The Justice Ministry’s consultation and legislative committee has issued a memo supporting the landlords’ right to a 50 percent hike in rent, but the committee’s opinion is legally non-binding.
Rizkallah believes a 50-percent increase would restore a fraction of long-due justice to landowners who are paid much lower than market rates.
But Antoine Karam, head of the committee representing tenants, sees it as “greediness” by landlords.
He said the tenants already paid a 33 percent increase on rents in 2008 when the Parliament passed the 200,000 wage increase.
“Since the wage increase decree in 2012 canceled the wage increase in 2008, the 50 percent increase in rents should be paid on pre-2008 rents rather than current rates,” he said.
Like Rizkallah, Karam also backs this argument by citing a Finance Ministry circular which estimates the increase due on rents at 12.8 percent, in line with the view of tenants.
Lawyer Fadi Masri of BSA law firm says the dispute could take years if Parliament fails to endorse a new law that clearly defines the increase.
Another resolution to the ongoing row would require both landlords and tenants to await a conclusive court verdict that could constitute the basis of interpretation of the increase, he adds.
But Masri says that such a conclusive court verdict would take years because the lawsuit has to go through three phases: the Court of First Instance, the Court of Appeal and the Court of Cassation.
The dispute over the percentage increase of the rent hikes is exacerbating an already-raging debate between landlords and tenants.
Karam and Rizkallah are arguing over a new draft law that aims to gradually liberalize old rent contracts.
The landlords committee now supports the draft as a means “to restore a minimum of its rights,” Rizkallah said.
Under the proposed law, rents would increase over six years until they reach 5 percent of the current market value of an apartment.
During the first four years, rent fees would increase annually by 15 percent, sources who participated in drafting the law said, followed by 20 percent in the fifth and sixth years.
In addition to reimbursement by the government to make up for the hike in rent fees during those first six years, low-income families would be able to demand the renewal of the lease contract for up to 12 years. Landlords, on the other hand, would have the option to ask tenants to evacuate the apartment in exchange for 20 percent of its value.
“It is painful to wait for 12 more years for our property to return to us, but it is better than the current situation,” Rizkallah said.
Karam, on the other hand, says the law would displace more than 1 million people across the country. He said the only way to resolve the problem would be through a national housing plan that provides tenants with alternative homes.
“We will only accept the law over our dead bodies,” he said.