Egypt Axes Rent Caps, Promising Relief for Landlords

Weary landlords tired of rent control or stabilization may soon be envious of property owners a world away, who are now getting a reprieve from their government after decades of struggles.

Egypt upended one of the longest-running features of its housing market, scrapping rent caps that for decades shielded tenants from rising costs but left landlords earning pennies, Reuters reported.

The move, approved by parliament in July, is the most sweeping rent reform since the mid-1990s and is set to reshape Cairo’s rental landscape.

The change eliminates “old rent” contracts signed before 1996, which allowed tenants — and in some cases their heirs — to occupy homes indefinitely at nominal rates.

Under the new law, rents will climb sharply over the next five to seven years before shifting to market-based increases of 15 percent annually.

Minimum rents have been set at 1,000 Egyptian pounds ($20.60 USD) in prime neighborhoods, 400 pounds ($8.24) in mid-tier areas and 250 pounds ($5.15) in working-class districts.

For tenants like 84-year-old Khaddara Ibrahim Ali, who pays less than a quarter of a U.S. dollar each month for her downtown Cairo flat, the prospect is devastating. Millions of households will face eviction or crushing rent hikes at a time when inflation, subsidy cuts and stagnant wages are already squeezing budgets.

On average, housing costs eat up nearly a quarter of household spending and many private-sector workers earn well below the state minimum wage of 7,000 pounds.

Landlords, meanwhile, stand to benefit after decades of suppressed returns. Capped rents left them unable to cover upkeep, let alone profit from their holdings.

The government pledged safety nets, including access to social housing and rent-to-own schemes, and insists no family will be left homeless.

But watchdog groups question whether the state has the capacity to meet demand. The Built Environment Observatory estimates 530,000 families will need immediate support, far outpacing the roughly 69,000 state-subsidized units delivered annually over the past decade.

Analysts warn that the transition could accelerate gentrification in historic districts, as low-rent tenants and small shopkeepers are priced out in favor of higher-yield tenants.

— Holden Walter-Warner