Impending calamity

According to Ghassan Moukheiber, legal ambiguity regarding the new rent law will spell trouble in 2015

After over a decade of debate — and severe hiccups in 2014 — a law annulling the “old rent” system, whereby tenants who signed leases before 1992 never faced rent increases, gained parliamentary approval and in June was published in the Official Gazette. The Constitutional Council, however, struck down two and a half articles in the law related to a committee to settle disputes between landlords and tenants over the value of an apartment. An apartment’s market value is used in the law as the basis for incremental rent increases for tenants with pre-1992 leases. The law is expected to go into effect in December. Executive speaks with parliamentarian Ghassan Moukheiber about the Constitutional Council’s decision and the impact of the law. 

 

Were the articles that the Constitutional Council rejected removed from the law?

No.

 

It is expected that dozens if not hundreds of landlords will be suing their tenants based on the law

What does that mean for implementing it? 

There’s a legal debate in the country about the consequences of such a decision. You have a divided opinion as to whether or not the Constitutional Council effectively invalidated the whole law or whether the effects of the invalidation of two and a half articles has no impact on the rest of the law.

 

What do you think will happen when the law goes into effect, given legal uncertainty around the committee that should arbitrate disputes over the value of apartments and rent increases?

It is expected that dozens if not hundreds of landlords will be suing their tenants based on the law.

 

Why do you think landlords will sue tenants?

Because, assume I’m a tenant and I don’t want to do anything — my argument, if I am asked by my landlord to pay increased rent, will be that the whole law is not applicable so you cannot ask me to do anything.

 

Is there any way to resolve this issue?

There are two ways to handle this confusion. It’s either handled through the courts themselves, through appeals up to the supreme courts, which will take years before they are settled, or Parliament intervenes and clarifies, by modification of the law, the fate of the two and a half articles. If Parliament does this, it will reopen the debate about whether or not to limit legislative intervention to these two and a half articles or to revise the whole law. And there you have two approaches within Parliament: those that side with the law and say we only have to modify those articles that were addressed by the Constitutional Council and the others that were unhappy with the law anyway and want to see it totally remodeled.

 

Is there any talk in Parliament about such an intervention?

Yes, there already are a few bills that were submitted and I expect Parliament, particularly the Law Committee that proposed the law, to discuss those new bills or ideas for reforming the law.

 

The other dimension of housing policy that we should have voted on is a series of tax incentives for building and developing social housing

Is Parliament looking at any other housing issues?

The rent law is only part of a group of bills that were supposed to be voted on together, which includes a special law on long term leasing, a funding system that makes it cheaper for people to own the apartments they’re renting. The other dimension of housing policy that we should have voted on is a series of tax incentives for building and developing social housing. 

 

This rent law took years to agree on, are you hopeful these other pieces will be approved soon?

That goes back to the issue of parliamentary ineffectiveness particularly with contentious bills. The more contentious it is, the more difficult it becomes to pass. 

 

Are there any recent, reliable statistics on how many “old rent” contracts there are in Lebanon?

No, there are no real, exact statistics. 

 

The law calls for funding to help low-income tenants pay the rent increases. Will it be functioning immediately or does it need additional legislation?

It would need funding laws, but there’s no [functioning] Parliament to [pass such laws].

 

So, in reality, is there a fund in place?

No, of course not. Having a rent fund would require a budget law, and the budget would need to provide funding for this fund because this is a new expense for the state, it has not been provided for in the past. If Parliament doesn’t do that, the creation of a fund would remain theoretical.

Matt Nash

Matt is Executive's Economics & Policy Editor. He has been reporting on Lebanon since 2007 with a focus on oil and gas, policy and legal matters.

*

Top