Written by: Yasmin Farag
Junior Associate
Introduction
After decades of judicial and social debate, Law No. 164 of 2025 on New Tenancy Regulation was enacted to resolve the long-standing issues surrounding lease agreements concluded before 31 January 1996. Such agreements were characterized by nominal rental values compared to the high market value of the leased properties, in addition to their extension across multiple generations, depriving owners of the full enjoyment and use of their property.
This law constitutes a decisive legislative intervention to reorganize the relationship between landlords and tenants in a manner that balances the interests of both parties and restores alignment with prevailing market values, without causing abrupt harm to tenants or infringing upon the rights of landlords. The key provisions of the new law are outlined below:
First: Scope of Application
The law applies to:
- Premises leased for residential purposes.
- Premises leased to natural persons for non-residential purposes (e.g., commercial shops, clinics, offices).
Second: Duration of Lease Agreements
- Residential leases: Terminate seven (7) years from the effective date of the law.
- Non-residential leases: Terminate five (5) years from the effective date of the law.
- The landlord and tenant may mutually agree to terminate the lease relationship prior to the expiry of these periods.
Third: Classification of Real Estate Areas
Survey committees shall be formed in each governorate to classify areas containing residential rental units into:
- Premium areas.
- Mid-range areas.
- Economic areas.
The classification shall be based on geographical location, construction quality, availability of utilities, level of services, and prevailing rental values in the area. The committees must complete their work within three (3) months, extendable once.
Fourth: New Rental Values and Annual Increases
- Residential premises
Premium areas:
- New value: Twenty (20) times the current legal rent, with a minimum of EGP 1,000 per month.
- Annual increase: 15% of the payable rent.
Example:
- 1 Sept 2025 – 31 Aug 2026: EGP 1,000
- 1 Sept 2026 – 31 Aug 2027: EGP 1,150 (15% increase)
Mid-range areas:
- New value: Ten (10) times the current legal rent, with a minimum of EGP 400 per month.
- Annual increase: 15% of the payable rent.
Example:
- 1 Sept 2025 – 31 Aug 2026: EGP 400
- 1 Sept 2026 – 31 Aug 2027: EGP 460
Economic areas:
- New value: Ten (10) times the current legal rent, with a minimum of EGP 250 per month.
- Annual increase: 15% of the payable rent.
Example:
- 1 Sept 2025 – 31 Aug 2026: EGP 250
- 1 Sept 2026 – 31 Aug 2027: EGP 287.50
- Non-residential premises leased to natural persons:
- New value: Five (5) times the current legal rent.
- Annual increase: 15% of the payable rent in the preceding year.
Example: If the current legal rent for a commercial shop is EGP 200/month:
- Upon commencement of the law: New rent = 200 × 5 = EGP 1,000/month
- After one year: 1,000 × 1.15 = EGP 1,150/month
- After two years: 1,150 × 1.15 = EGP 1,322.50/month
- After three years: 1,322.50 × 1.15 = EGP 1,520.88/month
- The 15% annual increase continues until the statutory lease term expires.
Fifth: Early Eviction Cases
Eviction of the leased premises may be ordered before the contractual term in the following cases:
- Keeping the premises closed for more than one year without justification.
- The tenant or an entitled successor acquiring an alternative suitable property for the same purpose.
In the event of refusal to vacate, the landlord may apply to the Summary Judge (Judge of Urgent Matters) for an eviction order and may also claim compensation.
Sixth: Alternative Solutions for Tenants
Before the expiry of the statutory lease term, the tenant or an entitled successor may submit an application to the State to obtain an alternative unit (leased or owned) in return for an undertaking to vacate and deliver the currently leased premises immediately upon receipt of the new unit, in accordance with regulations issued by the the Cabinet
Conclusion
Law No. 164 of 2025 represents a pivotal legislative step towards reforming rental relations in Egypt. It addresses conditions that persisted for decades and achieves a fair balance between the rights of landlords and the needs of tenants by introducing gradual rent increases, setting clear timeframes for vacating premises, and providing alternative housing solutions through the State.
This law stands as a model of legislation that upholds social justice while reshaping the real estate market to reflect current economic realities.