New rent law mandates bidding Beirut farewell

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An aerial view of Beirut with new highrise luxury towers being constructed. (Photo: Haitham Moussawi)

By: Soha Shamas

Published Wednesday, April 2, 2014

On the outskirts of "upscale" downtown Beirut in the Khandaq al-Ghamiq neighborhood, modest adjacent buildings form a narrow alley called Zaroub al-Haramieh (the Alley of the Thieves). There, bourgeois Lebanese live close to those in abject poverty.

The peculiar situation exists in many of Beirut's old neighborhoods. Basta, Zoqaq al-Blat, Achrafieh, Ras Beirut, and Mazraa are all neighborhoods that have both rich and poor tenants. However, the law to liberalize old rent contracts will lead to the eviction of their residents from their long time homes.

Despite all expectations, the great majority of MPs voted in favor of the law to liberalize the pre-1992 rent contracts. The only exceptions were MPs Nawwaf al-Moussawi and Walid Sukkarieh, who said that the new law will lead to the displacement of families on old rent contracts. Sukkarieh also called to form a parliamentary committee to discuss the law, with the involvement of the ministries of finance, justice, and social affairs.

Once again though, big business was more powerful. It was clear that the MPs were representing the interests of landlords and real estate brokers, who wish to clear the old buildings from their tenants in order to tear them down, construct high rises, and earn abundant profits.

The MPs claimed the law was fair to both owners and tenants. However, what they meant by fairness was the creation of an additional "fund," forcing all Lebanese taxpayers to pay the cost of emptying the buildings. This is the worst part of the law. The new law stipulates a full or partial rise in rent and compensation of owners and tenants for the paid taxes.

The Committee of the National Conference of Tenants followed up by calling on all parties, committees, unions, women’s rights and youth organizations, and tenant councils and committees to meet at 5pm next Thursday at the headquarters of the National Federation of Trade and Employees Unions in Wata al-Moussaitbeh in Beirut to decide how to escalate the confrontation against this law.

A member of the committee explained to Al-Akhbar that the law requires rent fees to be deregulated nine years after they’re issued. During the first six years, the rent will be raised according to a commulative increase equal to 15 percent of the difference between the value prior to issuing the law and the equivalent value for each year of the four year grace period following the law's adoption. This will be followed by raising the rent value by 20 percent of the difference for the fifth and sixth year of the grace period, until the rent reaches the value of the aforementioned equivalent. In the following three years, it should be equal to the equivalent value.

"The law is not only unfair," he explained, "it will also result in displacement of Beirut’s residents for many reasons."

The equivalent value is estimated at around 5 percent of the normal price of apartments. For example, for an apartment in Beirut whose price is estimated at 350,000 US dollars, the equivalent value would be $17,500 divided over 12 months, or $1,500 per month.

But how many of the old tenants would be able to pay such an amount after the sixth year or even when the rent is raised by 15 percent of the equivalent, or $255? Some tenants cannot even pay this amount. What will happen a year later, when the rent is raised by $450?

The law calls for the establishment of a temporary fund for limited income tenants whose income does not exceed three times the minimum wage. The fund would provide monthly installments to the landlord for the grace period as requested by the tenant who asked for the contribution.

Here lies the crux of the matter. Will those whose incomes exceeds three times the minimum wage (LL675,000 - $450) be able to afford paying the required rent? And what is the guarantee that this fund will not become a conduit for waste and embezzlement of public money like all the other public funds?

Nine years later, how will the tenant be able to afford a new home? Is it with the help of the compensation for evacuating the house, as set by the law, in the event that the owner wants to recover the amount equivalent to 20 percent of the rent?

"Why would any owner compensate a tenant for a rented property freed by the law and for which the tenant pays a rent exceeding the normal value, even exceeding the value of payments requested by owners to regulate their situation and recover their rights?" the tenant's committee wondered.

This article is an edited translation from the Arabic Edition.

Comments

Really, where do we see such a discrepancy? In one building, one tenant pays $800 per month and the other $30!

In other countries, the rent is a percentage of the income, what is $30 today? Nothing, does not buy food for one day.

What about discounts for poor Lebanese? Why doesn’t the government help the poor, give them free food, and exempt them from paying water bill, ….

Can one believe that parking a car costs more than what a rent brings for an apartment.

There are many facilities today to buy a house (Bank Al Iskan). Poor Lebanese should receive help from all. Poor people accept to be labeled as poor. Would our rich tenants accept this label? No they tend to save the money on the rent to buy perfumes, good cars....

My parents own a building under old rent - most of the renter in the building make higher salaries than both my parents combined - they can afford new rent, or can afford to move a better place. It is my parents that can barely make ends meet of the rental income. Furthermore, they have no incentive to improve the building because the rents are so low and they are not allowed to charge more. No one is wining in the current situation - there has to be some change.

I am not living in Lebanon since a long while now.
And I am neither concerned with the interests of the tenants nor those of the landlords.
However there are basic rules by which justice has to guide itself.

Most buildings were built and rented out by their owners, based on the then prevailing laws, which we know are the fixed rents.
These owners, at that time decided upon the rents based on their savant calculation of the return on their investments, and the full knowledge of the "fixed rent" law.
This means that each owner according to his calculations, would have had estimated that the building is practically sold (similarly to the rent to buy formula) to the tenant, with him recuperating his investment with anticipated profits, say in 10-15-20 years. Which also means that he has already recovered his investment, made his profit, and continued to have a bonus income after the amortization period.
This is pure business as they had agreed to then.
Parties get in a contract and act according to the then prevailing laws and rules.

Coming out years later to change the basic premise of the contract is unethical and unjust, if not illegal.
The old tenants have paid high rents in the beginning, with the understanding of both parties that the rents would not change, and have legally acquired the ownership of the occupation of the premises, if not the legal proprietorship.
In contrast, What would do a landlord in an initially open rent system who has set up his prices on that basis, if suddenly a new law comes up to freeze the rents.
They would cry out against such a law.
it is the same dilemma.
A contract is evaluated and concluded based on a certain set of rules; these rules should not be changed for the contract in question.

Of course there is the odd situation of relatively newer buildings, in which case the landlords could not have the time to capitalise on their investments, due to the sudden collapse of the lebanese currency.
These should be treated case per case, with a panel of judges, fixing the contractual clauses according to a fair compromise.
There are proportionally a few landlords who are really hurt and losing. But most others are greedy leeches who just find in this new law a lottery win that they claim is their divine right, while appropriating the legitimate homes of the tenants.
I repeat. the old tenants (the legal ones of course, who have not entered the apartments by force) are the legitimate owners of their apartments.

The landlords may cry all they want, and try to justify their acts.
The fact is that if the lawmakers were fair, and not acting on behalf of most of the purely opportunistic greedy landlords, this law would not pass as is.

Remain a lot of unsolved questions as the maintenance of the buildings, and responsibilities etc…. where tenants should assume their responsibilities.

What an idiot...

"These owners, at that time decided upon the rents based on their savant calculation of the return on their investments, and the full knowledge of the "fixed rent" law."

I haven't read the 'fixed rent' law but I would be very surprised if it included a clause that suggested 'fixed' meant eternity, as if to suggest inflation never existed at that time. It was a phenomenon that came after (I will pass your message to the Nobel Prize committee because you might just have stumbled onto something none of the 6+ billion inhabitants of this world have yet).

Secondly, how would Landlords have known that the government would decide to devalue the Lira when in fact the currency was in no trouble at all - this is according to a very prominent economist (we have yet to default on one government bond).

How can anyone argue for keeping the old rent, its like arguing that Palestine is the righteous home of Jews whom it was promised to by God..... I really can't see how anyone in the universe (I suspect extra-terrestrials exist) can find this old law fair.

I agree that rents are too high but that is the market. Landlords are not going to be able to fill all new vacancies at prevailing rates, so I suspect prices will come down. Old tenants have had more than ample time to save money. Those who really can't even afford a shed should get government subsidies...... but in the meantime, please stop spreading garbage.

Mrs. Soha you say "It was clear that the MPs were representing the interests of the landlords and real estate brokers, who wish to clear the old buildings from their tenants in order to tear them down, construct high rises, and earn abundant profits."

Put yourself in the shoes of the landlords, now suppose you have a building that was inheritance of your parents who passed away, and still the rent that was signed 40 years back is still being paid of the same amount until the very day... the whole world changed, a civil war took place for 15 years, then another 24 years passed after the civil war, the currency rate crashed big time... and still you receive the same rental each year. Your parents passed away, the original owners couldn't enjoy their own properties... and now when you ask for your propoerty to be free, someone comes to say why you want to set it free? you seem to be willing to sell it!!! you are planning to hurt the poor people.... this is unfair, do we seem rich? the rentals can tell the amount of wealth we are saving....

Mrs. Soha please be fair and look at our situation. Please!

To all old tenants ...... What would you do if it was your own property?
Would you give it to free public housing to complete strangers?
Don't tell me you pay rent because $20.00 USD a month is not rent!!!
If you are still impoverished .... Then maybe you should have gotten a job
for the past 60 years instead of leaching .

The old landlors of course do have right of having their own homes to be return to them by force or by law, this right was being "vanished" for 40 YEARS for plenty of unfair reasons... for whatever reason there should be strong, fair, and immediate solution for the landlords. Enough with it. Down with it.

I m not directly concerned with that law since I m neither an old owner nor occupant.
Anyways with the historic track of previous "funds", I think anyone claiming that the fund will not be used to sponsor political clientelism is simply in denial (or a potential benefactor of course).
However it seems to me that old owners always forget to mention that they did receive an amount that was very fair before the Lebanese currency depreciation(unlike the current rental laws) .They choose to sell the occupation of their assets . The fact that it got depreciated is just the loosing bet they did and the tenants are not responsible of that fact and they should not be held accountable for the currency devaluation. That's what capitalism is about. so please stop talking about Freebies . Ii s simply not the case.
It is true the law should have raised the monthly value in order to become more or less reasonable . This is the responsibility of the legislative body in order to sustain social stability , but is this job really being fulfilled by the new law ? is it even being fulfilled at all ?

Your comment is valid if it applied to all Lebanese including state employees who are not being paid salaries at rates before the depreciation of the currency but have had them increased in line with inflation. Even squatters were compensated in order to leave their 'homes' after the civil war so why should landlords have to shoulder a social burden that should be shared by the whole nation?

Regulated tenancies mean exactly that, with the government setting rent increases. Why have they not set them to keep them in line with market values or cost of living?

40 years ago my family and I fleed the raining bombs that were coming down on us.
We left our home and business behind to save our lives. We had no choice.
Decades later our hard earned home and business is still occupied by tenants that won't leave our properties and are paying less than what it costs for a cup of coffee in some places.
We are ordinary citizens and are by all means not rich. We in fact are impoverished.
Enough is enough!!! Where is your shame , where is your dignity. ?
Fear your god . You will have to answer to him one day!

To Little Miss Fairness or should I say LIttle Miss Shamas,

All your arguments are based on your 'opinions' of what is fair, and the drama of 'feelings' (feelings of seeing people on the streets). The most repeated phrase I have been reading these days in the news coming from old renters and their families in all languages is " tenant be thrown out on the streets".
First off, it is not the old owner's problem if you live on the street, in a cave, in a castle or on the moon. He really does not care, renting is a business and a business is one of the many ways of making a living. A living that people like you have been lobbying to keep away from its rightful owners. The owners' arguments are based on the 'freakin' (as you use it so much) Lebanese Constitution. The 'right' of housing as you say it is a natural right for 'every' Lebanese citizen. The constitution guarantees the right of ownership, which makes the old rent law unconstitutional. What's more the 'right' of housing is NOT mentioned in the constitution. And even if it were, I don't see how it would be translated to 'occupy' private property? Your right of 'housing' does not translate to you living in MY house for FREE and expecting me to pay you 40% of its current value as a 'compensation' for screwing me over (screwing being another word you used to describe the currency). Why don't you stay off sugar for a few honey because you definitely are hyper as described by the previous commenter.

I don't understand the arguement for the support of the tenants that have been living off of and been basically supported by the landlord for generations?! They got their free ride in life. Get another job like everyone else to support yourself or get out. You think because the owner of the building is Lebanese he should have to support all the tenants like it's his own family at his expense? Sorry, the real world doesn't work like that. If you can't afford the rent, maybe you should look at your own family for the financial support instead of the "Fellow brother Lebanese person" that's working hard enough to support his own family instead of worrying to support 30 unemployed tenants. It's about time this happened. Welcome to the real world Lebanon! It's unfair that tenants get screwed, but who cares about the landlord? You people are rediculous!

The government finally became responsible and changed the old Lebanese Rental Law. The Landlord within 9 years will be able to set the rules and the tenant either accepts the rules or he is welcome to leave and rent somewhere else.

Tenants have benefited for decades and generations. The poor tenants are going to be supported through a Fund.

What is not fair is why should a Landlord wait for 9 years to get his/her apartment? The new rental law is still unfair for the Landlord. The 9 years should be changed to 3 years.

if they really wanted a solution, then they would have made the rent go up according to each tenants salary ( say a percentage 15% ) and the rents then can't be inherited by the children of the tenants ,and it get terminated with the life span of the tenant that has his/her name on the rent clause.
this way the problem is sorted , for those who don't work and they are above the retirement age, then nothing new happens except that the contracts don't go down a generation .
i think that would be fair for every one

I am a father of three a property owner, NOT BIG BUSINESS, on average a 2 bedroom unit that has earned me $200 yearly for the past 30 years, $6,000 total, recently I paid $10,000 to the tenant to leave it, and $10,000 to fix. Is this right?

No, it's not right at all. But should the tenant be thrown out on the streets?
All you've been asked for is cooperating with your fellow lebanese.
Don't you know people that are tenants? Friends ? Family etc?
They have the right to a roof, and I understand that it shouldn't be on your depend.
So why not side up with tenants? Against the system?
Isn't the system and the law who brought you all those problems?
I'm a very young person, I get surprised from twice my age or more property owners who are almost all so educated
Can reach a level of law that is incredible.
Would it hurt them to have their rights along with the rights of the tenants?
Would it be wrong if everyone fought so that the gov. fixes what it did so kany years ago?
It is this mentality that i hate.. Blinded people each one blindly following and persuing their own interests above everyone else's.
I would like to ask property owners what would they feel if they saw families sitting on the streets? Wouldn't that hurt the conscience of any normal human being?
What they are asked for is to get their rights but stop burrying the tenants.
Both can benefit if the gov. Works (it's its duty after all..)
Peace
- note to everyone:
think before acting or speaking -

Sir,
In the mid 70s, my grandfather spent his retirement nestegg on a couple of apartments. The plan was for him to rent them out and live off of his investment during his twilight years. After the early and then late 80s hyper-inflation of the LBP, he ended up having to move in with us and be supported by my father for the rest of his days. Then, my father spent thousands of dollars in order to transfer "ownership" of these apartments, to his name. Today, almost a quarter of a decade after the official cessation of hostilities of the lebanese civil war, and the disbandment of most militias, my family is still expected to bear the brunt of a dysfuctional society and a covert socialist system? Is THAT your idea of "fairness". Is it fair for someone to rent out your property, take your life savings hostage for half a century and give you nothing in return? Would you rent you car out for 100$ a year to a bunch of people who refuse to return it, only to have to buy it back half a century later, FROM THEIR DESCENDANTS, all dilapidated, undrivable, and devoid of all value?

My family, dear sir, is not incorporated. Our property has been commandeered "for the greater societal good" for too damn long now, and we DEMAND what is rightfully ours be returned to us. If you are worried about a small minority of those leeches you seem to be so eager to defend, please, by all means, do invite them into your own home. I cannot and will not stop you from having the freedom to do with your possessions as you will and please, but just as long as what is rightfully mine ceases to be commandeered.

If the likes of you look at this law that was recently passed in parliment, and call it unfair to the tenant, I can only understand that the status quo is your skewed idear of "Fairness", and I can only assume that you, also, have a horse in this race. Now may I urge you dear sir, to take your damn horse out of MY stables and get your own damn hay!!!

Yeah, darling first of all, it's not sir, it's miss.
Unfortunately, I might be the age of your daughter.
I'm saying unfortunately, because i'm shocked of the likes of you who would stoop so low to attack everyone.
Respect yourself, and respect me, because aside of me being a human, it looks like i'm miles ahead of you with my mind and depth.
I did not freaking ask you to complain about your situation to me. Go freaking complain about it to the government who brought you this in the first place.
Who let those tenants live in your properties for years. For a cost that used to be fair before our currency got screwed up.

STOP ATTACKING UNFORTUNATE PEOPLE SIR
And start attacking your freaking leaders, (i'm very sure you got one, you look so defensive to be independant politically)

They're the ones who brought landlords and tenants here.
They're the ones to fix what they made to the landlords.
They're the ones to guarantee a roof over tenants head.
The country isn't blooming. Job opportunities aren't flying above our heads.
It's not the responsibility of the landlord to take care of the tenants.
It's the government's responsibility.
If you were a horse you would be smart, kind, loving, and strong. (after reading your reply I guess you're nothing near this)
I will end with a metaphor concerning animals and itttt's STOP BEING HYENAS.
Have a sense of conscienceness and demand the gov. To be fair to you & to tenants :)

Merciiii!
♕ Little Miss Fairness ♕

This article is a so biased. What about the landlords, aren’t they Lebanese too? Don’t they have families to support? Didn’t they sweat and work hard to build or buy those homes?is it fair to the tenants to pay the “new rent “while others are paying the old rent for the same apartment? Have a bit of human decency and open your eyes a bit to what’s going on. The rent that those tenants pay is a joke. The landlords don’t want people to be homeless but this doesn’t justify them to stay on the landlord’s expense for more than 15 years. This government was on their side the whole time. It’s funny how those MPs who voted against the law want to form a committee and discuss it now even though their party has been in power for a long time and didn’t do anything about it.This law is not perfect but it gives a small closure to the landlords who suffered from having their rights abused by the government and other Lebanese. My grandfather worked outside Lebanon in really horrible conditions in order to build homes and secure a future for his family only to have those tenants live for 30$ a month for the past 15 years or more. His son lives in a rented home in a different apartment and pays NEW RENT 500 $, while the current tenants in my grandpas apartment pay 20$ a month .Is it fair to his son? Some of those tenants have better lifestyles then us so they can pay the new rent. On the other hand, the ones who can’t afford should live in cheaper areas or smaller apartments instead.

To the hyper young lady " Little miss sunshine unfairness" -you sound like a "Rebel without a cause" it is clear to us that your are a second or third generation old renter leeching on a poor old owners sucking his pocket & his livelyhood .I picturing you in a demonstration holding a sign that says" WE WANT FREEBIES WE WANT FREEBIES< WE WANT FREEBIES!!! Shame on you !!and shame on people like you!!!
DK.

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