A significant shift is underway in Egypt’s housing market. President Abdel Fattah al-Sisi signed Law 165 on August 4, 2025, ending the decades-old system of fixed rents that once shielded millions of tenants. The reform will affect over three million apartments, which is roughly 7% of Egypt’s housing stock. It is expected to displace an estimated 1.6 million families, approximately 6.5% of the population.
From Protection to Reform
Egypt’s Old Rent Law dates back to 1920, when rent ceilings were introduced to protect tenants during a time of housing scarcity and social inequality. Over the years, especially under Gamal Abdel Nasser, it became even more tenant-friendly, allowing relatives to inherit leases across generations.
The result was leases priced far below market value. Some families still pay just 70 Egyptian pounds annually (less than $1.50), while market rents can run as high as 2,500 pounds ($50) per month. In many cases, tenants sublet these apartments at market rates while paying landlords a fraction of the cost, creating widespread distortions and resentment.
Perverse Incentives
Such price ceilings have had predictable consequences. Buildings fell into disrepair as landlords lacked incentives to maintain them. Some landlords even resorted to sabotage; there are reports of attempts to weaken foundations or use chemicals to slowly destroy concrete, thereby reclaiming land tied up in uneconomic leases.
The Human Cost of Market Adjustment
The new law phases out fixed rents over seven years, with rates in central districts set to rise by as much as twentyfold. While this promises new investment and, eventually, a healthier housing stock, it comes at a steep cost. Low-income tenants, pensioners, and those with limited mobility will be the most affected. For many, rising rents will mean forced relocation, strained family networks, and in some cases homelessness.
The Egyptian parliament has pledged support for relocation, but whether these measures will mitigate the impact remains uncertain. In the long run, the policy may bring efficiency; in the short run, it will bring pain, uncertainty, and economic anxiety.
The Bottom Line
Egypt’s rental reform raises an age-old economic question: how do you balance efficiency with equity? The buildings may look better a decade from now, but where will the people go?
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Economics 101: Price Ceilings & Rent Control
A price ceiling is when the government sets a maximum price that can be charged for a good or service. Rent control is a common example.
The idea: Protect tenants from sudden rent increases and maintain affordable housing.
The problem: When the ceiling is set below market value, it creates distortions:
Shortages: More people want apartments at low prices than landlords are willing to supply.
Quality decline: Landlords may not maintain or improve properties since returns are too low.
Misallocation: Some tenants hang on to units they don’t really need—or sublet them at higher rates—while newcomers struggle to find housing.
Black markets: Informal side deals often emerge to bypass the cap.
Economists generally agree: rent control helps tenants in the short run but creates inefficiency and disrepair over time. The primary challenge is designing a system that strikes a balance between affordability today and investment for tomorrow.
YESTERDAY I talked to beginning Econ students about the consequences of the price of any good being forced below equilibrium -- which of course is a shortage, and the example I offered was rent control, in New York, San Francisco and Mumbai -- all of which have EXACTLY the same results as you describe in Cairo. Mumbai is a little more colorful, because you get to see people living in condemned buildings. The need is to encourage more building of housing, especially for low-income tenants. Then, OF COURSE, I showed them photos of "Projects" built by the government mostly in the 60s and 70s to solve the problem. They caused another and possibly even worse problem, of creating centers of crime, violence, disorder, hatred of the system, etc. Houston *has* a housing voucher program offered by the Housing Authority (https://housingforhouston.com/residents/housing-choice-voucher/) using Federal HUD money -- naturally now the Waitlist is closed :-(. But even before our Current Sitting President, that program worked badly, with wait times of 2-5 years. It only subsidized rental housing, which effectively shut eligible applicants out from large swathes of (mostly White) upper-income areas, to a significant extent in response to the old Redlining from 1934-68, that withheld mortgages from Black (and Jewish) areas in 239 US cities -- and still has consequences for where owner-occupied housing is built. The solution I offered is a voucher funded at the national level that includes both rental and owner-occupied own homes, with a stipulation that no area can be excluded, with sufficient funding to include all potential tenants below an agreed income level prorated to the cost of housing in each city.
I'm really interested in seeing what sort of policies come out to help those most impacted (low-income tenants, pensioners, and those with limited mobility) beyond just promises to support them. Perhaps Egyptian politicians are held more accountable if they don't keep their promises.