Egypt old-rent law starts 15% annual increase

Under Law No. 164 of 2025, the 15% increase is applied to the newly determined legal rent, not to the old amount tenants had been paying before the law took effect. That means the size of the monthly rise will vary sharply by unit and location. In premium residential areas, the new legal rent is set at 20 times the previous legal rent, with a minimum of 1,000 Egyptian pounds a month. In middle-income and economic areas, it is 10 times the previous legal rent, with floors of 400 pounds and 250 pounds respectively. Once that new base is established, the annual 15% increase is calculated from it.

For non-residential units, including shops and other commercial premises rented to individuals, the law sets the new legal rent at five times the existing legal rent before applying the same 15% annual increase. A shop paying 100 pounds under the old regime, for example, would move to 500 pounds as the new legal base, then to 575 pounds after the annual increase.

The legislation also includes a temporary payment mechanism for units still waiting for area classifications to be completed by local committees. During that interim period, tenants or successors to the lease must pay 250 pounds a month, with any difference to the final legal rent settled later in monthly installments over the same period the arrears relate to. That makes the reform administratively important as well as financially significant: the pace of local surveys and governorate decisions will determine when households see their final bills.

The wider economic effect is gradual but meaningful. Egypt has long faced a stock of legacy leases that function like a parallel housing system, suppressing landlords’ returns and limiting turnover in parts of the rental market. By indexing rents upward every year during the transition, the government is trying to restore pricing discipline without forcing immediate eviction. That could help unlock more supply over time, but it also raises the risk that vulnerable tenants, especially in urban centers, will struggle to absorb successive increases after years of low fixed payments.

For investors, the direct market impact is limited outside Egypt’s housing and property ecosystem, but the policy carries broader significance. It signals a more interventionist effort to normalize a distorted asset class, which could eventually support better economics for landlords, developers and listed real-estate interests if the transition proceeds smoothly. The flip side is execution risk: legal challenges, slow local implementation and political resistance could delay the re-pricing and keep uncertainty high.

The reform’s seven-year sunset for residential leases and five-year limit for non-residential contracts also means the September increase is only the first in a sequence. The key question now is not whether rents will rise, but how quickly the new regime is implemented, how consistently governorates classify neighborhoods, and whether the government’s promised alternative-housing options can cushion the social impact of a market being rewritten in stages.