Rent Control in Lebanon: Balancing Ownership and Housing Rights


2014-09-23    |   

Rent Control in Lebanon: Balancing Ownership and Housing Rights

Ever since discussions of rent issues began in Lebanon, the Legislature seemed occupied with finding some resolution to the conflict between two social groups: tenants whose leases are governed by pre-1992 rent law, and their landlords. Reducing these two groups to “old tenants” and “old landlords” represents a widespread, and possibly encouraged, misconception. Many of the current landlords have in fact recently acquired buildings, entirely or partially, for the purpose of speculation or reconstruction. Similarly, many of the current tenants have replaced longtime tenants as their legal successors. Valuable records regarding this issue are unavailable.

Attempts to find a solution to the dispute between landlords and tenants have remained completely unrestricted or unaffected by legal standards of any kind for many years. The Constitutional Council thus had an exceptional opportunity to place legal restrictions in this regard, and to effectively think about the legal issues that should govern rent control. Yet, it too seemed inclined to avoid delving too deep into this matter. This was made quite clear in its ruling issued on June 13, 2014, which overturned the two previous challenges [to the new rent law] on technical grounds. According to the dissenting opinion of Council member Antoine Messarra, such grounds could have been disregarded.

In its second ruling, the Council spoke at great length about assessing ownership and housing rights, as well as the consequences they entail. In contrast, it seemed to brush over the heart of the matter, namely, the issue of adequate standards to achieve balance between those rights. Its ruling thus remained obscure, and indeed devoid of any such standards. It merely stated that in its view, the Council found the articles of the law to meet the conditions of such a balance. Meanwhile, it found a sufficient pretext to overturn articles of the law addressing the conditions for appointing the committee charged with certain tasks – such as setting compensation rates and determining tenants’ eligibility for financial assistance. Despite three of its members voicing dissent, the Council justified its decision on the grounds that these articles conflicted with guarantees of due process.

 

The Legal Agenda notes a number of positive and negative aspects of the Constitutional Council ruling regarding the balance between the rights of landlords and those of tenants, as discussed below.

 

Positive Aspects

 

To its credit, the Council has taken three principled stances.

 

The Council’s affirmation of the constitutional nature of social and economic rights, including the right to housing. Such an affirmation was not exclusively rooted in “international covenants” mentioned in general terms, without specific reference to relevant texts. Examples include Article 11 of the International Covenant on Economic, Social and Cultural Rights and “established constitutional jurisprudence”, which are most likely a reference to jurisprudence in comparative law. It also stemmed from the very nature and purpose of the Lebanese Republic, as described in the Preamble to its Constitution. This applies in particular to the principles of democracy and social justice, as well as to those of equality and balanced development, as per sections C and G [of the Constitution’s Preamble]. Indeed, the ruling states that “democracy is not restricted to political and civil rights, but rather, it requires for its fulfillment that economic and social rights be provided to citizens as well” (unless otherwise indicated, all quotes in this article are from the ruling in question). It adds that, “the purpose of balanced regional development is to achieve social justice, applying it to all citizens and providing them with an adequate standard of living”.

In addition, “social justice requires working to provide all citizens with adequate housing”. In fact, the purpose of the Constitution itself is “to regulate social relations in the country [mujtama‘ al-dawlah] in such a way as to ensure decent living conditions for citizens, in addition to stability and security”. It can be noted here that the constitutional nature of the right to housing was deduced from a set of concepts mentioned in the Preamble to the Constitution. These include democracy, equality, balanced development and social justice, as well as certain rights, such as the right to adequate shelter and the right to form a family. In fact, the Constitutional Council went as far as to say that housing represents an element of psychological and social stability and safety, as well as a principal requirement for social well-being.

The Council’s assertion that providing the aforementioned rights, and most notably, the right to housing, represents a goal of “constitutional value which both the legislative and executive branches of government should draft policies and lay down laws to achieve”. Consequently, the Constitutional Council considered it the responsibility of both branches “to adopt general social and economic policies on housing, balanced development and transportation. In Lebanon in particular, regulated public transportation would contribute to encouraging residence in different parts of the country”. It concluded with the assertion that laws remain “subject to the oversight of constitutional courts in order to preserve those guarantees” (i.e., the guarantees mentioned in the Constitution).

The Council enshrined the theory of function-rights (droit-fonction), declaring that “all rights have limits, and abuse of process can thus apply to all rights without exception”. It thereby paved the way for thinking about the functions of enshrined rights in a manner that would not clash with public interests.

 

Negative Aspects

 

Upon reading the text of the ruling, one might sense a schism within its arguments between its positive and negative aspects. A possible explanation is that Council members reached a certain compromise amongst themselves, leading to arguments of conflicting backgrounds and perspectives being brought together in a single text.

 

Separating the state’s duties regarding the “Right to Housing” from the landlord-tenant relationship. The ruling stressed that public authorities should adopt general policies at several levels (development, public transportation and housing) to ensure the right to housing, rather than merely regulate the landlord-tenant relationship. Nonetheless, the Constitutional Council recognized the constitutionality of deregulating rent control under the current circumstances, despite the failure of legislators to adopt any policy in this regard. Indeed, there is no plan of any kind to ensure adequate housing for “old tenants” who could be forced to leave their homes when their rents noticeably increase, or when their contracts are no longer subject to rent control.

Unlike previous Constitutional Council rulings, this one did not include any kind of assessment of the financial assistance prescribed by the new rent law for “old tenants”, whose income falls below a certain level. In particular, the Council did not consider whether such assistance would represent a sufficient alternative to guarantee the right to decent living conditions. It thus seemed to merely affirm the state’s obligation to provide alternative guarantees of adequate housing in the future, without making their effective ratification a precondition for eliminating currently available guarantees. In other words, the Constitutional Council replaced an obligation of inaction by state authorities subject to its oversight, with an obligation of action entirely free from its oversight. The Council’s arguments thus seems at odds with one another, declaring constitutional a law likely to infringe upon constitutional rights, with no alternative guarantees available to ensure the latter. This could in effect lead to the loss of such rights, and to results that would be socially disastrous in every sense of the word. Such a stance fundamentally contradicts past positions taken by the Constitutional Council. The latter had clearly stated that, “when legislators draft a law addressing fundamental rights and freedoms, they cannot modify or revoke texts in force that guarantee these freedoms and rights, without replacing them with texts that offer greater or at least equally effective guarantees” (Constitutional Council ruling issued on June 27, 2000).

Freeing landlords of any clear obligation towards their tenants. Despite the fact that the Constitutional Council declared its adherence to the theory of function-rights, it simultaneously freed landlords of any obligations towards their tenants. Even worse, the Council took the risk of drawing up a list of considerations of public interest that can restrict the right of ownership, while asserting that such a list was exhaustive, not illustrative. Specifically listed were the following: “real estate and architectural rules for partition, annexation and construction; fairly compensated acquisition for the purpose of public works; rules of urban planning, public safety and the protection of architectural and cultural heritage; and adherence to municipal regulations for maintenance and restoration”. The Council thereby excluded the possibility of restricting the right of ownership on the basis of any other consideration, such as the protection of the environment.

In declaring this list as being exhaustive, the Council’s recklessness brought it into blatant contradiction with one of its past decisions issued on May 10, 2001. The latter had stated that: “[the country’s] higher interests can justify any restriction on the right of ownership, even with regard to citizens themselves, despite the fact that ownership (…) is a right protected by the Constitution”. In the same context, the Council explicitly turned the right of ownership in the landlord-tenant relationship into an absolute one, as restricting it would be inconsistent with “contractual principles, freedom of contract and balance in general contract theory”. The Constitutional Council took its reasoning even further in this respect, stating that the right to adequate housing on the basis of international covenants gives rise to an obligation for state authorities alone, not for landlords. It thus concluded that the law being challenged was consistent “with constitutional rules, in terms of invoking the principles of the right of ownership in favor of old landlords, as well as the general principles of contract theory”.

Aside from such arguments being at odds with the theory of function-rights, they also contradict different arguments invoked by the Constitutional Council later in the ruling. Such arguments, found on page 16 of the ruling, unequivocally suggest that legislators may restrict the right of ownership to ensure the right to housing under certain circumstances. “The legislative branch of government”, the ruling states, “should reconcile the right of ownership and the right to housing”; that “the discrepancy in the state of affairs of landlords and tenants, by its very nature and weight, justifies the discrepancy in the way they are treated”; and that “a law balancing diverging interests may restrict constitutional rights, albeit for a reasonable and necessary purpose, on the basis of values and frames of reference, and through a balanced approach”. The Council thus seems to consider any infringement on the right of ownership in one argument unacceptable, only to later allow it in another, on grounds of balance between tenants and landlords. More importantly, the Constitutional Council’s discussion of the need for balance in the [landlord-tenant] relationship remained a general one. After requiring such balance in the text, the Council ended up confirming its presence in the law being challenged, without clarifying its nature or the standards needed to guarantee or even measure it.

The same kind of contradiction can be found in the Council’s assessment of the special rent control laws [permitting contract renewal], which first came into effect in Lebanon during World War II. In one argument, the Constitutional Council seemed to condemn them all. Thus, on Page 12 of the ruling, it stated that, “what took place throughout the past seventy years was an ongoing injustice in restricting the right of ownership through special laws that blatantly infringe upon the freedom of contract”. In a different argument, the Council recalled that these laws first came into effect as special cases, as a result of shortage and low supply of housing units. Yet, it did not look into whether current circumstances, such as the influx of considerable numbers of refugees, as well as the considerable and fast-increasing demand for housing, would qualify as special cases and thus justify rent control laws. The fact is that the Council made an error when it failed to distinguish between pre-civil war and post-civil war special rent control laws. Pre-civil war laws provided a certain balance between the rights of tenants and landlords. They protected tenants from the consequences of insufficient supply and rising rent rates fueled by speculation, without depriving landlords of fair remuneration. Post-civil war laws, on the other hand, led to extending the right to housing in a manner that completely disrupted the contractual balance and severely undermined the right of ownership.

Instead of drawing from international jurisprudence to adopt standards of balance between tenants and landlords, the Constitutional Council merely spoke of balance in general and ambiguous terms. Its ruling thus seemed to lack substantial justification. The fact is that the theory behind rent control is at its core based on the notion of the legitimate need for adequate housing for rent rates consistent with the average wage. This is why it allows for restricting the right of ownership, preventing landlords from taking advantage of the scarcity of housing to impose exorbitant rates, without allowing it to be completely breached. This is clearly stated in the General Comments on Article 11 of the International Covenant on Economic, Social and Cultural Rights, and allows for taking measures to protect tenants from the exorbitant rates the market might impose.[1] In this sense, applying such a principle would require more change than suggested by tenants, and less change than demanded by landlords. Indeed, just as it would be wrong to speak of the acquired right of tenants to prevent rent control from being phased out, it would also be wrong to say that the rights of landlords require rent rates to become completely unrestricted.

Making matters worse is the fact that the Constitutional Council did not examine the constitutionality of the text concerning financial assistance to low-income tenants. In particular, the fact that the state has no obligation to fund such assistance renders the latter superfluous.

Discriminating among citizens in terms of the state’s contribution to ensuring their right to housing. The right to adequate housing requires the state to intervene whenever citizens’ incomes do not allow them effective access to such housing. This does not only concern “old tenants” or tenants in general, but also and in particular young people preparing to leave their parental homes and searching for homes to rent at rates consistent with their income. The state should therefore be required to adopt a comprehensive housing policy. Otherwise, its assistance to a certain segment of the population would be discriminatory and would violate the principle of equality. Provided that it ensures fair remuneration, the state should certainly have the power to restrict the right of ownership, and should take whatever other measures it deems necessary to ensure adequate housing for everyone. Naturally, the state’s responsibility in this regard would increase in proportion to the need for housing, i.e. the extent to which demand exceeds the number of housing units on offer for rent.

One of the ruling’s major shortcomings is the Council’s apparent failure to assess the articles of the rent law under revision concerned with setting up a [national] fund to provide financial assistance to tenants whose income fall below a certain level. The law provides no guarantees that such a fund would be financed, stoking fears that such a fund may never materialize. This was the fate of a number of similar funds established on the basis of past laws, including the Disability Rights Law (2000), the Environment Protection Law (2002), and more recently, the Law on the Protection of Women and Family Members Against Domestic Violence (2014).

Social harmony is no mere technical issue. There is yet another aspect in which the Constitutional Council’s analysis and assessment of the new rent law seemed lop-sided. In support of deregulating rent, it opined that severing the landlord-tenant relationship would likely lead to reducing the chances of social conflict. It stated that “infringing on general contract principles in an issue pertaining to everyday life, regarding ownership and housing, represents a source of conflict among citizens and a source of tension in neighborly relations, and is therefore a core source of threat to social peace”.

Its ruling, however, remained devoid of any mention of the legal complications entailed by the new law. Such complications are quite likely to bring about conflict in every old relationship of this kind. The rules meant to determine adequate compensation, for example, are complicated and entrust the task to experts appointed by both the landlord and the tenant, and in case of conflict, to an administrative committee with judicial powers. The same is true of the complicated rules meant to determine tenants’ eligibility for financial assistance. This could have been avoided by increasing rates proportionally and automatically on an annual basis, which would have spared us the potential complications and costs of such conflicts. More importantly, talk of national consensus never addressed the social catastrophes that may result from phasing out rent control under the current circumstances.

 

This article is an edited translation from Arabic.

 

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[1] United Nations Committee on Economic, Social and Cultural Rights. General Comment No. 4: The Right to Adequate Housing (article 11(1) of the Covenant), Article 8(c): “…Tenants should be protected by appropriate means against unreasonable rent levels or rent increases…”. (General Comment 4)

 

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