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close this bookSupport Measures to Promote Rental Housing for Low-Income Groups (HABITAT, 1993, 132 p.)
close this folderII. THE EFFECTS OF LEGISLATIVE AND POLICY INTERVENTION
View the documentA. Rent-control legislation
View the documentB. Effectiveness of rental laws in controlling rent levels and evictions
View the documentC. Legislation and the needs of low-income groups
View the documentD. Planning and zoning regulations affecting production of rental housing
View the documentE. Different forms of legislation affecting provision of rental housing in different cities

A. Rent-control legislation

The forms of rent control introduced around the globe are highly diverse. Some countries freeze rents at a particular date and only allow cost increases to be passed on to tenants. Others completely index rents. Some have multi-tiered systems in which some units are frozen, some increase at an express annual rate, and some only increase on a change of tenants. In the three case-study countries, the main features of rent control have been as described below.

In India, rent controls have been introduced by most state governments. The different rent-control laws are very similar and apply to all residential and non-residential property, with the exception of governmental premises, high-income accommodation and newly constructed property. The laws are extremely rigid and cover rent levels, the responsibilities of tenants and landlords, and eviction. In some states, the landlord does not even have the right to choose the tenant; responsibility for this rests with a government agency, landlords having to notify the agency of any vacancy. Rents are usually fixed at a standard rate established at some date in the past, and rises are permitted only under certain circumstances. The base for establishing the standard rent is normally the cost of construction plus the value of the land. The rent is based on a percentage of this value, ranging from 6 to 15 per cent according to the state. Periodic rises in rents are permitted in some states but usually only every three to five years. Sometimes, too, rents can be increased if major improvements have been made to the property or if there has been an increase in local taxes. Maintenance is the responsibility of the landlord but if repairs are not made the tenant is permitted to pay for them out of the rent. Eviction is possible on the grounds of non-payment of rent, misuse of the premises or the need of the landlord to use the premises for his or her own family needs. The tenancy rights are extended in some states to the tenant’s heirs.

In Nigeria, rent controls were first introduced in 1941 and control over eviction in 1948. The two laws were incorporated into the Rent Control and Recovery of Premises Law in 1954. The precise regulations vary from one state to another but all are based on federal guidelines. In most states rents are fixed according to the quality of the accommodation with the general approach being to limit rents to less than 20 per cent of household income. Tenants can be evicted only by a court order which is normally granted on one or other of the following grounds: rent arrears of more than one month, the need for substantial repairs, the premises are required by the landlord, the tenant is misusing the property or being a nuisance, the accommodation is required for some public purpose.

In Egypt, rent control and legislation began in 1920 and controls over rents gradually increased during the next five years (Serageldin, 1993:3). In 1941, rent rises above certain levels were prohibited and tenancies were automatically renewed after their termination. This was consolidated in the Rental Housing Law of 1947. More controls were introduced after the Socialist Revolution of 1952 and by 1962 rents on most kinds of housing were controlled. The law was substantially modified in 1981 when the annual rate of return on the combined value of the land and the cost of house construction was established at 7 per cent. Only a limited number of luxury and furnished apartments were excluded from these regulations. The 1981 law also changed the system for raising rents and permitted the sale of housing to the tenants. The Government also established a central agency to provide subsidies to cover part of the rents of the poorest families. The law also allowed tenants and owners to share the costs of maintenance.