The fall of the Soviet Union in 1991 has demoted communism and socialism to the least importance upon which capitalistic notions flourished all around the world. Since then, the dominant economic trends revolve around the economic theory of deregulation of the markets and noninterference of governments, theorized as the Free Market system.
In practice, this extortionate version of capitalism ended up being the catalyst that drove most of the world into the severe economic recession of 2008. Nonetheless, there are some prudent governments, like those of Germany and Scandinavian countries, who were able to contain such worldwide recession with minimal damages to their economies. This, however, is because their legislative systems require a certain level of government involvement in the regulating process of the markets.
The rationales behind adopting similar mindful policies stem from the need to uphold stable socioeconomic conditions, secure the welfare of low-income classes thus and so reinforce equality among citizens. Heady governments usually do this by establishing long-term socioeconomic laws and legislation, such as constrictive financial regulations, stable housing laws, reasonable tax law, and many other regulations in which the markets work in tandem with the needs of the economy’s backbone: the middle-class.
However, in Lebanon, it is the contrary. Lebanese governments and parliamentary councils have the custom to introduce short-term laws and shortsighted legislation. They never did enact a well thought out legislation to solve the problem once for all. Lebanon’s rent legislation, for instance, always arrives defective to present long-term solutions to this consequential socioeconomic issue. This persistent failure is owed to some naive presupposition that rent laws should only hinge on the free supply and demand of the housing market, irrespective of the intense economic recession and the shaky political situation in the country.
In real terms, this inconsistent legislative reasoning drove the housing market trends to the current uncontrollable mode whereto the rental fees and property prices of moderate domiciles became unaffordable not only to middle–class citizens but to the well off as well. Since the current average price of one square meter nowadays is around $4000 in Beirut district and between $1500-2500 in nearby suburbs.
All the same, this time, the Administration and Justice parliamentary committee had put forward after years of procrastination its final review of a new rent legislation proclaiming that it will conclusively solve the chronic housing problem across Lebanon. Thereupon, on April 01, 2014, the self-reinstituted Lebanese parliament enacted, in few minutes without further discussion, the worst housing legislation ever enacted.
In short, the new law compels renters, whose rent contracts were signed before 1992, to add 15-20% of the market value of their houses each year for the next six years with which their rental fees become equal to market prices at the end of the sixth-year. The new law also compels those old leaseholders to evacuate their houses after nine years without any compensation, which was officially allotted in all previous rent legislation. On top of that, the approved law denies any right for those renters to stay in their homes even if they are ready to pay the rent market prices unless so agreed with proprietors—but only for three more years.
Several interest groups and feudal politicians boastfully claim that the new rent law is formulated on the grounds of freeing the de jure extended lease contracts after a grace period of six years at which the housing issue fully relies on the supply and demand of the market. In simple words, the housing of more than 700,000 badly-off old leaseholders will rest exclusively in the hands of indignant property owners. Dismissing that the government and parliament have to enact and enforce, prior to the enactment of any new housing law, rent control regulations to set the profit margins of the housing industry, control the overstated rental fees and standardize the rights of renters and proprietors.
The Administration and Justice committee, led by two Einsteinian lawmakers, Robert Ghanem and Samir al-Jisr, justifies this cruel decree by arguing that something must be done to liberate private properties, ignoring that a contract is the law of the contractees. Disregarding that, this housing problem came into being before sixty years or so because Lebanese governments and parliaments overruled individual rent contracts when they extended all contracts for an indefinite time—albeit that there was no necessity for such extension. Six decades ago, Lebanese officials then argued that it is the duty of the government to protect the civil and human rights of its middle-class citizens. Whereas, the hidden truth was that they have done so just to extend the rent terms of low-priced government buildings, which were cheaply bought afterward at the cost of property owners—not to discuss under-the-table commissions.
Actually, the Lebanese parliament has made four indefensible mistakes: the first is when they canceled the longstanding right of compensation to old renters and did not include a lump sum of monetary aids to the underprivileged senior citizens and poor tenants, most of whom have no resources to buy or rent out similar humble houses.
The second mistake is when they invalidated old rent contracts without establishing a National Leasing Fund to finance low-interest credits to leaseholders and property owners in which buy-or-sell arrangements become feasible.
The third mistake is when they ignored the presence of 1.5 million Syrian refugees and escapees and its effect on the housing market.
The fourth one is when they enacted suchlike massive ousting project without guaranteeing that modest alternative houses are available and affordable, at least to the underprivileged.
Affordable! But what in precise is considered affordable?
The Canadian government, for instance, defines what is affordable in their Rent Control Act revision as the following: “a tenants’ housing is unaffordable if they are paying more than a quarter of their gross income in rent”.
Unfortunately, similar housing standards, or even lesser formula, have never been adopted in this country. Keeping in mind that the lowest rent cost of modest houses nowadays, in remote areas, exceed the minimum monthly wage—let alone that rentable houses are so scarce. This unfortunate actuality leads to one clear conclusion: what is unaffordable now will be unthinkable after the invalidation of old rent contracts since the demand for houses will soar up to unprecedented levels. Yet, there are interest groups, such as mega housing development companies, naive politicos, and loaded landlords, still try to understate the socioeconomic consequences of this unfair law on the poor and low-income families: the mass majority of the Lebanese.
Apparently, several injudicious MPs have considered the housing issue from a legal perspective of private ownership and business-related angle alone. Thus dismissing that they should weigh it up from a social, human and civil rights perspective as well. Obviously, the Lebanese legislative and governing bodies are unmindful about article 25 of the Universal Declaration of Human Rights, and article 11(1) of the International Covenant on Economic, Social and Cultural Rights, which emphasize the right to have adequate housing: “Right to Housing”.
Given the fact that rent laws have been originally established to combat the housing problem of middle and lower classes, the Lebanese authorities are responsible to create alternative remedies prior to freeing up old rent contracts. The Lebanese legislative body has to establish joint ventures housing projects made to serve the low-end of the leasing market in order to expand the availability of moderately priced domiciles.
Delivering rent legislation without guaranteeing the availability of affordable houses, fair treatment and equal housing opportunities among its citizens is a disastrous fault. In all probabilities, it will drag the current downslope pattern of the social and economic situations of the country to a lower state, let alone that it will create further inconsistency between the distressed and their questionably rich representatives.
The government is required to deal with the need for having modest houses as one of the basic needs for adequate living, not as an accessory. Otherwise, they are just widening the social and economic gaps much further among citizens, and imprudently turning the poor masses against the authorities.
Meanwhile, the current government has to be very vigilant before approving the new law so that not to add more social and economic burdens on the mass majority of the Lebanese. Bearing in mind that the potential strength of Lebanon’s economy largely depends on the spending power of the middle and working classes.
Mohammad S. Moussalli is a well-known Lebanese writer. He has a reputable journalistic record, as commentary writer, with a renowned regional English newspaper and web-based gazettes. He holds a long list of esteemed published Op-Eds and online articles mostly centered on civil liberties, human rights, socioeconomic and sociopolitical issues.
Mr. Moussalli is an independent management consultant with senior executive experience in the Middle East and Gulf region. He devises reorganization and restructuring plans and provides advice on business planning, administration, operations, pay and benefit scales, and other business issues.
Mr. Moussalli blogs at http://middleeasttribune.wordpress.com