On June 18, the Supreme Council of Economic Coordination, chaired by the heads of three branches of government, decided to impose a ceiling on housing rent levels and called for the automatic renewal of lease agreements for a year.
Their decision can be reviewed from different aspects but it is important to pay particular attention to the departure from precedent that has happened here. This was stated by Nasir Mashayekh, lawyer and professor of public law, in an article for the Persian economic daily Donya-e-Eqtesad. A translation of the text follows:
The first question is whether the Supreme Council of Economic Coordination has the mandate to approve binding laws. The answer is clear; according to Article 71 of the Iranian Constitution, the only legal authority to pass laws is the Majlis, the Iranian Parliament and according to Article 85, the legislative authority cannot be delegated.
Therefore, the council is facing two challenges: first, what is the legal position of such a council and second, where did the council get its legislative authority from? These questions do not have convincing answers. Both the “principle of the separation of powers” and the “principle of legality of the establishment of governing institutions” are legal hurdles in the way of the council approving or enacting laws.
The second issue is deconstruction to legal writing. The decision made by the council has deprived citizens of their two legitimate civil rights. One is the right to own a property that the citizen has acquired through legal means. According to Article 47 of the constitution, the legitimate property of every citizen should be respected and protected by the law. Every person has the right to own both his property and the benefits gained from that property. Therefore, forcing the owner to grant the benefits of his property to another person is synonymous with depriving the owner from the benefits of their property; this is contrary to the c human rights and the right to property.
Government Intervention
The intervention of the government in the intention of the parties is the second point here. Private contracts are bound to a certain time; they dissolve upon the expiration of the term and need to be renewed by signing a new contract.
By interfering in the intention of the parties, the council has completely disregarded the consent of the parties and concluded a contract on behalf of the lessor and the lessee. Of course, this is contrary to the principle of autonomy of citizens’ will in civil and private affairs. Neither of these two rulings by the council is compatible with the principles of Islamic law. Therefore, it is incompatible with the Article 4 of the constitution, which stipulates that all laws must be based on Islamic laws.
Why did the council approve the decision on extension of the lease? Shouldn’t it have been reviewed by the parliament so that the legal mechanisms were employed completely? It seems that what led to the approval of this law in the council was not the importance of the issue, but the haste in designing and approving it.
Perhaps this is a new extralegal method in lawmaking; seemingly whatever takes time for approval in the parliament will be reviewed and approved in the council. If correct, we should be concerned about a new precedent to circumvent the law. Such matters ultimately lead to the multiplicity of sources and legislative bodies, and consequently lack of transparency and unaccountability of government institutions.
Legislative Institutions Ignored
The laws approved by the heads of three branches of the government can also be reviewed from other aspects.
The decision has ignored legislative institutions and compounded the problems; it has ignored official documents and given credit to unofficial property transfer documents.
Article 2 of this law mentions cases in which the lease contract is not renewed. Among these cases is the transfer of the rented property; the method according to which the transfer and registration of the property takes place is in a system called “National Property and Housing Database” and by registering the tracking code. This ruling has various unfortunate legal consequences.
According to Article 47 of the Registration Law, real-estate deals must be officially registered in notary offices. As per Article 22 of the Registration Law, the government recognizes a person as the owner only if they have been registered in the Registry Office.
Therefore, the mechanism of the new system will lead to new real-estate lawsuits and the creation of parallel institutions vis-à-vis the registration organization, and finally, media and social conflicts. Such half-baked solutions do not help the society legally; they also disrupt the economic peace of mind of people and undermine the ownership right of citizens.
Article 2 encourages the circumvention of the law because informal listing and announcing property transfers and their registration in the system urges people to make unofficial transactions to avoid the mandatory extension of lease contracts. As a result, this directive creates new, but illegal institutions that result in a density of methods of proof of ownership. This will increase disputes over property ownership and increase court cases.
New Lawsuits on Horizon
On the other hand, the new directive is inconsistent and in contradiction with the policies announced by the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei regarding the upstream development documents.
The council’s decision sets another precedent: It creates new jurisdiction for dispute resolution councils and increases new lawsuits in these councils. The directive states that if the tenant has not fulfilled their duties and obligations, their lease will not be renewed automatically.
What is the proof of this? It is the landlord’s responsibility to wait for the decision of the dispute councils to confirm the tenant’s non-compliance with the obligations.
This comes as, according to the Landlord and Tenant Relations Act of 1997-98, if the tenant refuses to fulfill their duties, the landlord could get an eviction order by referring to the Dispute Resolution Council.
If the lease term ends, the tenant’s eviction order is issued easily. At present, the eviction order is not being issued; rather, the lessor must not only prove that the tenant has not fulfilled their obligations, but must also prove the expiration of the lease term. This comes as the “non-existent matter” does not need to be proved; it is the tenant who has to prove that they have fulfilled their obligations.
The Dispute Resolution Council has assumed another mandate. If a person owns multiple residential properties, the council must determine which one meets the lessor’s personal needs. Giving this authority to the council is not compatible with the laws, as it leads to the expansion of the country’s judicial organization and creates more disputes in people’s daily affairs.
There are other unanswered questions about the directive. It says the ceiling set on rent increases in Tehran and large cities is 25%. What is the standard of this coefficient? Is the annual inflation rate 25% or has the price of real-estate increased by 25%, or has the workers’ wages increased by 25%?
This directive seeks to solve a social problem. Many people can’t have access to adequate rental housing because of excessive growth in rents and unruly inflation in the housing rental market. The increase in demand for rental housing and the lack of supply have urged high-ranking officials to think of a solution but such an approach can’t solve the problem.
Did the so-called economic surgery consider such matters? Landlords are not necessarily wealthy people. Many of them have bought an apartment, after years of savings, to use the rent as a source of income amid this runaway inflation and growing living costs.
The heads of the government could introduce incentive packages, like tax reductions or exemptions for lessors or low-interest loan payments for old rental units, instead of issuing such directives. The implementation of the current directive will not solve the problem; it will only send a large number of landlords to dispute resolution councils.
