Committee Studying the Compulsory Extension of Old Rental Contracts Suspends Work

After weeks of debate and objections, the issue of old rental contracts subject to the compulsory extension system and the furugh system has reached a standstill, as the meetings of the government committee tasked with studying the matter have been suspended.

The committee, formed to propose compromise solutions between property owners and tenants, faced widespread protests in a delicate economic and political climate, which hindered its work and raised questions about its future and the fate of one of Syria’s most sensitive property issues. There are around 100,000 properties under compulsory extension in Syria, half of them in Damascus and a large portion in Aleppo.

On June 12, the Ministry of Justice issued Decision No. 856, forming a specialised committee chaired by the President of the Court of Cassation and including judges as well as representatives of government and professional bodies. The committee was tasked with studying the legal status of properties rented under contracts subject to compulsory extension, whether residential or non-residential, in both the public and private sectors. It was mandated to propose balanced legislative solutions that take into account fairness for both landlords and tenants, and to complete its work within two months, with the possibility of extension. Members’ allowances would be paid from the Ministry of Justice’s budget.

Compulsory extension is a legal system of rental contracts in Syria first introduced under Legislative Decree No. 111 of 1952. It stipulates that a rental agreement is automatically extended without the consent of the landlord or tenant and regardless of the owner’s wishes. This mandatory extension was considered by many industry and legal analysts a violation of property rights and a breach of the principle that “contracts are binding agreements,” as stipulated in the Civil Code of 1949. Although later attempts were made to restrict this system, such as Rental Law No. 6 of 2001, which subjected all residential rental contracts signed thereafter to the principle of free contracting, older contracts remained under compulsory extension. The 2001 law did not explicitly state the end of compulsory extension. Meanwhile, Rental Law No. 10 of 2006 ended compulsory extension for all new residential and commercial rental contracts but maintained its application to contracts signed before that year.

Furough is a form of compulsory extension specific to commercial premises rented prior to 2006, under which the tenant at the time paid a lump sum – typically between 40 and 60 percent of the property’s value, and in some cases up to 80 percent – in exchange for indefinite occupancy and a nominal fixed rent, along with the right to transfer the lease for a new furough payment. Actual ownership of the property remains with the landlord.

The specialised committee issued an unpublicised decision to pause its work due to widespread protests, particularly from tenants, local sources explained. The Syria Report’s correspondent learned that the committee has not met in about a month. This comes as a surprise, given that it initially met three times a week. This indicates that the committee’s activities have been unofficially suspended, as announcing such a move would have likely provoked major controversy, particularly since many tenants have repeatedly stated that they will not vacate their premises whatever the cost.

Sources stated that the suspension of the committee’s work was due to the country’s political and economic situation and the tensions in many parts of Syria. The committee feared that its work might provoke anger among new social groups, whether property owners or tenants, potentially increasing tensions in the country. A large segment of society had opposed the formation of the committee from the outset and rejected the idea of addressing the issue entirely.

The issue of statutory extension and furough can be further delayed, especially as it is not a new problem; it has been ongoing for decades. The committee was cautious to avoid favouring one party over another, whether landlords or tenants, and had done initial research on rental laws in Jordan and Egypt in an effort to draft suitable proposals on the matter.

Sources familiar with the file suggested that freezing the committee’s work is a step towards ending its mission indirectly and postponing any review of old rental contracts subject to compulsory extension.

The sources believed that forming the committee was rushed, as the issue is complex and requires new legislation that should ideally be drafted by an elected legislative body (Parliament).

Meanwhile, protests by tenants under the furough system continue. Recently, some shopkeepers renting premises in Damascus’s Hamidiyeh Market staged a demonstration demanding the cancellation of the committee’s proposals, raising slogans asserting their rights and declaring that they would not surrender their shops to landlords.