The ‘Furough’ Crisis Between Tenants and Landlords Puts at Risk 250,000 Shops

The committee of the Ministry of Justice studying the legal status of properties rented under  contracts subject to compulsory extension (residential and non-residential)  intends to propose granting tenants of commercial properties a grace period, after which they must vacate without compensation, local sources said.

The special committee was formed by the Ministry of Justice under Decision No. 856 on June 12. The committee held two closed meetings at the Palace of Justice in Damascus at the end of June, and then representatives of landlords, tenants, and professional unions met at a public seminar held on July 2. The committee is expected to submit its preliminary report in mid-August, with the possibility of extending its mandate for an additional month if the proposals require further legal drafting.

The furough payment system is a form of compulsory lease extension applied to commercial premises rented before 2006. Under this arrangement, the tenant paid a lump sum – typically between 40 percent and 60 percent of the property’s value, and in some cases up to 80 percent – in exchange for continuous occupancy and a symbolic fixed rent. The tenant also retained the right to transfer the premises in exchange for new compensation, while ownership of the property remained with the landlord.

According to The Syria Report’s sources, the committee will propose granting tenants of commercial properties a grace period, after which they must vacate without compensation. The proposed period, which could extend up to seven years during which the tenant continues to invest in the property, would itself be considered a form of compensation. This would exempt the landlord from paying eviction compensation, which ranges from 40-60 percent of the property’s value and can reach 80 percent in some commercial areas in Damascus.

Leaks regarding the committee’s proposal have been met with rejection from some tenants holding furough rights, as they view themselves as de facto owners of the premises. In response, groups of landlords and tenants have begun to propose an alternative approach based on phased eviction with decreasing compensation; a potential compromise. This proposal is gaining legal and social traction and could serve as the basis for legislation that balances property rights with rights to housing and commercial investment. 

However, the ongoing conflict of interest between landlords and tenants threatens to derail a settlement and may lead to collective legal action. The distinction between compulsory extension and the furough system has also highlighted essential legal differences shaping the committee’s internal debate.

On both sides, the rhetoric is escalating. A group of landlords in Damascus recently launched a campaign labelling tenants as “occupiers,” calling for immediate eviction without compensation and demanding the “restoration of usurped rights.” In response, hundreds of commercial tenants in Damascus staged two consecutive demonstrations at the Chamber of Commerce and then the Ministry of Justice in late June, holding signs declaring, “Our rights are not for sale,” and insisting they would not vacate without reclaiming the sums they had previously paid as furough. At the same time, the Damascus Chamber of Commerce issued a memorandum calling for the expansion of the committee’s membership to include market representatives and for any legislative amendments to be postponed until economic conditions stabilise. It also warned of a potential paralysis in commercial activity.

Beyond the two camps, legal observers have cautioned that rushing to a resolution would be a “reckless gamble affecting a quarter of a million shops” and have proposed forming economic committees in each community to draft a compromise.

The furough system covers an estimated 200,000 to 250,000 commercial properties across Syria, representing a livelihood for thousands of families. Any cancellation of this system -whether through rapid eviction or inadequate compensation – could disrupt commercial activity in many markets, force shop closures, or lead to relocations to the outskirts of cities. This could effectively freeze activity in traditional markets in Damascus, such as Sarouja and Al-Buzourieh.

Cancelling the furough system would not reduce the overall cost of renting commercial spaces; rather, it would shift the cost from a one-time payment to a high periodic rent now collected by the original landlord. The real risk is that current tenants could lose the capital they initially invested in the furough and find themselves required to pay high monthly rents. This may lead some to close or relocate, changing the makeup of traditional marketplaces in favour of wealthier traders. This shift would not result from a direct increase in property prices but from a redistribution of financial burden between capital and rent.

This could lead to urban decline and alter the character of city centres if shops are left vacant or sold to large investors. The most affected would be small tenants and female heirs, who may lose a steady source of income without a quick alternative, deepening both economic and gender gaps. In short, any reform that does not carefully balance property rights with commercial stability risks turning a legal dispute into a widespread urban and livelihood crisis.

Potential scenarios after the committee’s report

Once the Ministry of Justice’s committee concludes its mandate and presents its report, three main scenarios can be envisaged. 

The first is for the committee to adopt the “phased evacuation” approach with some technical adjustments and clear language detailing the mechanism for estimating market value and the timeframe for compensation payments.

The second path would involve dividing the issue into two separate legislative tracks: one addressing residential contracts under statutory extension, and another specific to commercial premises under the furough system. In this case, the committee may recommend creating a different compensation mechanism for commercial shops, with the state shouldering part of the cost through a contribution fund or tax incentives to ease the burden on landlords and reassure tenants that they won’t lose the full amount of the furough they paid. Such dual legislation would satisfy a broader range of stakeholders but would take more time as it would require drafting two separate legal texts and agreeing on funding sources, possibly delaying its enactment and prolonging the uncertainty.

The third scenario assumes the committee fails to establish common ground – whether due to the gulf between landlords’ and tenants’ demands or time constraints – and settles for a general recommendation to maintain the status quo. In that case, landlords would continue filing collective eviction lawsuits, while tenants would respond with legal appeals and compensation claims. This would flood the courts with cases that may take years to resolve, leaving the fate of around a quarter of a million shops in limbo. This scenario offers no legislative solution but merely shifts the crisis to the judiciary – with all the associated social and economic costs – while keeping traditional markets in a state of anticipation that could hinder investment and business planning in the near and medium term.