The Ethiopian Parliament has ratified a new legislation to regulate the lease of residential houses in cities across the country. The proclamation promises significant change in the below three areas pertaining to the lease of residential housing.
- Authentication and registration of contract of lease: Contracts of Lease of houses did not require any special form to be valid and binding between the parties as per the Civil Code of Ethiopia. The new legislation, however, clearly stipulates authentication and registration of the contract as a validity requirement for lease contracts. As such, contract of lease is now set to be one of those special contracts which require a special form for validity as an extension to the lost under Article 1723 of the Civil Code of Ethiopia.
- Minimum duration of lease contract: Parties to a lease contract are not free anymore to randomly decide the duration of the lease contract. The new proclamation stipulates that the duration of the lease contract shall in no case be less than two (2) years.
- Control on increase of rental fee: The incessant rise/inflation of rental fees that is putting lessees and the public at large in financial distress is tipped as the main reason for the introduction of this legislation. The new proclamation tries to address the issue in two ways. The first way is the prohibition of increase on rental fee except in line with a government assessed rate for such increase. Such review of the permissible rate for increase is to be done annually by the special body to be organized for this purpose. The second way is the introduction of rental fees set for the house by the agency that will be organized for the implementation of this Proclamation.
The final version of the proclamation is yet to be consulted as we await it’s publication on Negarit Gazetta, and the enforcement of the prescriptions and prohibitions introduced by the proclamation will mainly depend on the independence and structure of the administrative body that is to be established by the relevant tiers of the government.
by: Axis Advocates
Addis Ababa, Ethiopia