Fears of a popular uprising pushes Sisi to suspend controversial real estate law

Over the past few weeks, amendments to Law No. 186 of 2020 regulating the real estate registry, which al-Sisi issued in September 2020 and which was due to take effect at the beginning of this month, sparked widespread anger in Egypt, which has turned into popular, unorganised opposition.

The controversial law, whose implementation was postponed, provides for the regulation of real estate trading through the real estate registry. It prohibits the delivery of services including electricity and water to any building whose owner has not proven ownership with a registered contract. The law proposes that 2.5 per cent of the property value must be paid as a real estate tax, in addition to other fees to be paid.

According to the articles of the law, the state will have the right not to recognise the circulation of empty lands and built real estate unless they are registered in the real estate registry of the Ministry of Justice, which means that the initial sale and purchase contracts are not recognised by judicial rulings that sign them. Due to the lack of government recognition except for contracts registered in the real estate registry, the services and utilities’ companies (water, electricity, gas, and telephone) refrain from delivering or transferring services and facilities to the buyer.

The Ministry of Justice affiliated with the Real Estate Registry requires payment of the real estate disposal tax to accept the registration application, amounting to 2.5 per cent of the contract value, provided that the seller is obligated to bear the tax. What increased the irony is that for every transaction that took place on the property before the last sale, the last buyer will be required to pay the taxes on it. Meaning that if the unit is sold to three people before the last buyer, the tax will be paid three times.

The latter will be obligated to pay the real estate tax for the previous three contracts at 2.5 per cent of each contract’s value in addition to the tax of his contract. In addition to the real estate disposal tax, registration fees will be paid, an engineering fee for the unit, a contract certification fee from the Bar Association (one per cent of the contract value), and an announcement about the purchase of the unit subject to registration will be published at the buyer’s expense in a government newspaper. When registering a 100 square metre housing unit, it reaches EGP 21,000 (about $1,300).

Opposition against the new taxation law did not transform into people on the Egyptian street amid a state of continuous security repression and random arrests in various governorates, against the backdrop of the demonstrations last September, in protest against house demolitions and reconciliation fees for building violations. Simultaneously, the political and union parties and forces did not express any position on the law.

Newspapers and the media also avoided expressing any critical view of the authority, which suffers from a severe financial deficit and is looking to meet its needs from citizens’ wallets through a series of decisions to raise subsidies and service fees and approve new taxes. In the parliamentary arena, no position appeared against the law, in light of the majority of the Nation’s Future Party (affiliated with the Egyptian Intelligence) and the removal of opposition deputies outside the parliament in the parliamentary elections last December.

The Egyptian street was free of any physical manifestation of a rejection of the law, for fear of arrest, the fabrication of charges of belonging to a “terrorist group,” and dismissal from work, which are punitive measures that for more than seven years have affected opponents of al-Sisi’s rule. The alternative to this absence was social media, which became more like the spearhead of a popular opposition without leadership, and an effective movement, which extended to non-politicised currents and personalities, and opinions critical of the law from figures who were affiliated with the regime and loyal to the military coup.

With the succession of videos rejecting the law the ruling regime was forced through a journalist close to the security services, Ahmed Musa, to disavow the matter altogether, and claim that the Brotherhood was behind the passage of the law during their period of rule. Later, other media professionals called for installments or reductions in the tax. However, the pressure continued, and the Egyptian government issued a declaration by Prime Minister Mostafa Madbouly to postpone the amendments.

During a cabinet meeting, Madbouly justified delaying the entry into force of this law by providing an opportunity to cooperate with parliament in putting forward some ideas to facilitate citizens and encourage registration. He pointed out that about 95 per cent of real estate in Egypt is not registered and that the government hopes that all citizens will register their properties.

A journalist residing abroad, Jamal Sultan, said of the law: “The government retreated from the real estate registration law under the pressure of public opinion on Facebook, Twitter, and social media platforms.” He added, “As for the media and the press, they kept silent or supported the law as an outcast. The real parliament of the people in Egypt is social media, except for structures and decorations that complement the state’s view, nothing more.” The decline this time is the second of its kind, within a few months, after a similar decline in the demolition of violating real estate and the reduction in reconciliation fees for building violations. This retreat came after demonstrations and protests in the villages during which dozens were killed and injured, and hundreds were arrested due to the demand for the departure of al-Sisi.

It seems that anger in Egypt is escalating with the circulation of a project targeting farmers to impose fees on licensing irrigation machines at a value of EGP 5,000 (about $320). This is in parallel with continuous increases in electricity, water, gas and telephone bills, transportation, metro, rail tickets, identity cards, and official identification papers.

Social media networks may be an effective platform for a continuous movement that may be invested in the future in rebuilding an organised political force that challenges the security repression on the one hand and stops draining the pockets of Egyptians. On the other hand (and it is not unlikely), it will be a path to reproduce the January 2011 movement in a new guise.