Rent Control Proclamation Infographic

Rent Control and Administration Proclamation No. 1320/2024

Effective: May 9, 2024 | Source: Federal Negarit Gazette, 30th Year No. 23

Official Document

The embedded document provides the full text of the proclamation.

Executive Summary

This proclamation, effective May 9, 2024, establishes comprehensive rent control and administration in Ethiopia to address rising housing costs. It mandates written and registered rental contracts, introduces a minimum two-year lease term, and prohibits arbitrary rent increases or evictions before contract expiry. A designated Regulatory Body and the Ministry of Urban and Infrastructure will oversee enforcement and implement annual rent adjustments based on economic conditions, balancing homeowner and tenant rights.

Rationale and Objectives

Addressing Rising Rent and Hardship: Direct response to financial burdens caused by increasing rents.

Fundamental Right to Housing: Government intervention deemed necessary for this basic human right.

Ensuring Affordability and Fairness: Aims for "affordable and fair" rent prices in urban areas.

Transparency and Accountability: Balances interests and rights of homeowners and tenants.

Scope of Application

Geographic Reach: Applies to residential house rent contracts in Urban Centers accountable to Regions, Addis Ababa, and Dire Dawa City Administrations.

Exclusions: Does NOT apply to rentals by hotels, resorts, guesthouses, or pensions and other services operated under a business license.

Contractual Requirements & Registration

Mandatory Written Contracts: All residential house rent contracts must be in written form, authenticated, and registered with the Regulatory Body. Applies to renewals too.

Registration Deadline: Within 30 days from signing. For existing contracts, 30 days from Regulatory authority designation (up to 3-month extension).

Consequence of Non-Registration: An unregistered contract "shall be of no effect."

Penalty for Non-Compliance: Financial penalty not exceeding "a three month rent price" of the unregistered house.

Model Contract Development: Regulatory Body to develop and make accessible a "Model Contract of Rent."

Rent Control Mechanisms

Minimum Contract Duration: Minimum duration of two years, with specific termination provisions.

Base Rent Price: The registered rental price is the official amount for that house.

Annual Rent Increase Regulation: Increases based only on economic conditions, determined annually by the Regulatory Body (announced June 1st, valid from June 30th).

Prohibition of Unwarranted Eviction/Increase: Prohibited before contract expiry unless explicitly in accordance with the proclamation.

Maximum Advance Payment: Shall not exceed the equivalent of two months' rent.

Payment System: Rent payments must be made through bank or legal electronic payment systems only. Both parties must retain records.

Incentives for Homeowners

Exemption for New Construction: Owners of new residential units exempt from price cap obligations for four years from initial registration.

Exemption for First-Time Rentals: Owners renting an existing unit for the first time exempt from price cap for two years from initial registration.

Penalty for Vacant Units: City administrations can impose an additional 25% of property tax on units vacant for >6 months (if previously rented/newly built) or >1 year (otherwise), encouraging utilization.

Termination of Contracts

Mutual Agreement or Tenant Notice: Termination by mutual agreement or by tenant giving two-month notice.

Termination by Owner (with 6-month notice): If ownership transferred via inheritance, sale due to debt, etc. (excluding donation).

Termination Without Notice (by Owner): If tenant fails to pay rent (15 days late first offense, 7 days second), uses property for business without consent, disrupts peace, engages in criminal activity, or causes substantial damage.

Administrative Structure & Dispute Resolution

Ministry of Urban and Infrastructure (National Level)

Oversees consistent enforcement.
Develops national rental system.
Conducts research & policy.
Gathers and analyzes data.
Formulates national rental price evaluation system.

Regulatory Body (Regional/City Level)

Enacts regional directives.
Prepares Model Contracts.
Registers rental contracts.
Supervises implementation.
Establishes electronic rental system.
Gathers & analyzes regional data.
Investigates violations & imposes penalties.

Complaint and Grievance Procedures

Whistle Blowing: Written complaints about violations to Regulatory Body within 30 days of awareness.

Dispute Resolution: Disputes submitted to Regulatory Body within 30 working days; decision rendered within 30 working days.

Grievance Hearing Committee: Appeals against Regulatory Body's decision within 15 working days; Committee's decision is final administrative decision.

Judicial Appeal: Appeals against Committee's decision to competent court; court renders decision within 30 days, which is final.

Cassation Ethiopia