The development of the law of lease on dwelling houses and its effect on the rent market

Abstract

This thesis may be concisely described as a study of the abundant legislation regulating the contract of lease, including any possible future development of this law and the effects of such unstable law on the rent market. The depleted state of the rent market will be explained by arguing the following notion. The attempt by the legislator to protect the lessee's right to shelter, through numerous discriminatory and often retroactive legislation, is incompatible with the concept and rules of a free market. Particular emphasis is placed on an analysis of the relationship between the lessor and the lessee after the 1995 amendments to the law of lease where, in spite of a partial liberization of the laws, the rent market has failed to return to acceptable standards. The close connection between law and the correct functioning of the intricate workings of society is evident when considering the disruptive influence of law on the rent market. The lease contract is based, like all contracts in the civil code, on the concept of the freedom of the parties when contracting. By removing such freedom in contracting, through now obsolete legislation, the legislator managed to create in the landlord a profound mistrust in the law of lease thus damaging the delicate balance between demand and supply which is the cornerstone of any sector of the market in a capitalist society. Even after the 1995 amendments the landlord is timorous of placing his property on the rent market, preferring to leave his tenement vacant. The landlord also utilized loopholes in the law to prevent the contract from falling under the law of lease or resorted to holiday leases. This in turn provoked the legislator to enact further restrictive legislation. Thus we are faced with a sort of cause and effect where every new law of lease has a corresponding effect on the rent market. Considering the present state of the market it would therefore be desirable to review the current rent laws perhaps following the rules incorporated in certain foreign systems which possess a healthy rent market. My suggestions on the matter of rent review may be found in the final chapter of this thesis.