The 18-year rent freeze on residential properties is being reviewed and will be replaced with a new system under the Landlord and Tenancy Bill, says Finance Minister and Deputy Prime Minister Professor Biman Prasad.

He told Parliament the policy has not worked and has created perverse outcomes.

He said the freeze was introduced by the military regime in 2007 and kept in place for far too long without proper checks.

The result, he said, has been poor housing conditions, lack of investment, and rising informal rental agreements.

“Our approach will be, first, to deregulate ground rent and high-end residential rentals. Secondly, we can gradually retain all residential rentals, or those above a certain threshold, for market determination. I think that would be the best thing to do. The third approach that we will take is to continue monitoring the housing market to assess whether the rent stabilization policy, which limits annual increases, would be more appropriate than a blanket freeze. One of the reasons why we do not want to rush is that an abrupt end or removal of the freeze without proper safeguards could result in exploitation.”

There are 8,000 rent complaints lodged with the FCCC since 2010.

Prof. Prasad said the freeze failed because there was no proper law, no clear enforcement, and no resources to manage it.

Opposition MP Premila Kumar, who raised the question, said demand in urban and peri-urban areas is far greater than supply.

She said homes in informal areas are renting for $500 and asked how the new policy would stop landlords from pushing rents even higher.

She reminded Professor Prasad that this was his election promise.

“How will this particular policy, the honorable minister is talking about—the legislation itself—ensure the price of the rental properties does not go very high, considering what people are going through in terms of finding a property?”

In response, Prof. Prasad said the new law will define landlord-tenant roles, set clear rent formulas, and create a rent tribunal.

He also states there will be an electronic registration system and rent tracking to stop abuse.

He added that ground rent and high-end housing will be deregulated first, while other rents may be adjusted gradually to market levels.

Professor Prasad said the policy was meant to protect tenants, but it ended up hurting them.

He said lifting the freeze without safeguards could cause more harm.

The minister said any policy that stays too long without review becomes a problem.

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