In a significant development to regulate Egypt's real estate market, the government has reached an agreement with real estate developers to introduce a unified law. This law aims to establish governing rules for the real estate market and classify developers. According to Tarek Shukri, head of the Real Estate Development Chamber at the Federation of Industries and chairman of the Economic Committee in Parliament, the new law will replace previous plans for two separate pieces of legislation.
The agreement was reached during a recent ministerial meeting with real estate companies. Shukri stated that the law will have two main parts: the first part will outline the governing rules for the real estate market, while the second part will focus on the establishment of a union for real estate developers. The law is expected to be finalized and approved by the Council of Ministers by the end of October, after which it will be presented to Parliament for discussion.
The new law will draw heavily from a 2022 Council of Ministers decision that outlined 15 key points for regulating the real estate market. These points include requirements for developers to open separate bank accounts for each project, obtain a ministerial decision before selling units, and provide a cash guarantee for each project phase. The decision also outlines penalties for developers who fail to meet their obligations, including delays in delivering units to customers.
Under the proposed law, developers will be required to provide a cash guarantee for each project phase, and customers will be protected in cases of project delays. If a developer fails to deliver a unit on time, customers will be entitled to compensation. The law will also establish a system for classifying developers based on their technical, financial, and administrative capabilities. This classification will determine the size and type of projects that developers can undertake.
The classification system will be based on three main criteria: technical capability, previous work experience, and financial capacity. The goal is to ensure that developers only take on projects that match their capabilities, reducing the risk of project delays or cancellations. The law will also establish a union for real estate developers, which will be responsible for overseeing the industry and imposing penalties on developers who fail to meet their obligations.
Shukri noted that the law will not impose a standard contract on all developers, as project types and sizes vary significantly. Instead, the law will provide a framework for regulating contracts and protecting customers. The law will also establish committees to resolve disputes between developers and customers, under the supervision of an independent judiciary. These committees will help to speed up the resolution of disputes and reduce the backlog of cases in the courts.
The Egyptian government is currently reviewing around 20 cases of stalled real estate projects, and the new law is expected to help resolve these issues. The law will also provide for the establishment of a support system for medium-income housing, with the aim of providing affordable housing options for this segment of the population. The Real Estate Development Chamber has proposed a initiative to provide land to developers at cost price, and to offer long-term financing options with subsidized interest rates.
Key points
- The new law aims to regulate Egypt's real estate market and classify developers based on their capabilities.
- The law will provide a framework for protecting customers and resolving disputes between developers and customers.
- The law will also support the development of medium-income housing, with the aim of providing affordable housing options for this segment of the population.
