The Egyptian government has introduced new regulations for the real estate market, allowing customers to reclaim their funds if there is a delay in handing over units. According to Tarek Shukri, head of the Real Estate Development Chamber at the Federation of Industries and head of the Economic Committee in the House of Representatives, the new law will unify the regulation of the real estate market and the establishment of a union for real estate developers.
The initial plan was to prepare two separate laws, one for the union of real estate developers and another for regulating the real estate market. However, a recent ministerial meeting with real estate development companies agreed to merge the two into one law. The new law will have two main sections: one that determines the rules and controls for the real estate market and another for the establishment of a union for real estate developers.
The government aims to finalize the draft law and approve it in the Council of Ministers by the end of October, then submit it to the House of Representatives. The new regulations will not start from scratch but will be based on a 2022 Council of Ministers decision that was previously discussed with market stakeholders. The decision includes around 15 items that can form the basis of the part related to regulating the market.
The proposed system will require developers to open a separate bank account for each project, where project revenues are deposited and all expenses are paid. The system also requires developers to provide a cash cover for the new phase before offering it for sale, which will remain in the project's account until the start of construction work.
Additionally, developers will have to submit a semi-annual financial declaration to the relevant authority, approved by an accountant, detailing the amounts collected from customers and the spending on the phase. According to the 2022 ministerial decision, the rules for handover and dealing with delays will be part of the law, giving developers a 12-month grace period after the contractual handover date.
If the delay exceeds this period, the due installments will be postponed until handover, with the same delay period, after which the customer can choose to either continue the contract and stop paying installments or reclaim the amounts previously paid within three months of their request. The system also includes a mechanism for dealing with developer violations, starting with a six-month grace period to correct the violation.
The law will also establish committees to resolve real estate disputes under judicial supervision and regulate maintenance funds by depositing them into a separate account for maintenance and operation. The new regulations aim to organize the real estate market, protect customers' rights, and provide a clear framework for developers.
Key points
- The new law allows customers to reclaim their funds if there is a delay in handing over units.
