The Egyptian government is preparing to introduce a new law to regulate the country's real estate market. The law, which is expected to be approved by the end of October, aims to organize the market and establish an association for real estate developers. According to Tarek Shukri, head of the real estate development chamber at the Federation of Industries and chairman of the economic committee in the House of Representatives, the new law will combine the regulation of the market and the establishment of the developers' association.
The proposed law consists of two parts, the first of which sets out the rules and regulations for the real estate market, while the second part deals with the establishment of the real estate developers' association. The government aims to complete the drafting of the law and approve it in the Council of Ministers by the end of October, before submitting it to the House of Representatives. The new regulations will include controls for managing project finances, offering project phases, and delivery dates.
One of the key changes proposed is that developers will be required to open a separate bank account for each project, where all revenues will be deposited and expenses will be paid. Developers will also be required to provide a cash cover for the new phase before it is offered for sale, and this cover will remain in the project account until the start of construction work. Additionally, developers will have to submit a semi-annual financial statement to the relevant authority, approved by an auditor.
The regulations also aim to organize maintenance funds by depositing them into a separate account designated for maintenance and operation. In cases of delayed delivery, developers will be given a 12-month grace period after the specified deadline, provided that the relevant authority adheres to the licenses and conditions of the project, and the customer pays the due installments. If the delay exceeds this period, the due installments will be deferred until delivery.
The proposed law also sets out a mechanism for dealing with developer violations, starting with giving developers a six-month deadline to correct the violation. If the violation is not rectified, the relevant authority can suspend the approvals for starting sales in subsequent phases until the situation is corrected. The law also provides for the establishment of committees to resolve real estate disputes under judicial supervision.
The new regulations aim to protect the rights of both developers and customers, and to organize the relationship between them. According to Shukri, the new system will not start from scratch, but will build 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 of the law that regulates the market.
The Egyptian government hopes that the new law will help to regulate the real estate market and protect the rights of all parties involved. The law is expected to be approved and implemented soon, which will help to improve the real estate sector in Egypt.
Key points
- The new law will require developers to open a separate bank account for each project.
- Developers will have to provide a cash cover for the new phase before it is offered for sale.
- The law will establish committees to resolve real estate disputes under judicial supervision.
