The House of Representatives’ Housing Committee will discuss on January 28 a draft law to regulate real estate development and to establish a federation for real estate developers, Invest-Gate reports.
Member of Parliament’s Housing Committee Omar Watani exclusively revealed to Invest-Gate that the new law would set up a state-sanctioned Egyptian Federation for Real Estate Developers, underlining that gathering all issues of the Egyptian real estate development sector under one body is a crucial and vital step towards regulating the market and ensuring customers’ financial rights.
Watani added that the bill is aimed at creating an insurance fund, which is one of the mechanisms to guarantee funds of clients and depositors, explaining that the fund will be backed by the membership fees.
Since the insurance fund aims to protect customers against any developer’s failure to deliver units within a contractually specified timeline – among other risks. In the case of any project faltering or suspension, the fund intervenes and guarantees the clients’ funds and the right of the state, Watani noted.
He elaborated that the amount of fines imposed by the new law on developers, even in cases of delays in units’ delivery or announcing off-plan projects without obtaining licenses, is not much, however, it will help in preventing violations and frauds within the sector.
The parliament member concluded that this law, alongside other bills, will be very integrated and will push the sector to grow further, besides contributing to regulating the Egyptian real estate market.
For his part, Tarek Shoukri, head of the Real Estate Development Chamber affiliated to the Federation of Egyptian Industries (FEI), told Invest-Gate that the draft law was submitted by the chamber, noting that the article related to the prohibition of announcing booking or reserving real estate units or contract to sell units before obtaining the building permits was originally submitted by FEI’s members.
Shoukri added that that prohibition is in favor of the clients as it will guarantee their rights and protect them against frauds. He explained that obtaining a ministerial decision for any development is important to launch reservations or bookings of projects’ units; this applies to developers and major companies, confirming that granting building permits for small buildings is also important even if they were still undeveloped.
He noted that the article related to obtaining licenses will not affect the financial liquidity of developers because they can sell their units before building but on condition of obtaining building permits.
This will eventually contribute to the organization of the country’s real estate sector as well as prevent random and informal building, Shoukri commented.
CEO of ARDIC Real Estate Development Ashraf Dowidar agrees with Shoukri that the article will prevent fraud in the market, however, he says it will rather complicate the legal situation of companies.
“At ARDIC, we do not have any concerns regarding the article since the ministerial decree is very important and the main condition to launch the project and obtaining other permits come after that,” Dowidar told Invest-Gate.
Dowidar further added that his company was one of the first developers demanding the formation of a federation for real estate developers to manage the market, highlighting that the sanctions imposed on violating the draft law are crucial and suitable to deter any company disregarding the law and resulting in the emergence of problems in the real estate market.
He disclosed that the draft law will be an added value to the sector and will eventually boost investments into Egypt’s real estate market.