The Real Estate Investment Division has concluded the initial draft of the Real Estate Developer’s Union Law, according to Mamdouh Badr El-Din, head of the division in the Federation of the Egyptian Chambers of Commerce (FEDCOC).
The law contributes to evaluating the legitimacy of real estate companies, and protects clients if companies are in trouble financially.
The law aims to protect real estate buyers by establishing regulations for real estate companies. The regulations aim to eliminate the existence of illegitimate companies in the sector, in addition to supporting free competition, Badr El-Din said.
Badr El-Din said in a statement on Sunday that the division presented the draft to the Minister of Housing, and is awaiting comment from the ministry in order to carry out necessary amendments. Afterwards the final draft of the law will be presented to all developers and real estate investors before being presented to the parliament for approval.
Badr El-Din explained that real estate development in its comprehensive definition includes housing, administrative, industrial, commercial, agricultural, and tourist sectors, in which real estate developers are responsible for establishing facilities, as well as all buildings and finishes required, whether they are administrative, industrial, commercial, or service buildings. However, operation processes are the responsibility of investors.
“The law stipulated financial obligations to be paid only once by members in exchange for the membership, in addition to an annual subscription of maximum EGP 50,000,” Badr El-Din said.
Deputy Chairman of the Real Estate Investment Division, Hisham Shoukry, said several conditions were specified for companies seeking to join the union, adding that they are suitable for all segments. The conditions include that developers must have past experience to guarantee the feasibility of the company. Another condition is that developers must have developed a space of at least two acres or a minimum of 10,000 sqm built.
Shoukry added that the new conditions will contribute to raising standards in the sector and abolishing dishonest, unfeasible companies, which will be removed from the union’s records. After approval by the legal committee, membership can be completely suspended, prohibiting practice of the profession. However, members can be reenlisted if their new request and qualifications are approved.
“Any person or company unregistered in the union who signed contracts to develop lands that exceed the area of two acres or a total building area of 10,000 metres will be penalised and fined a minimum EGP 10,000 or up to EGP 20m”, said Shoukry.
Fathallah Fawzy, division member, said that this law will reorganise the sector, solve several problems in the market, and push investments whilst also being a motivating factor for serious companies.
Fawzy added that the law mainly aims to protect real estate clients and preserve their rights, as the law will include establishment of a fund to reimburse victims of fraud. The law also eliminates the risk of buying units still under-construction.
The company is committed to paying a percentage of their fees to the fund in order to secure clients against bankruptcy; in this case, the fund will be completely responsible for reimbursing clients.
Adel Lotfy, member of the division, said that Sarie Eldin’s advisory firm has conducted studies on the law and its formulation, in coordination with the division, through consultations with all concerned parties.
Lotfy noted that terms of the law comply the market’s needs and are in line with demands of workers in the sector. They also contribute to protecting real estate clients.
Lofty added that the bylaw will explain all terms and their application mechanism.
