Under a watchful eye
Real estate developers may soon be coming under closer scrutiny after the Madbouly cabinet yesterday greenlit new regulations designed to protect consumers and reduce market risk, it said in a statement following its weekly meeting.
Don’t read the statement expecting clarity: Cabinet provided zero details on the regulations that may soon be imposed on developers, saying only that they will introduce “binding standards” governing contract enforcement, marketing, and “maintenance and operation” work. “The controls aim to protect the real estate market and preserve the rights of buyers,” the statement said.
Some of the measures floated so far would really step up regulation of the industry: Officials have been considering rules that would make it a legal requirement for auditors to monitor each developer and file quarterly reports on their projects and activities. At one time, there was a suggestion that companies would be required to create separate financials and / or accounts for each of their projects, allowing auditors to monitor their finances — a logistical and accounting nightmare, we think.
What’s the “consumer protection” angle? Policymakers have been discussing whether to require developers to purchase ins. policies that pay out if they break contractual terms with their customers. Under a presidential decree In August, real estate developers are not allowed to begin selling units until at least 30% of the project is completed.
Then there’s the idea for a new state-regulated industry lobby / quasi-regulator: A separate bill currently in the House would set up a new real estate federation that would be in charge of issuing licenses, monitoring companies’ performances, handing out fines, and managing company-client disputes.
What’s next? The rules will now head to President Abdel Fattah El Sisi for sign-off before being made official through a cabinet decree.