Ethiopia is taking a bold step towards regulating its real estate sector with a new draft law that aims to protect buyers and promote responsible development.
The law proposes a licensing requirement for developers, ensuring only qualified individuals are involved. It also mandates escrow accounts for funds collected from buyers, preventing developers from misusing the money.
The draft states that a house that is not at least 80% complete cannot be transferred to customers without their consent and approval.
This indicates that the customer must agree to the handover of an incomplete house before it can be done.
The draft also sets a condition for real estate developers to register home buyers and collect advance payments.
The draft states that developers can only register and collect payments after they have obtained "land ownership confirmation and building permits from the relevant authorities."
It also states that "developers cannot register more home buyers than the legally acquired land can accommodate," which is one of the obligations placed on real estate developers.
The new regulation being drafted for real estate development, in addition to the obligations, also sets out the process by which developers can obtain "large-scale land" from the government.
Developers who receive "large-scale land" from the government are required to meet at least one of the three conditions outlined in the draft.
One of these conditions is to build a large number of houses and make "40% of these houses accessible to low- and middle-income segments of society."
The draft states that developers who meet this condition can build "between 500 and 5,000 houses at a time, depending on the city's level."
The draft states that the government will provide "large-scale land" in Addis Ababa to developers who "build and transfer more than 5,000 houses in Addis Ababa."
In other cities, "large-scale land" will be provided to developers who have a "tangible housing need," and in cities with "industrial parks," it will be provided to developers who build more than 1,000 houses.
According to BBC Amharic, the draft law is currently being reviewed by the House of Representatives and is expected to be debated further before being finalized.