Ethiopia Proposes the Changes to Real Estate Regulations

A draft proclamation on real estate development and sales has been submitted to the standing committee of Ethiopia. This legislation aims to regulate how real estate professionals operate, especially those who sell properties before construction begins.

The bill introduces several significant changes to real estate regulations in Ethiopia. First, real estate agents must deposit any money they collect from clients into a closed bank account. This requirement protects buyers’ investments and ensures financial accountability.

Additionally, the bill prohibits agents from registering clients or accepting down payments unless they have a land ownership certificate and a building permit. This rule ensures that only qualified developers can engage in pre-sales, enhancing consumer protection.

Agents who previously operated with only a business license must now obtain a “qualification license.” To get this license, they must demonstrate their experience by constructing or demolishing at least 50 homes. This requirement raises industry standards and ensures agents have the necessary expertise.

Real estate professionals must also notify the relevant authorities if they plan to engage in pre-sale activities. They need to obtain the necessary permissions to maintain transparency in the market.

The draft mandates that agents deposit funds collected from home buyers into a closed bank account until the property is completed and handed over. It also blocks property documents for sites sold in advance from being transferred or altered until construction is finished. This provision protects buyers from fraud or mismanagement.

Lastly, agents cannot transfer ownership of less than 80% of complete properties without the buyer’s consent. This rule ensures that clients are fully informed and agree to any transfer of ownership, safeguarding their interests.

The draft proclamation, titled “Real Estate Development, Sale, and Estimation of Immovable Properties,” was presented to the House of Representatives on October 10, 2024. These proposed regulations aim to enhance transparency and protect consumers in the real estate market, reducing potential inconveniences and financial losses for buyers.

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