The Real Estate Investment Division at the Federation of Egyptian Chambers of Commerce (FEDCOC) requested from Minister of Housing Mostafa Madbouly to amend Article 34 of the new real estate executive regulations, according to a statement.
The article stipulates additional payments if there is delay in delivering the project after the deadline. The request was made before the executive regulation is presented to the cabinet for official approval and adoption.
Article 34 in the real estate regulation has resolved problems in the old regulation, said the CEO of Real Estate Investment Division at FEDCOC, Mamdouh Badr El-Din.
He explained that the article grants companies that did not fully implement their project on time extended periods for additional payments that are calculated according to a price equation, instead of having their lands confiscated.
The division is requesting an amendment to the calculation method of additional payment, to allow companies that implemented more than 60% of their project extended periods calculated on the land price when bought, Badr El-Din noted.
As for the companies that implemented only 60% or less, the division requests that their fees for extended periods are calculated according to the current market price of land, Badr El-Din added.
Moreover, the division requests the companies that implemented 85% or more of the project’s construction works to be excluded from additional payment for delay or land retrieval, according to Badr El-Din.
He further highlighted that the division presented this mechanism to officials of the New Urban Communities Authority (NUCA).
According to the new real estate regulation, the delayed payments are determined based on a percentage of the value of undeveloped lands, according to the lands’ price when contracting on additional periods.
Meanwhile, Article 34 of the new real estate executive regulation stipulates that companies that have implemented more than 15% to 30% of the project should pay delay fees calculated based on 8% of the current market value of the land annually.
If the company implemented more than 30%-50% of the project, the delay payment will be calculated at 6% annually, while in case of completing more than 50%-60%, the delay payment will be 4% annually.
Furthermore, if more than 65% of the project is implemented, the company will be excused from paying the delay penalty for six months. If the targeted implementation is not achieved in this period, a penalty of 2% will be imposed on the value of the undeveloped lands at the start of the delay.
On the other hand, Badr El-Din requested amendments to the constructional terms to allow real estate developers to implement service compounds on the border of the project area and open them to main streets. This will make services more beneficial for all customers, not only the compounds’ residents, and will elevate the level of services in the NUCA’s cities.
Badr El-Din added this will also contribute to increasing the projects’ added value, by realising fast developments for new cities. It will also encourage citizens to buy commercial units in housing compounds.
NUCA imposes additional fees on real estate developers if they want to open their projects’ services to the main streets. It also imposes fines if non-residents of a compound used its services.