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Saturday, 08 May 2021

Egypt: Containing the real estate registration storm

President Al-Sisi intervened this week to quell a public opinion storm by postponing the implementation of a controversial law on the registration of real estate properties

Gamal Essam El-Din , Thursday 4 Mar 2021
Containing the registration storm
Some 95 per cent of Egypt’s real estate wealth is unregistered. AFP
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Parliament voted Tuesday in favour of amending a controversial law on regulating the registration and documentation of real estate property in public notarisation offices.

The vote came one day after President Abdel-Fattah Al-Sisi stepped in to order the delay of the implementation of the law to 30 June 2023.

Al-Sisi held an urgent meeting with Prime Minister Mustafa Madbouli and Minister of Justice Omar Marwan on Monday, at the end of which he asked the government to coordinate with parliament on postponing the implementation of the law to a minimum period of two years.

Al-Sisi also proposed that the law be amended to relieve citizens seeking to register their properties from a 2.5 per cent disposal tax. “Citizens can only pay a reduced flat fee depending on the property’s size and type of ownership,” Al-Sisi said.

Al-Sisi’s directives were put up for discussion in a meeting held by parliament’s Legislative and Constitutional Affairs Committee on Tuesday morning. The committee voted in favour of delaying the implementation of Real Estate Registration Law 186/2020 to 30 June 2023. They also approved amending Article 42 of Income Tax Law 91/2005 to abolish the 2.5 per cent disposal tax. Citizens will no longer be obliged to pay the tax as a precondition to be able to get access to electricity, water and natural gas services.

Al-Sisi said the government and parliament should make use of the two-year grace period to hold a national dialogue on the law which has caused much controversy in recent weeks.

The Real Estate Registration Law, passed by parliament in August 2020, was to come into effect on Saturday 6 March.

The parliamentary majority Mostaqbal Watan Party said in a statement that in response to complaints from MPs and an angry public opinion, the party in coordination with Madbouli’s government decided that the amendments be postponed to 30 June 2023.

The party’s statement explained that its decision to introduce an amendment to the real estate registration law also comes in line with the directives of President Al-Sisi which aim to relieve citizens of financial burdens and modernise the legislative process in a way that serves development objectives.

The Madbouli government also said in a statement that “as its main objective is to achieve the interests of citizens, it has agreed with the majority parliamentary party that the controversial amendments to the new Real Estate Registration Law be postponed to 30 June 2023.”

MP Suleiman Wahdan, the parliamentary spokesperson of the opposition Wafd Party, told Al-Ahram Weekly that the amendments to the Rea Estate Registration Law took citizens by surprise and caused a public opinion storm throughout the past week. “Citizens were shocked that a new law imposing heavy financial burdens and requiring several bureaucratic steps would go into effect in a few days and as a result there was a storm on social media,” Wahdan said, indicating that “the law requires that citizens pay documentation fees ranging from LE500 to LE2,000, a 2.5 per cent property disposal tax, as well as a one per cent to the Bar Association, not to mention other expenses that will make it a heavy financial burden at a time the coronavirus has negatively affected the daily lives of most Egyptians.”

“Much worse,” said Wahdan, “is that the law also made it impossible for citizens to have access to electricity, water, and natural gas services unless they first pay the required property tax and finish long complicated procedures. The law stipulates that citizens should finish the required measures within one year and if they fail they will be compelled to follow the same steps anew,” said Wahdan.

Mostaqbal Watan said in a statement this week that “it has followed with utmost concern broad-scale reaction and debate on social media over the new law regulating the documentation and registration of real estate property in public notarisation offices.” It added that “as a result of the above and in line with our principles, which are based on meeting the needs of ordinary Egyptian citizens, the party announces that it intends to consult with the government in a way that will help citizens register their real estate rights in a much more simplified way and guarantee the state’s right in regulating the performance of public notary offices.”
A number of political parties in parliament also announced that they support President Al-Sisi’s initiative, saying in a statement that “there is a pressing need to hold a community dialogue on a new real estate registration law during the two-year grace period.”

Ashraf Rashad, the parliamentary spokesperson of Mostaqbal Watan, said MPs wholeheartedly welcomed President Al-Sisi’s initiative.

He also explained that until the amended law comes into effect on 30 June 2023, there will be some sort of public dialogue on its articles. “MPs, representatives from the government and real estate experts will debate the law in a public dialogue to see how it should be finally formulated in a way that can serve the interests of both the government and citizens,” Rashad said.

Wahdan told the Weekly that it was “very bad that the government imposes heavy fees on citizens while they are feeling the pinch of the coronavirus crisis in their daily lives. It is also very bad that you pass a law that will affect the majority of citizens without first conducting a public dialogue on it,” Wahdan said, adding that this was not the first time the government ignores public opinion. “It followed the same scenario when it suddenly forced citizens last year to pay exorbitant fees in return for settling construction offences or as part of what came to be known as the Reconciliation Law,” Wahdan said, stressing that “laws that are drafted without taking the people’s needs and interests in mind will be naturally met with a popular storm and resistance.”

He also argued that the law, which was about to come into effect on Saturday, was sure to lead to freezing the property market, making it almost impossible for citizens to sell or buy any real estate units.

Madbouli said on Sunday that the postponement will also provide an opportunity to cooperate with parliament in putting forward new ideas to make things easier for citizens and motivate them to register in the future. He indicated that about 95 per cent of Egypt’s real estate wealth is unregistered, and that the government hopes that all citizens register their real estate units, with the objective of securing their properties.

Minister of Justice Marwan also argued that registering real estate properties in notarisation offices helps in securing the citizens’ ownership rights, and also leads to “abolishing the bad phenomenon of illegal construction and slum areas”.

*A version of this article appears in print in the 4 March, 2021 edition of Al-Ahram Weekly

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