· EBC
Real Estate in Ethiopia: A New Era of Regulation
Topics:Law and policyDevelopers
Summary of the EBC report
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.
Key points
- A draft law proposes a licensing requirement for real estate developers.
- Funds collected from buyers must go into escrow accounts.
- The law aims to protect buyers and stop developers from misusing their money.
Real.et analysis
EBC reports that Ethiopia has a draft law to regulate the real estate sector. The stated goals are to protect buyers and to promote responsible development. Under the draft, developers need a license, so only qualified firms can sell property. Money that developers collect from buyers must go into escrow accounts. This is to stop developers from using buyer funds for other purposes.
What this means for buyers
For years, buyers in Addis Ababa paid developers large sums before construction began, with little legal protection. If a project stalled, buyers often had no clear way to get their money back. The two main parts of this draft target that problem.
- Licensing. A license gives buyers a simple first check. If a developer has no valid license, do not pay.
- Escrow. In an escrow system, a bank holds buyer payments and releases them as construction reaches agreed stages. Your money funds your building, not another project.
These rules may raise developer costs. Some firms may raise prices or leave the market. Others may slow new launches while they adjust. Buyers may see fewer off-plan offers but safer ones.
Parliament later passed the real estate bill as Proclamation 1357/2024. Before you sign with a developer, ask for its license number and the details of the bank account that receives your payments. Check that the account is in the project's name.
Background
The law took about a decade to reach parliament, according to earlier reports. Our guide to real estate developers in Ethiopia explains how to vet a firm. For the full buying process, read how to buy a house in Addis Ababa.