Saturday, 30 August 2008
Cambodia introduces new real estate regulation
New regulations are being introduced in Cambodia to protect property investors from fraud as the country’s real estate industry booms.
Developers will be required to deposit a sum with the National Bank of Cambodia before being allowed to begin construction on a project under new regulations aimed at curbing fraud.
Payments from buyers will be held in this account with the aim of making the whole payment system more transparent and avoid developers using money illegally. It will also allow the government to intervene if developers fail to honour their contracts.
Real estate agents and developers will have to obtain a licence from the Ministry of Economy and Finance to sell projects and face legal action and even closure if they fail to do so.
The new rules mean developers and agents must comply by the end of September, a spokesman for the Economy and Finance ministry said.
There will be costs to the developers and agents involved but officials believe this will deter cowboys. ‘Real estate developers will be required to deposit 2% of the projects’ total value at the National Bank of Cambodia,’ said Mao Pao deputy chief of the ministry’s real estate division.
‘We will require a developer to open a housing development account at any commercial bank to enable buyers to make payments through the bank,’ he added.
The price for the new licences for selling or renting will depend on the scale of the project. Until now developers only needed a letter of permission from the Ministry of Land Management, Urban Planning and Construction and an investment licence from the Council for the Development of Cambodia.
There are estimated to be around 100 developers currently operating in Cambodia, many of them quite small. Some said the new regulations will be too costly and put them out of business.
Capital Phnom Penh has undergone an unprecedented construction boom over the last several years, including a number of residential and commercial mega-projects that are set to transform the capital from a sleepy backwater.