Government submits Real Estate Business Bill to Parliament, proposes Property Regulatory Authority

The Maldivian government has today submitted to the People's Majlis the first law specifically drafted for the development of the real estate business sector in the country, titled the "Real Estate Business Bill." The first reading of this bill is scheduled on the agenda for the afternoon session of the Majlis today. The bill is being submitted at a time when preparations are underway to provide a 500-hectare land parcel in Rasmalé to the UAE-based Eagle Hills company for the implementation of a real estate tourism project. According to the bill, one of its main objectives is to establish a specialized authority to regulate real estate businesses, monitor projects and transactions, and ensure complete legal protection for the funds of those purchasing flats and houses. The current building construction law applies only to middle-income buildings, and the bill aims to address problems arising due to the lack of a specific law to protect buyer funds. The bill includes 14 chapters and more than 160 articles. It proposes the establishment of a state authority named the "Property Regulatory Authority" under the Ministry. The Minister will be accountable to the Majlis for the authority's functioning, and the President will appoint a Chief Executive Officer (CEO) based on the Minister's recommendation. The authority will be responsible for registering developers and agents, maintaining property records, and designating escrow banks. The accounts of the authority will be audited by the Auditor General. All money paid by buyers for units sold off-plan must be deposited into a special 'Project Escrow Account' opened in a bank in the country. The developer may withdraw funds based on the proportion of construction work completed. Once the project is finished and units registered, five percent of the funds must be retained in the account for one year. It is prohibited to announce or sell any project without registration with the authority, and the maximum booking fee will be limited by regulation. The bill's eighth chapter introduces a special legal framework for large master plan projects, termed Integrated Real Estate Zones. Such a zone, determined by the President, must include at least 200 hectares and an investment of one billion US dollars. These zones can be leased for up to 99 years, and the Master Developer must pay ten percent of net income generated from the zone to the state. Properties within the zone can be sold for 99 years under the Leasehold Rights scheme using the Surrender and Re-grant model. No entity from any single country will be allowed to purchase more than 25 percent of the land or units. Persons barred from entering the country, Israeli citizens, and companies owned by that country are prohibited from purchasing such properties. A four percent registration fee will be levied on every sale, and profit from such sales is exempted from income tax. Security will be maintained by the Maldives Security Services. Gambling, acts contrary to Islamic Sharia and the laws of the country, and places of worship for religions other than Islam are prohibited in these zones. Under the bill, a licensing system must be established for real estate entities. Real estate agents must be Maldivians aged 21 years or older, and valuations must be conducted by individuals holding recognised professional qualifications. The authority can impose fines ranging between MVR 100,000 and MVR 1,000,000. Upon commencement of the law, ongoing projects must submit applications for registration within 90 days, and 180 days will be granted to obtain licenses. Regulations must be finalised within one year.