Saturday, April 13, 2024

Gov’t to drop land allotment system for real-estate developers


The new land lease draft proclamation will not give land to real-estate developers without an auction if the draft is accepted by the parliament.
The draft which is formulated by Ministry of Urban Development and Construction (MoUDC) will allow the developer to participate in the auction like any other business if they want land for housing construction.
“There are three ways in the current situation that real-estate developers can get land for construction, buy from individuals, participate in the auction or get land from the government by allotment,’’ a source at MoUDC told Capital.

“The reason we started the land allotment system for real-estate developers was to encourage investors and now the business is in a good position and the land is provided by tender not allotment. We have sent the draft articles to the Attorney General for comment and after their responses we will send it to the parliament for ratification,’’ the source added.
Residential homes and neighborhoods built by real estate developers are now becoming increasingly common ever since the first large-scale development was initiated by the pioneer in this sector, Ayat Real Estate. At present, the dominant real estate developers for residential villa homes include: Ayat Real Estate, Sunshine Real Estate, Flintstone Homes, Ropack International, Ambassador Real Estate, Trancon Real Estate, Gift Real Estate, Enyi Real Estate, Country Club Developers, Akakas Real Estate, Boran Real Estate and Zenebe Frew Real Estate. Many more are also operational, though with more limited activities.
Several real estate development sites located in outlying neighborhoods were targeted to diaspora buyers, with as much as 50 to 60 percent of total buyers from this group.
The sources added that the lease interest rate will also be calculated in single interest rate and the current double interest rate will be dropped.
The interest rate a person will pay will not be calculated according to the total sum of the money they paid. Instead it will be calculated based on the amount of money they pay each year.
The sources also said that added that the new proclamation will force many cites to transact and administer the land in the lease system.
“Many cities still use the old soil tax system and the money we get from such tax is a very small amount and the revised proclamation will force them to apply the lease system which will increase the government revenue apart from modernizing the land management system,’’ the sources added.

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