Regulatory Alerts2012-05-21
Controls and rules of bank financing for real estate development companies working in the field of constructing residential units for the purpose of selling them
The letter, dated October 2, 2007, from Dr. Farouk El-Okdah, refers to the Central Bank of Egypt's decision regarding financing regulations for real estate development companies constructing residential units for sale. The letter emphasizes the importance of adhering to Article 8 of the decision, which stipulates that the regulations apply to financing provided by banks to real estate and refinancing companies. It also highlights the requirement that financing for unit reservations is only considered real estate financing or mortgage-backed financing after the units are delivered and the project's facilities are completed. The letter notes that some banks have circumvented this decision by providing personal loans for unit reservations, which contradicts the decision and the Central Bank's regulatory framework.