Bahrain approves law to protect property investors

20/10/2014 10:53 AST

A new law designed to resolve failed multimillion-dinar investment projects and protect investors was approved by Bahrain’s Cabinet yesterday (October 19).

The new bill is intended to overcome problems at stalled property developments and will be presented to His Majesty King Hamad to issue as a Royal Decree, since the National Assembly is currently in recess, said a report in the Gulf Daily News (GDN), our sister publication.

However, parliament and the Shura Council will review the legislation once their new four-year term gets under way.

"We are coming up with legislative procedures and disciplines that will help us end the issue of failing multimillion-dinar investment projects and ensure that all problems are being addressed in the fastest way possible," said the Minister of State for Information Affairs after the Cabinet session yesterday.

"The government is keen to protect investors and beneficiaries' rights and through this new law we are looking to the future when more projects are set to come.

"It complements a new law that governs new investment projects that has been passed by the National Assembly and ratified by the King."

Under the law earlier approved by the National Assembly anyone embarking on a new project must submit complete plans including a start and completion date, designs and artists' impressions - as well as a value estimate for the scheme calculated by an engineering firm and ratified by the Engineering Practices Regulatory Committee.

In addition, they must deposit 20 per cent of the project's value with the Municipalities and Urban Planning Affairs Ministry, have a bank account in the project's name and sign an agreement to waive 5 per cent of the deposit in the event of future compensation appeals.

It also bans developers from selling properties "off-plan" without government permission.

The law aims to prevent a repeat of the Marina West fiasco, in which hundreds of private buyers invested millions in a proposed property development that was never finished, and will be implemented from January 1.

It will force developers to open escrow accounts for each project they are involved in and deposit all of the project's funding, including loans from banks, up front.

Developers of existing projects that have stalled will also be obliged to comply with the law within six months of it being enacted.

In addition, the Municipalities and Urban Planning Affairs Ministry will set up a commission to look into real estate disputes - comprising two judges and senior government officials - and developers who break the law could face jail.

Meanwhile, a Cabinet decision to come up with guidelines on investing in government land has been referred to the ministerial committee for legal affairs by His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince, Deputy Supreme Commander and First Deputy Premier.

"The new law aims to organise proper investment policies and procedures with steps of offering government plots and lands for investment and the manner in which winning bids are selected, besides grievances and contractual details," said Ms Rajab.

"All of this will be done through a competitive, transparent and fair system."

It comes after failures to invest in government land affected development at Al Jazayer Beach and Al Fateh Corniche for the past four years.

The Crown Prince also directed the Cabinet to look into a request by Municipalities and Urban Planning Affairs Minister Dr Juma Al Ka'abi to grant bonus to members of the land evaluation and grievances committee.

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