RERA Confirms There is no 50% Completion Requirement for Developers to Sell Off-Plan
There has been some confusion in the market in relation to what completion percentage developers must reach before the Real Estate Regulatory Authority (“RERA”) will permit them to commence off-plan unit sales.
Several reports in the media have stated that for developers to commence off-plan sales, they will be required to:
- deposit 50% of the construction value of the project into an escrow account; or
- deposit the equivalent bank guarantee; or
- have completed 50% of the project construction.
We have sought clarification on this from RERA, and are pleased to confirm that a deposit of 50% of the construction value, or equivalent bank guarantee, is no longer required. RERA will apply the previous requirement of 20% of the construction value, i.e. developers will be required to complete construction of 20% of the project or deposit funds for the value of 20% of the construction value into an escrow account or via a bank guarantee.
There are other separate requirements of RERA in relation to licensing off-plan sales, which developers will need to consider when registering projects in order to obtain the required licenses for selling off plan and opening escrow account.
Our Real Estate team would be happy to discuss the above in more detail with you. Please do not hesitate to contact us.