In Egypt, a debate has reignited over the need to introduce mandatory escrow accounts to protect the funds of home buyers in facilities under construction. Parliamentarian Ahmed Fayed has submitted an official proposal calling on the government to make such accounts mandatory for all development projects.
According to the proposal, developers will be required to open a separate escrow account for each project, which will receive all payments from buyers. Funds from these accounts can only be withdrawn in stages, as the construction progress is confirmed by independent engineering experts. It is also planned to create a single digital database under the supervision of the Central Bank, the Ministry of Housing and Commercial Banks to monitor all projects operating under the new system.
The initiator of the bill emphasizes that the goal is not to create additional barriers to business, but to build balanced regulation that protects the interests of both buyers and developers. As a successful example, the experience of the UAE, Singapore and a number of US states is cited, where escrow accounts are already a mandatory element in the real estate market and have proven their effectiveness.
Economic experts generally support this measure, noting that it will strengthen confidence in the market and discipline developers, preventing them from using buyers' funds to finance other projects or purchase new land. However, they warn that the drastic introduction of new rules may create liquidity problems for small and medium-sized developers. Therefore, experts recommend introducing escrow accounts gradually, providing for a transition period for ongoing projects in order to maintain the stability of the market as a whole.
Source: Daily News Egypt
