Lawmakers approve incentives for owners to legalize unofficial buildings

A new law, set to change how the owners of unlicensed properties can gain legal recognition for their buildings, was approved by lawmakers Monday. The new law has yet to be approved by the executive branch. 

Over two million unofficial properties are thought to exist across the country, with the government beginning in 2019 to push for centralized urban planning, asking owners to file and pay fees for legalization. Officials cited the risk informal buildings represent to agricultural land preservation and urban planning.

Under the prior law — passed in 2019, processing and uptake were slow, and building continued unlicensed in the meantime.

The new law, which annuls and replaces the previously enforced one, will likely increase the percentage of buildings being legalized, said housing and urban policy researcher Yahia Shawkat and Egyptian Social Democratic Party MP Ehab Mansour to Mada Masr.

But there is no corresponding disincentive to prevent property owners from continuing to build without licenses as they have previously done, both added, with Shawkat suggesting that there are root economic causes that still need to be addressed.

Shawkat said that under the new law, owners will now be able to apply to legalize buildings that did not previously qualify for legal status, as well as newer properties built in 2017-2023. The earlier version of the law ruled out any construction that had taken place after 2017.

Owners will have more time to submit their applications under the new law, as well as the chance to pay reconciliation fees in installments over several years.

People whose applications were initially rejected will also be allowed to file grievances and get accepted into the process again, said MP Ahmed al-Segini, head of the House Committee on Local Administration, speaking to the privately owned Al-Masry Al-Youm news outlet on Monday.

“It wasn’t implemented properly in the previous years. In my opinion, this law will help resolve around 40 percent of the applications, which is an improvement, though still not a success,” Mansour, who sits on the specialized committee on housing in the House, told Mada Masr.

But both housing experts said that people are still unlikely to regularize their properties’ status under the new law. Shawkat said this is due to the bureaucratic barriers, with the new law entailing even more complex procedures than before. The earlier law required a number of inspections to be carried out and submitted to different government departments. 

The amount of paperwork required meant that the government only resolved around four percent of the files, Mansour said, noting that other routes to legalize properties are even less accessible. 

“People who want to [legalize] properties that are not subject to the law can do so in some cases, but they have to go to the Cabinet, then pay three times the amount to settle violations, and I think this is a [large sum] under the harsh economic circumstances we’re living under,” he said. 

The new law is passed as the government faces a major foreign currency shortage. In 2020, the government said it had raised LE6.9 billion from building settlement requests, though it had initially estimated LE100 billion in revenues.

“If successful, the new law could help bring in LE150 billion to the economy,” Mansour said. “Even though people will have to pay to reconcile, they want to be done with the violations.”

But whether the law will affect how construction takes place moving forward is even less clear.

“Violating structures represent as much as 70 percent of all construction in Egypt, and that hasn’t fallen significantly since the time the 2019 law was passed,” Shawkat said, noting that similar forms of legislation over the past 70 years are yet to get at the heart of the issue.

There is the question of why people build houses without approval in the first place, Shawkat noted. 

While some are building for personal use, others are doing it for investment and to save money due to their mistrust in the value of the Egyptian pound, he said, noting that up to 12 million housing units built for investment lie empty across the country.

Shawkat believes the law could actually encourage contractors to build in violation of it since it allows for buildings to be legalized after construction. “Large groups of informal contractors have exploited informal housing since the nineties for personal use, to gain profit through real estate investment,” he added.

Professionals, experts, and government officials should assess the needs of each area, from big cities to villages, and attempt to understand how and why people in different regions build and use houses to understand the main issues underpinning the law, Shawkat recommended.