As the real estate sector in Bahrain is an important contributor to the country’s GDP it is important to have a well-organized law for the same. Therefore, the Real Estate Regulatory Authority (RERA) has established in the kingdom of Bahrain with an aim to regulate the real estate sector in the country. RERA is the independent government authority which aims at issuing guidelines for the real estate developers, agents etc. providing training to real estate brokers & sales agent and assisting the developers with licensing or any other related information.
Therefore, a new law no 27 of 2017 was issued to achieve the following objectives :
- To ensure that the real estate industry in Bahrain is at par with the international standards.
- To protect the rights of foreign investors, real estate developers , agents thus enabling a smooth functioning and a better relationship between the parties.
- Develop the economic growth & investment.
Application and Scope of the Law
The law applies to property developers, sales agents, brokers, valuers /appraisers and those licensed to manage and operate the properties. All the buyers or investors will have a right to know the details of the project they are buying or investing into. Therefore, this will lead to enhance transparency, increase efficiency of the market and the real estate services in order to safeguard the interests of consumers, investors and all stakeholders in the real estate market, which will thereby lead to growing the local economy by attracting foreign investment.
Buying a property off-plan can be a challenging experience as a buyer can neither see the property, they are purchasing nor visit the property. To help the buyers, the law requires developers to allocate a seven-day consideration period to prospective buyers to make a final decision on a unit purchase in an off-plan development. Developers must disclose detailed information to prospective buyers. This allows buyers time to know the facts and make an informed decision.
Developers are required to maintain an escrow account for each development project. The account must be managed by an escrow agent authorized by the Central Bank of Bahrain and approved by RERA. Hence, this will ensure the money is being used by the developers for the purpose of construction and execution of the Real Estate Development project.
RERA also has a provision for establishment of an owners associations to assume administrative and legal responsibility for such properties and regulate the relationship between the owners of units and the property developer, as well as between the owners themselves. The owners associations will work to protect the rights of all these parties and ensure that they perform their duties in accordance with the laws and regulations.
All brokers, sales agent and developers are compulsorily instructed to obtain a RERA license within six months of its implementation. Non compliance shall be subject to an offence and penalties include imprisonment for not more than two years and fine up to 50,000 BHD.
(This news update has been prepared by Almoayed Chambers to provide inputs pertaining to RERA. Inputs are based on information from various sources. The content in this report does not constitute any legal advice. It is published for general information only, therefore it is advised to take a professional opinion before acting on any of the statements mentioned in this news update.)