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The Dawn of Real Estate in Bahrain

The Law No.27:

This law pertains to the Endorsement of Real Estate Sector Regulation Law (New Law) issued in the Official Gazette on 03 August 2017. The Chapter One of this Law came into effect from 1st September 2017 and the remaining sections from 1st March 2018. The law comprises of legislation of significant issues of the Real Estate sector. The prominent features of this law are:

The inception of Real Estate Regulatory Authority:

Chapter One endorses the establishment of a Real Estate Regulatory Agency (RERA) to regulate the Real Estate Sector of Bahrain. The board of directors has been appointed, and the CEO of Rera is Sheikh Mohammed bin Khalifa bin Abdulla Al Khalifa. The RERA board have their work cut out for them which also includes the execution of a countrywide plan for the Real Estate Sector and the regulations to be issued for the New Law operations.

Off-Plan Development:

The most awaited effect of the New Law is the monitoring of off-plan developments as the New Law replaces the Law No. 28 of 2014 concerning Property Development which was governing all off-plan developments. However, the New Law has similar requirements like the previous law.

Developers selling off-plan properties have to hold a Developer’s Licence” before carrying out any development activities. The Cabinet Minister’s resolution will determine the purview of a “property development.” The RERA board will also release a resolution of obtaining, renewing and amending a “Developer’s License” requirements.

Once the Developer’s license is obtained, the details will be recorded in a “Developer’s Register”  kept by RERA. The New Law also requires every development or project to hold a “Development Licence.” The RERA is to maintain a “Development Register” to store the following information:

  • Plans and specifications, designs and drawings of the development;
  • Details of the Escrow Account and any financial guarantees; and
  • Any other data deemed appropriate by the Board.

A developer has to submit the following along with the other requirements when obtaining a “Development License,”:

  1. The title deeds or its substitute;
  2. Approved architectural and structural engineering plans;
  3. Method statement detailing the completion and implementation of any phases of the development;
  4. The building permit;
  5. A valuation of the development from a COEPP licensed engineer; and
  6. Any other information required by RERA as determined by a resolution from the Board.

The New Law compels the developers to carry on the process of development, and the RERA has the authority to withdraw the “Development Licence” if the developers do not proceed with the development as required. The exact criteria will be decided by a Board resolution.

Like the old legislation and other GCC markets, a Developer has to hold an Escrow account with a Registered Escrow Agent. The account will hold the revenue from the sale of units and also the finance secured for development. The details of initial deposit amount and rules of the Escrow account will be issued as a board resolution by RERA with inputs from the Central Bank of Bahrain.

The Escrow account is exclusive for development, and the sums deposited in them shall be protected from the misuse or seizure by any creditor of the developer. The developer has to maintain a specific percentage of the structural value of the development for 12 months after the sale of the last unit. This amount will be used to remedying any defects within the development.

An essential stipulation of the New Law is the prevention of marketing for unregistered off-plan developments locally or internationally. There is an expectation of various other regulations, and some of them are:

  • The terms and conditions of sale contracts used in an off-plan development;
  • The on-sale of a unit by a buyer to another party before completion; and
  • The cancellation of the development.

Brokerage, Valuer and Property Management:

The Sections of 3, 4 and 5 of the New Law cover brokers, valuers, and property management individually, with each profession being required to obtain a license from RERA to practice.  The Board will issue resolutions setting out further requirements. However, one crucial restriction of the New Law is that the same business cannot undertake valuation and Brokerage activities.

Joint Ownership and Home Owners Associations:

The main changes from the preceding law are that a Home Owners Association (HOA) is required to be set up on the sale of one unit (previously 4) and it shall be an incorporated entity.  Also, an HOA is now capable of being registered at the Survey and Land Registration Bureau and will form part of the title deed of any jointly owned common property.

Registration of Rights

The New Law requires all property “real” rights to be registered and these will include long-term leases, rights of Musataha and mortgages.


Non-compliance with the New Law carries strict penalties which range from up to 2 years imprisonment and a fine of up to BHD 50, 000.


The New Law and its resolutions will deliver comprehensive legislation for the Real Estate sector in Bahrain. The RERA as the regulator will form the necessary government authority in implementing the New Law and regulations. As such rule will have the potential to provide a secure situation for the stakeholders and increase confidence in the market for investors.

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This post first appeared on Intuit Management Consultancy, please read the originial post: here

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The Dawn of Real Estate in Bahrain


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