Land bid bond amount to escalate to 20 percent

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Addis Ababa City

In order to remove fake bidders from the land lease auction, The Ministry of Urban Development & Housing came up with the new draft, requiring bidders to bring a minimum of 20 percent bid bond amount, which is currently set at five percent.
The draft aims to guarantee that the successful bidder will execute the contract and buy the land after paying the down payment for the total price of the land.
If the draft regulation gets acceptance from the Ministry of council, the total Upset price (minimum price set for property offered at auction or public sale) will be increased by 300 percent.
The draft deregulation is the better outcome for Land experts who say that people who place high bids often are hoping to obtain a loan from banks, preventing others who offer big money from snatching away business from them.
As capital reported, frequently many winners in Adiss Ketema fail to show up to the land lease auction, though they have offered high price.
The draft regulation which adds a number of improvements from the2011 proclamation also targets to fully discard the special auction system and allow regional and city administration land bureaus to revise upset price for land lease auction in less than two years.
Furthermore, the draft regulation requires new projects that get land with out tender to submit 30 percent of the total cost in a closed bank book account.
But it allows developers to borrow money from banks, which is currently giving loan for developers based on the lease system paid for the land bureaus.
The draft regulation also incorporates giving lands for farmers and husbandries for home and work in the event that they lose their lands for development purposes and allowing developers to use the side lands near their properties after consultations with administration heads.
Banning developers who transfer their lease without finishing the building construction and auditing land from auction for five years also receives big attention within the regulation.
In addition, it allows land bureaus to use 80 percent of the land selling money for land preparation in another auction.
The draft proclamation allows divorced couples to get out of the lease system and divide their house according to the old system if they owned it before the lease proclamation was ratified in the country, in 1987.
Relocated houses for redevelopment works will get land without the lease system if their houses are under the old land owning system.
But government houses who will be relocated to new areas get land in the lease payment system .
The draft regulation which is under discussion among the public is expected to be ratified in this fiscal year.