Egypt Establishes New Regulatory Framework to Compensate Owners of Architectural Heritage Buildings

The Egyptian Cabinet has issued a pivotal decision aimed at refining the registration system and enhancing incentive mechanisms for owners of buildings and structures featuring distinguished architectural styles. These properties, which are officially registered on heritage lists, fall under the provisions of the Law on the Preservation of Heritage Buildings.

As part of this initiative, the Cabinet approved a draft resolution establishing the operational framework for the committee responsible for assessing compensation resulting from prohibitions on demolition or structural additions. Furthermore, the resolution outlines precise assessment criteria and designates the specific entity accountable for disbursement, aligning with Law #144 of 2006 concerning the Preservation of Architectural Heritage.

Compensation Application Process

Under the new guidelines, any owner of a distinguished property designated by a decision of the Prime Minister must submit a formal compensation application to the relevant committee. This submission requires an approved technical report detailing planning and construction requirements, designated land use, and a comprehensive site inspection report. The latter must describe the physical condition of the building, including the number of floors, setbacks, area, and current state. Additionally, a certified copy of the decision listing the building under architectural heritage alongside its documentation form must accompany the request.

Committee Working Mechanism and Valuation

The Compensation Assessment Committee is mandated to convene at least once a month, with the authority to consult non-voting experts. Completed applications are forwarded to two registered experts from the Financial Regulatory Authority, chosen by the Authority’s Chairman.

For expropriation cases, these experts evaluate the market value of the property at prevailing prices under the assumption that it is not registered as a heritage building, with the final compensation determined by averaging the two assessments. In scenarios involving property restrictions—such as bans on demolition or additions—market values are assessed under two distinct conditions: with the restriction applied and without it. Compensation is subsequently calculated based on the average difference between these two valuations at the time of assessment.

Disbursement and Appeals

Once evaluated, the committee submits its report to the relevant governorate to initiate disbursement in coordination with the Finance Ministry. Owners receive formal notification of their compensation amount via registered mail within two weeks. Expropriation compensation is fully settled in accordance with Law #10 of 1990, while restricted ownership compensation is typically issued in a single payment within six months. Alternatively, payments may be scheduled in semi-annual installments over a period of up to five years, incorporating interest at the Central Bank of Egypt rate, or provided in kind upon the owner's request. Property owners retain the legal right to appeal the committee's decision within 60 days of notification.

Core Objectives

Ultimately, the decision seeks to streamline the registration system for heritage buildings and activate incentives for property owners. By fostering a collaborative partnership between government entities and owners, the initiative aims to facilitate revitalization studies, ensuring that registered heritage properties do not impose an undue financial or functional burden on their custodians.

Edited translation from Al-Masry Al-Youm