Morocco Seeks to Boost Off-Plan Property Sales with VEFA Law Reforms

"A fundamental instrument to guarantee transactions and professionalize the sector, VEFA is rarely practiced by operators (5% to 10%). [...] It offers two types of guarantees to offer buyers, either a financial guarantee, i.e. a bank guarantee, or a guarantee or completion insurance," said Anice Benjelloun to MAP. Except that "such insurance does not exist in Morocco, because there are no products that offer developers a guarantee of completion of the work," said the vice-president of the FNPI.

Regarding the bank guarantee, "banks cannot at the same time finance the project (the construction) and give a guarantee for the buyers’ advances," he also pointed out. Based on these findings, Anice Benjelloun calls for a review of a number of provisions. "There needs to be a gradual transfer of ownership, put in place a completion insurance and see if banks will be able to set up a guarantee system for advances that is independent of project financing. So, there is a need to review this law and find a formula that is more applicable," he said.

The FNPI is enthusiastic about the implementation of a VEFA, but "this provision must be truly applicable, fluid and easy to implement." Anice Benjelloun recommends looking into the possibility of setting up a gradual transfer of ownership to have a specific guarantee for the buyer, studying the possibility of setting up a completion insurance product and finally setting up a bank guarantee for buyers, without penalizing the credit granted to real estate development.