(MENAFN - Arab News) The government will start working on a new regulation aimed at regulating real estate agents and brokers in the country.
Within the next three months, three ministries will study the state of existing real estate agents in the Saudi market. "Especially as the market currently is full of unlicensed agents and is unorganized," sources were cited in an Al-Sharq Al-Awsat newspaper report.
Meetings between the ministries of Commerce and Industry, Municipal and Rural Affairs, and Housing, are expected to result in the closure of 50 percent of existing real estate agents.
The Council of Saudi Chambers had warned on several occasions against unlicensed agents who currently operate in the market as middlemen and property managers.
Chairman of the council's national real estate committee Muhammad Al-Khaleel expects the move would curb the chaos in the real estate agents sector. "Regulating the sector means real estate mediation and property management would become an official occupation. In turn, this would increase the level of professionalism in the field and solve several problems," he said. Officials at the council have proposed to the Ministry of Commerce and Industry to create a classification system, encompassing real estate agents. He said the proposed classification would involve three categories: agents practicing real estate marketing, those practicing marketing and property management and companies that market and manage property in addition to investing.
Al-Khaleel said regulating the field would also eliminate much of the tasattur (cover-up businesses). "Regulation would lead to positive results in terms of security, both economically and socially."
He thinks the market would not be adversely affected when half of the agents would quit after the regulation is implemented.
Saudi Arabia recently started organizing and supporting the real estate sector. About six months ago it approved the real estate mortgage system that will be implemented in 2013. A senior official at the National Real Estate Committee had called on banks to start preparing for the necessary liquidity that would be required to finance the purchasing of homes under the new mortgage regulation instead of expanding in consumer loans.
"We hope for the recently-approved mortgage and real estate financing systems to balance the levels of supply and demand in the Saudi market. That is what the sector needs," Al-Khaleel said previously.
He said whether real estate prices would decrease after implementing the system is something that cannot be predicted. "Market is supply and demand and there is a group of factors that affect prices." However, the mortgage system would succeed in regulating relationship and preserving rights between buyers, sellers and financers. Implementing financing systems would increase chances for the sector to perform well during the next few years, he added.