zoning_shares – Syria Report

Posts

Confusion Surrounds Allocation of Properties in Basilia City

26-11-2024/in HLP, News /by Rand Shamaa

The initial sessions to allocate residential plots in Basilia City, organised by the Directorate for Implementing Decree 66 in Damascus Governorate, have been marred by unclear procedures and a lack of regulatory framework. This led the governorate to cancel the results of the first allocation session held in early October, calling on eligible stakeholders to restart the process. The decision added to existing confusion and disarray.

Basilia City is the second zoned real estate area established within Damascus under the provisions of Legislative Decree No. 66 of 2012, covering an area of 954 hectares. Allocation refers to an agreement between the Damascus Governorate and the holder of zoning shares, granting the latter a specific, ready-to-build plot with a defined location and specifications, while clarifying the conditions and obligations between the parties. People eligible for allocation, or reallocation, must have documented ownership of zoning shares in the area – typically individuals who owned properties there before the zoning took place and who are able to prove ownership.

On August 19, the Executive Office of the governorate issued Decision No. 985 to begin allocating residential plots to zoning share owners in Basilia City. The decision outlined the process for submitting allocation requests. Following a review of these requests, allocation is either determined by a draw when multiple applications exist for the same plot or granted directly if only one request is received. The allocation process takes place in the form of sessions for which there are no clear rules. Decision No. 985 did not specify a minimum number of plots to be offered for allocation or a minimum number of requests required to initiate an allocation.

The Directorate for Implementing Decree 66 announced the start of the allocation process for the entirety of Basilia City on September 1, set to last for a full year. By September 24, the directorate had accepted 130 allocation requests out of 161 submissions and granted applicants a one-week deadline to complete their documentation. On October 1, it announced the results of the documentation review, and on the following day it held the first allocation session, using either direct allocation or a draw.

According to The Syria Report’s local correspondent, this led to 30 objections from applicants, who cited insufficient time to submit applications and complete their paperwork, resulting in their exclusion from specific plot allocations. According to our correspondent, these objections could have been resolved without cancelling the session’s results. The cancellation, however, angered those who had already been allocated plots, as they found the decision unjustified and blamed the governorate’s mismanagement for the errors.

The Directorate has set October 7 as the new date for receiving the allocation applications, but has not yet set session dates.

One such shareholder, Khaled, told The Syria Report that he sold his shares after his allocation was cancelled. He cited the complexity and lack of clarity in the procedures, along with his inability to wait any longer – seven years after his home in Kafr Sousseh was demolished. Khaled sold his shares for approximately SYP 600 million (around USD 40,000), enough to buy a small apartment on the outskirts of Damascus, he said.

Sources told The Syria Report that the reallocation provided an opportunity for brokers to pressure shareholders into selling at low prices. Brokers used two main arguments to persuade shareholders. The first argument is based on the fear of missing out: shareholders were warned of losing their chance at allocation or having their requests deferred to later stages. Brokers emphasised the slow pace of allocation, with lengthy intervals between sessions, and suggested that any mistakes by shareholders or the governorate could result in their applications being postponed or rejected entirely. This argument resonated particularly with those holding small shares or facing financial difficulties due to ongoing rent payments after the demolition of their homes. The second argument is the high costs of licensing and construction: brokers highlighted the high costs associated with obtaining building permits and developing the plots. For instance, the licensing fees for a single residential plot in the neighbouring Marota City reached SYP 3 billion (around USD 200,000).

Our correspondent noted that many of these brokers are wealthy building contractors or real estate office owners in Damascus. They employ sales agents and transaction facilitators to acquire zoning shares, further complicating the process for individual shareholders.

Allocation of Residential Plots Begins in Basilia City

17-09-2024/in HLP, News /by Rand Shamaa

On August 19, the Executive Office of the Damascus Governorate issued Decision No. 985, allowing the allocation of residential building plots in Basilia City to start. This is the second development zone established within Damascus, in accordance with the provisions of Legislative Decree No. 66 of 2012, and covers an area of 954 hectares.

Allocation refers to an agreement between the Damascus Governorate and the holders of shares, regarding the allocation of specific, ready-to-build plots, with known locations and specifications. This agreement outlines the conditions and obligations of all parties involved.

Legislative Decree No. 66 of 2012 created two development zones in Damascus: the first is Marota City, and the second, located south of the Southern Ring road, is Basilia City. The Damascus Governorate manages both zones through the Directorate for the Implementation of Decree No. 66 and the Damascus Cham Holding Company, which is owned by the governorate. A large number of committees worked on implementing the provisions of Decree No. 66 in Basilia, and the results of their work were gradually issued as decisions by the Damascus Governorate, starting in 2021 – after a delay of nearly nine years in implementing the decree.

In February 2021, the Damascus Governorate released the estimated values for 4,200 properties that existed in the area before 2012. After that, the entire zoned area became jointly owned by the rights holders. Subsequently, in line with the area’s zoning plan, the values of the residential building plots were calculated. Each of these plots is referred to as a “zoning plot” to distinguish them from service or investment plots, which the governorate is entitled to develop on land deducted for free from the zoned area.

Afterward, the zoning plots were distributed among the rights holders based on their shares, which were themselves based on the value of their ownership in the 4,200 properties that existed in the area before 2012. Based on this division, each rights holder received shares, referred to as “zoning shares.” Those entitled to these zoning shares are property owners who have proven ownership through documents and records, meaning owners of licensed properties located in zoned areas, and therefore registered in the Directorate of Cadastral Affairs. However, those who built unlicensed homes on public land or on private agricultural land where construction is prohibited, may be allocated alternative housing but are not entitled to zoning shares.

In July 2021, the governorate released the values of the zoning shares owed to property owners, as well as the share values of the residential zoning plots in Basilia City. According to the zoning plan, Basilia includes 567 zoning plots, divided into three categories: 312 residential plots, 64 residential/commercial plots, and the rest are investment plots, in which the governorate has the right to invest in, including selling or renting it for commercial or service purposes.

At the end of 2021, the governorate began distributing ownership deeds for zoning shares to the rights holders. Under Decree No. 66, a shareholder has three options: to convert their shares into a zoning plot, to sell the shares at a public auction, or to form or join a joint-stock company. In any case, the process of distributing the shares has been slow, and by the end of 2023, the Damascus Governorate announced that only 47,438 ownership deeds for zoning shares had been issued, out of 93,829 rights holders. This means that there are 93,829 rights holders for the 4,200 properties that previously existed in the area before it was zoned. To explain this large number of rights holders, it is important to note that a single property may consist of a building with several floors and many residential units. Additionally, many properties have not been subdivided in the Directorate of Cadastral Affairs, meaning that a single property may have a large number of heirs among the rights holders.

The governorate authorised the trading of shares in Basilia City, starting from May 15, 2023, for a period of one year only. Trading shares means that ownership of the shares can be transferred between owners or to others, either partially or fully. The purpose of trading is to consolidate zoning shares in the hands of a few owners, which would facilitate their allocation of ready-to-build zoning plots. It was expected that once the share trading period ended in May 2024, the allocation of zoning plots would begin.

Accordingly, the recent Damascus Executive Council’s Decision No. 985 of 2024 outlined the provisions for how holders of zoning shares can apply for allocation of specific zoning plots, within a one-year period ending in September 2025. Upon registering their application, the applicant receives a notice known as the “queue system.” If more than one application is submitted for the same plot after the one-year period, a draw will be held to decide. It is not allowed to apply for more than one plot in a single application, but shareholders can submit multiple applications for different plots.

There is a specific format for the application, attached to Decision No. 985, which includes details about the applicants, such as the serial number of applications, zoning share ownership deed numbers, names of the owners, the number of shares applied with, the signatures of the owners or their representatives, the total number of shares applied with, confirmation that there are no legal impediments to obtaining a construction permit, and the designation of up to three owners or their representatives to attend the allocation committee meetings. These representatives will also be present for the draw, sign its record, reclaim ownership deeds if no allocation is made for any reason, and agree to the procedures set by the governorate. Additionally, they are prohibited from taking any actions that would affect the ownership rights of the other shareholders in the application.

Explained: Zoning Shares and Who Gets Them Under Decree No. 66

08-08-2023/in Analysis & Features, HLP /by Rand Shamaa

Legislative Decree No. 66 of 2012, which established two zoned real estate areas within Damascus governorate as part of the general plan for the capital city, compensated some rights holders with zoning shares in these two areas. This article explains what is meant by “zoning shares” and how people obtain them.

Decree No. 66 clarified that those entitled to zoning shares are owners of built properties within the zoned real estate area who have proven their ownership with official documents and endorsements. This mainly refers to owners of properties that were registered and documented in the Land Registry prior to the establishment of the new zoned real estate areas. However, non-compliant owners who have built on public lands, or on private agricultural lands where construction is prohibited, might instead be allocated not free alternative housing but will not be entitled to zoning shares.

As for renters, Decree No. 66 stipulated that tenants of properties within the zoned real estate area whose rental agreements are subject to the provisions of the old Tenancy Law No. 111 of 1952 are also entitled to zoning shares. Essentially, this means that the property is officially documented in the Land Registry. In such a case, a tenant occupying the property is entitled to a share equivalent to 30 percent of the estimated value of the residential property they occupy, and 40 percent for a tenant occupying commercial property.

The 2012 decree also stipulated dividing the zoned real estate area into plots, which are jointly owned by the owners within the zone. The value of the plots are estimated and then distributed in the form of joint shares, or zoning shares, amongst the rights holders by a distribution committee. This committee is formed by a decision of the governor and is chaired by an advisory judge appointed by the Minister of Justice. It also includes two real estate appraisal experts appointed by the Minister of Housing, and two representatives from amongst the area’s property owners.

The zoning shares for each rights holder are calculated according to complex processes carried out by several committees, in accordance with Decree No. 66. To put it simply: an initial committee estimates the value in Syrian pounds of the properties owned by rights holders, which were constructed before the establishment of the zoned real estate area based on prevailing prices at the time of the procedure. Subsequently, the area becomes joint communal property of the rights holders, though each person theoretically retains their share. Following this, another committee calculates the Syrian pound value of the plots intended for construction, specifically designated for rights holders, as per the zoning plan. Each of these is referred to as a zoning plot. The Damascus governorate is entitled to allocate large areas within the zoned real estate area, free of charge, for the establishment of service or investment plots. There are no clear criteria for valuation, as these plots have not yet undergone construction. After the valuation, the value of the zoning plots is divided among the rights holders, who each receive their zoning shares.

The distribution committee issues its definitive final decision, which includes the names of those entitled to shares of the zoning plots as joint owners. The Damascus governorate also releases nominal data about the joint zoning plot shares and delivers them to the owners based on the distribution committee’s tables. This data should list the name of the zoned real estate area, the names of the shareholders, the number of shares, and the total count of shares for the zone.

Owners of the zoning plot shares can begin trading their shares within a year after the governorate announces the final distribution scheme. However, initially, the rights holder’s share ownership must be registered with the Damascus governorate. Subsequently, anyone can access ownership information of the shareholders from the share registry and obtain a certified copy in exchange for a fee set by the governorate. The governorate also charges a five percent fee of the traded share value for every share trading transaction.

The process of transferring and registering the ownership of zoning plots is conducted in the Land Registry, in accordance with the current status of the joint share owner. If someone has a large share, they can apply for an independent zoning plot that is equivalent in value to the shares they own. The executive office in the governorate then issues a decision to allocate the plot and register it under that person’s name. This decision is announced on the governorate’s notice board and a copy is sent to the Directorate of Cadastral Affairs for the property registration procedure.

For those who own smaller shares that don’t equate to an independent zoning plot, Decree No. 66 allows them the option to establish a joint-stock company under the Companies Law. In this scenario, the governorate issues a decision to allocate the shares to the company, announcing it on their notice board. The governorate also sends a copy of this decision to the Ministry of Economy and Trade for establishing a joint-stock company and another copy to Cadastral Affairs for registering the plot ownership under the company’s name. Properties within the decree’s zone of implementation are exempted from land registration fees.

Decree No. 66 prohibits the ownership and allocation of more than one zoning plot, whether by individuals or companies. If it is not feasible to establish or join a company, the only option left for a small shareholder is to sell their shares via public auction. In such cases, the Damascus governorate forms a special committee, in accordance with Contract Law No. 51 of 2004, to sell the zoning plots. The proceeds from the sold plots are then deposited in the Damascus governorate’s account at the Central Bank of Syria, labelled as a “trust account”. The governorate may not use the funds of the owners of the sold zoning plot shares. This group of zoning share owners is the most adversely affected as they are forced to sell at auction prices that builders compete for.

The Directorate for Implementation of Decree No. 66, which is affiliated with the Damascus governorate, announced the commencement of share trading for the second regulatory zone south of the Southern Ring Road, called Basilia City, starting from May 15, 2023. The trading period will last until May 15, 2024. A square metre consists of 339,615 shares, according to the the Finance Directorate of the Damascus governorate. Article 25 in Decree No. 66, set the price of a single share at SYP 1.