New Prakas on Real Estate Business Service Licensing
According to Prakas No. 052 dated 3 November 2022 before applying for accreditation, a valuation company or valuation specialist in the real estate sector is required to obtain a valuation services license or a valuation professional certificate from the Real Estate Business and Pawnshop Regulator (RPR) of the Non-Banking Financial Services Authority (NBFSA).
On 27 December 2022, the NBFSA issued Prakas No. 064 regarding Real Estate Service Business (Prakas 064) to strengthen the management and control of the real estate service business in Cambodia. Prakas 064 came into force on 27 December 2022 as officially declared by NBFSA via its announcement letter dated 16 January 2023.
Prakas 064 applies all kinds of businesses related to the real estate services including real estate/property management services, real estate valuation/appraisal services, and real estate agency services. The Prakas 064 replaces the Prakas No. 636 SHV.Br.K dated 29 June 2017 on the Management of Business for Providing Valuation Service and Real Estate Service.
The valuation service and real estate service licenses will be issued to any legal entity such as a real estate company while the professional certificate will be issued to any individual engaged in the real estate services regulated in accordance with Prakas 064.
Prakas 064 describes the application process and documentation and qualifying criteria applicable to legal entities (or branch offices of legal entities) or individual practicing certain real estate services.
Prakas 064 distinguishes among 3 categories of license (License) which must be obtained by a legal entity operating in the real estate sector, according to the specifics of the relevant real estate business performed:
- Real estate management license: This license applies to any company/branch office that provides any real estate management services, in return for professional fees;
- Valuation license: This license applies to any company/branch office that provides business evaluation services to customers, in return for professional fees; and
- Real estate agency license: This license applies to any company/branch office that provides real estate agency services on behalf of clients, in return for professional commission.
The granted License is valid for 1 year, renewable within 30 days before its expiry date.
An authorized representative of a company applying for a license must hold formal qualifications as required under Prakas 064. A company applying for a real estate management services license or real estate valuation license must hold a professional indemnity insurance.
Whereas, the professional certificate (Certificate) is required for an individual who is qualified under Prakas 064 to practice the profession as a real estate valuer or real estate agent with two categories as below:
- Valuation professional certificate: This certificate is granted to a legally qualified individual to practice their profession as a valuation specialist; and
- Real estate agency professional certificate: This certificate is granted to a legally qualified individual to perform real estate agency services.
The granted Certificate is valid for 1 year, renewable within 30 days before its expiry date.
Prakas 064 describes the renewal process, qualifying criteria for the renewal of a license or certificate. Prakas 064 also requires a real estate company or individual with the granted License/Certificates to fulfill a various on-going compliance obligations which includes the preparation and submission of monthly, quarterly and annual reports to RPR.
The license and administration fees for a company and individual which are payable to the RPR in order to obtain the License or Certificate are summarized in Article 16 of Prakas 064. The License fee for a company to obtain the real estate business License is 500,000 riels (approx. US$ 125) per License with the administrative fee of 140,000 riels (approx. US$ 35) while the Certificate fee is 200,000 riels (approx. US$ 50) per Certificate with the administrative fee of 60,000 (approx. US$ 15).
Besides the fee for the License/Certificate, the real estate company and individual need to pay the annual real estate and pawnshop development fund to RPR. The amount is summarized in Article 17 of Prakas 064 whereby the company holding the License is required to contribute 140,000 riels (approx. US$ 35) per year while the individual holding the Certificate is required to contribute 60,000 riels (approx. US$ 15) per year.
A company operating real estate services/doing any advertisement activities without the relevant License is liable to a fine from 5,000,000 riels (approx. US$ 1,250) to 10,000,000 riels (approx. US$ 2,500) and has to stop its business operation/such advertising activities immediately.
The PRP is also entitled to impose administrative sanctions to any company/individual who is in breach of Prakas 064 by taking any following actions:
- issuance a warning letter;
- suspension/closing down of business operation
- suspension/withdrawal of the business license/certificate;
- publishing the breaching activities; and
- taking any other action permissible by the law.
It should be noted that notwithstanding the introduction of Prakas 064, licenses or certificates that were previously issued to a legal entity or individual before Prakas 064 came into force shall continue in full force and effect (until the relevant expiry date of such license or certificate).
Should you need any further information or legal support, please reach out to us via below contacts.
Davy Kong, Co-Head of Real Estate and Construction Practice Group, [email protected]
Leung Seng, Co-Head of Real Estate and Construction Practice Group, [email protected]