By Sinishaw Hailu, Associate at DMR Law Firm
Ethiopian House of People’s Representatives issued Proclamation No. 1388/2025 here after the proclamation, to govern how foreign nationals may own or lease residential houses in Ethiopia. The Proclamation sets out who may qualify, the prerequisites for ownership, the rights conferred on foreign owners, the obligations they must meet, and the restrictions governing possession. It assigns ministry of urban and infrastructure development here in after the ministry, to issue directives that can adjust thresholds, land allocation mechanisms, and eligibility in response to national interests and market conditions. The overarching aim is to balance foreign participation with security, public order, and national policy-making.
Rights, Pre-Conditions, and Restrictions on Ownership
Ownership Rights of Residential Houses by Foreign Nationals: Any foreign citizen who meets the Proclamation’s requirements may become a residential house owner. Ownership of a residential house is contingent on land provided through a lease and allocated via public bidding. The Ministry, through directives, may prohibit ownership by citizens of certain countries or stateless foreigners.
Rights Granted to Foreign Investors: Foreign investors identified under applicable law may own or lease residential houses in accordance with the Proclamation. Investors with an investment license may own one residential house without meeting the minimum monetary threshold; they may own more than one house only if they satisfy the conditions in Article 6. A permit from the Ministry to acquire ownership requires written proof from the investment-permitting organ detailing the investor’s shareholding and other relevant information, and a confirming document from the investment-permit-granting authority.
Permit Process: A foreign investor seeking ownership must obtain a permit from the Ministry upon written confirmation from the investment-permitting authority certifying shareholding and other necessary information.
Financial Thresholds, Volume, and Area: The minimum investment is USD 150,000 per residential house, including the full lease price. An ownership cap permits a foreign national to own one residential house at a time, with the Ministry able to adjust this number by Directive in the national interest. The Directive authority empowers the Ministry to increase or decrease the minimum amount, determine leasehold or house sizes, and modify the total number of leaseholds or houses based on market conditions and policy objectives.
Prerequisites for Becoming Owner: A foreign national may own a residential house only if the following preconditions are fulfilled: submission of valid legal documents disclosing the applicant’s name, nationality, and identifying particulars; proof of sufficient financial capacity to meet the minimum threshold; no criminal record; absence of restrictions arising from considerations of national peace, security, public order, or related concerns; and authorization from the Ministry.
Rights Conferred on Owners: Foreign owners may enjoy property rights comparable to Ethiopian citizens who own a house, subject to restrictions on commercial use unless exceptions apply through collaboration with relevant entities. Owners and their families may receive a residence permit or a five-year multiple-entry visa. The owner may also transfer rental or sale income abroad in foreign currency at the prevailing exchange rate under the National Bank’s directives.
Obligations of Foreign Nationals: Foreign owners are subject to the obligations applicable to Ethiopian citizens under national law. They must meet the minimum financial threshold and pay the lease, purchase, construction permit, and first-year government service fees in the applicable foreign currency. If land is leased with a purchase option, the full lease price must be paid in a single installment.
Restrictions on Ownership and Possession: Territorial and border-area restrictions determine where ownership is prohibited, as set forth in a Regulation issued by the Council of Ministers. No foreign citizen may own a dwelling in a condominium built with direct government subsidies to citizens, though exceptions exist for residential houses built by federal or regional governments through public-private partnerships or market-driven projects. Domestic financing prohibition bars foreign nationals from acquiring ownership through financing from domestic financial institutions or by mobilizing capital within the country. Reciprocity provisions allow foreign nationals from countries that permit Ethiopian citizens to reside to receive corresponding rights under directives.
Retention of Ownership Rights: Retention and enforcement of ownership rights follow the applicable law, ensuring consistency with Ethiopian citizens’ ownership frameworks.
Procedural Pathways: Any foreign national seeking ownership must obtain prior authorization from the Ministry. Applications may be submitted in person or through online systems established by the Ministry. Processing timelines provide for an initial decision within 30 working days from submission, and a decision on a completed application within 30 working days from submission of the completed application. If additional information is required, the Ministry may request it within five working days, and the applicant must provide the information and resubmit. The Ministry shall issue a final decision within 15 working days.
In general the Proclamation delineates a structured framework for foreign national residential house ownership in Ethiopia, balancing investor rights with national interests. It establishes clear financial prerequisites, alongside specific public housing restrictions. While promoting investment through defined entitlements, the law enforces stringent domestic financing prohibitions and a reciprocity principle. The Ministry’s authorization is mandatory, guided by a transparent application process with specified timelines. Ultimately, the proclamation aim to regulate foreign real estate participation, ensuring compliance and equitable integration within Ethiopia’s housing sector.
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