Directive No. 1147/2026 turns Ethiopia’s new foreign residential property regime from a
headline into a procedure. Proclamation No. 1388/2025 marked a shift in Ethiopian property
law by permitting qualifying foreign nationals to own residential houses and acquire leasehold
land for residential construction. Now, Directive No. 1147/2026 puts the machinery in place. It
answers the questions investors actually care about: Who qualifies? How much capital is
required? How is the money brought in? How many houses can be owned? And what has to
happen before title changes hands?
The Headline: One House, Foreign-Funded, Permit First
A foreign national wishing to acquire a residential house must first obtain a permit from the
Ministry of Urban and Infrastructure. The application requires, among other things, valid
identification, evidence of no criminal record, proof of the required capital deposit and relevant
security/public-interest clearances. Foreign investors follow a slightly different route: they must
hold a valid investment permit and obtain confirmation from the issuing authority regarding their
equity participation and investment status. Importantly, the Directive defines a “foreign investor”
for these purposes as a person holding at least USD 150,000 in paid-up equity in an investment
established in Ethiopia.
How Much Does Entry Cost? Location Matters.
The Directive introduces regional minimum capital thresholds for a single residential house:
USD 150,000 — Addis Ababa and Sheger City;
USD 120,000 — most other regions and Dire Dawa; and
USD 100,000 — Afar, Benishangul-Gumuz and Gambella.
If the actual purchase or construction price exceeds the amount initially registered, the
additional amount must also be deposited in US dollars before the transaction proceeds. The
money does not simply move directly to the seller. Foreign currency must be deposited through
a bank, converted into Ethiopian Birr at the prevailing exchange rate and held in a blocked
account, with release subject to Ministry authorization. In other words: the door is open, but this
is not a cash-and-carry property market.
One Foreign National. One Residential House.
Perhaps the clearest limitation is also the easiest to remember: the maximum is one residential
house. The permit itself is valid for one year. Where acquisition cannot be completed because of
force majeure, a further one-year extension may be available, subject to the Directive’s
conditions. And while foreign nationals may obtain leasehold rights over land for residential
construction, the reform does not create private ownership of land. Land remains subject to
Ethiopia’s constitutional and statutory land-tenure framework.
Not Every House Is on the Market
The Directive excludes several categories from foreign ownership, including government-
subsidized condominiums, certain publicly funded or supported housing, non-profit housing
projects and houses constructed through housing cooperatives. Once ownership is acquired,
the foreign owner must notify the Ministry within 30 working days, submit the relevant title
documentation and surrender the original permit certificate. The regime also links qualifying
ownership to immigration benefits contemplated under the Proclamation, while repatriation of
property-related funds remains subject to the applicable National Bank of Ethiopia framework.
And Compliance Has Teeth
The Directive backs the new ownership regime with a fairly detailed penalty framework. A
foreign national who uses a residential house for an unauthorized or unlawful purpose may be
fined USD 1,000 to USD 3,000. Acquiring a residential house/land for residential construction,
without first obtaining the required Ministry permit, carries a heavier fine of USD 2,000 to USD
5,000. Failure to meet the applicable minimum capital requirement may attract a fine of USD
500 to USD 2,000, while acquiring or attempting to acquire property by submitting false
evidence can result in a fine of USD 3,000 to USD 5,000. The Directive also imposes a USD
2,000 to USD 5,000 fine where a purchaser proceeds without depositing any required additional
purchase funds in US dollars and notifying the Ministry as required. The compliance net extends
beyond the buyer. Any person who knowingly — or where they have reason to know that the
requirements have not been satisfied — causes, permits, assists or collaborates in a non-
compliant acquisition may be fined ETB 30,000 to ETB 50,000.
Summary
The Directive takes the Proclamation from principle to practice. It establishes the permit
process, confirms the one-house limit, sets location-based minimum capital thresholds of USD
100,000 to USD 150,000, requires foreign currency to pass through a blocked Ethiopian bank
account, and regulates the acquisition of leasehold land for residential construction. It also
identifies excluded housing categories, imposes post-acquisition registration requirements, links
qualifying ownership with residence and visa arrangements, and introduces specific penalties
for non-compliance. Ethiopia’s residential property market is now legally accessible, but entry is
structured, capital-controlled and closely regulated. Successful transactions will depend as
much on getting the permit, funding and registration steps right as on finding the property itself.
Directive No. 1147/2026 provides that it becomes effective upon registration by the Ministry of
Justice and upload on the Ministry’s website. This update is for general informational purposes
only and does not constitute legal advice.
For further information and updates please contact Dablo Law Firm, the LEX Africa member in
Ethiopia, on info@dablolawfirm.com or visit https://dablolawfirm.com/
