New Laws to Revolutionize Real Estate Market Management in Vietnam

The real estate market in Vietnam is set to undergo a transformative change with the introduction of two new laws, according to Nguyen Hoang Hai, Director of the Ministry of Construction’s Department of Housing and Real Estate Market Management. These laws aim to eliminate conflicts and overlaps in policies and regulations related to real estate, including land, investment, finance, and credit.

One major difference between the existing laws and the new ones is the promotion of decentralization and a shift in administrative procedures. The amended laws will move away from using administrative tools for management and instead focus on effectively utilizing economic tools to drive the development of the real estate market. This will also strengthen the role of local authorities in managing real estate and housing business activities.

The new laws introduce clear regulations for real estate businesses. For instance, there is a minimum equity requirement, and businesses must maintain a specific ratio of outstanding credit and corporate bond debt to equity. Additionally, the laws restrict real estate project investors from collecting a deposit of more than 5 percent of the selling or rental price until the necessary conditions for business operation are met.

Furthermore, the laws emphasize the responsibility of project investors to provide guarantees, while granting customers the right to decide whether they want such guarantees. The laws also outline the obligations of guarantee banks when issuing letters of guarantee to buyers or lessees of properties.

An important aspect addressed by the new laws is the renovation of old apartment buildings. The approval of investment policies for these projects will now align with the provisions of the Housing Law instead of the Investment Law. This change is intended to facilitate investment in the renovation of apartment buildings by creating a favorable environment for investors.

The laws also cover the relocation and forced relocation of owners and users of apartment buildings, specifying the rights and responsibilities of local authorities and relevant parties. Additionally, they establish the inclusion of funds for relocation and demolition in the total project investment.

Other significant changes brought about by the amended Housing Law include defining the responsibility of local authorities in setting aside land for social housing development, introducing new forms of accommodation for workers and members of the armed forces, and granting the Vietnam General Confederation of Labor the authority to oversee social housing investment projects. The new law also eliminates residency conditions for individuals wishing to buy, rent, or purchase social housing, providing several incentives for investors involved in social housing projects.

The Ministry of Construction is currently working in collaboration with the Ministry of Justice, the Government Office, and other relevant agencies to enact these new laws and establish a plan for law enforcement implementation. If all goes as planned, the new laws will be fully applied by 2024, marking a significant milestone in revolutionizing real estate market management in Vietnam.

FAQ Section:

1. What are the main changes introduced by the new laws in Vietnam’s real estate market?
The new laws aim to eliminate conflicts and overlaps in policies and regulations related to real estate. They promote decentralization and a shift in administrative procedures, strengthening the role of local authorities in managing real estate and housing business activities. The laws also introduce clear regulations for real estate businesses, including minimum equity requirements and restrictions on collecting deposits. Additionally, they address the renovation of old apartment buildings and cover the relocation of owners and users, among other changes.

2. How will the new laws impact real estate project investors?
The new laws impose specific requirements on real estate project investors, such as maintaining a ratio of outstanding credit and corporate bond debt to equity. They also restrict the collection of deposits until certain conditions for business operation are met. Moreover, the laws emphasize the responsibility of project investors to provide guarantees, while giving customers the right to decide whether they want such guarantees.

3. What changes are introduced regarding the renovation of old apartment buildings?
Under the new laws, the approval of investment policies for renovating old apartment buildings will follow the provisions of the Housing Law instead of the Investment Law. This change aims to facilitate investment in the renovation of apartment buildings and create a favorable environment for investors.

4. How do the new laws address social housing development?
The amended Housing Law defines the responsibility of local authorities in setting aside land for social housing development. It introduces new forms of accommodation for workers and members of the armed forces and grants the Vietnam General Confederation of Labor the authority to oversee social housing investment projects. The new laws also eliminate residency conditions for individuals wishing to buy, rent, or purchase social housing, providing incentives for investors involved in social housing projects.

5. What is the timeline for the implementation of the new laws?
The Ministry of Construction is currently working with other relevant agencies to enact the new laws and establish a plan for law enforcement implementation. If everything goes as planned, the new laws will be fully applied by 2024.

Definitions:
Decentralization: The transfer of authority and power from a central government to regional or local governments.
Administrative procedures: The formalities and steps required by government agencies for the implementation of laws and regulations.
Equity: The ownership interest in a company or property, representing the residual value after deducting liabilities.
Corporate bond: A debt security issued by a corporation to raise capital.
Residency conditions: Requirements related to permanent residence or duration of residency in a specific area.

Related Links:
Ministry of Construction
VietnamNet
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