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| Lumi Hanoi, a premium residential project located on Thang Long Boulevard, Hanoi__Photo: VNA |
Vietnam is moving to tighten oversight of its real estate market, improve transparency and address longstanding legal obstacles under a draft revised Law on Real Estate Business, which is expected to be passed by the National Assembly at its upcoming October session.
The proposed legislation seeks to address shortcomings in the existing legal framework, particularly those relating to real estate transactions, developers’ financial capacity, project transfers and the disclosure of market information.
The revision comes amid mounting financial pressures in the property sector. Construction and real estate businesses account for up to 76 per cent of high-risk corporate bond debt, while around two-thirds of listed housing developers are reported to face weak cash flows.
The draft introduces a series of changes aimed at strengthening market discipline, protecting buyers and creating a more transparent and predictable business environment.
Firstly, the draft seeks to clarify the legal status of “hybrid” real estate products, such as condotels and officetels, by formally recognising the concept of “housing for accommodation purposes” within the definitions of existing and future (off-plan) real estate.
It also sets out the rights of overseas Vietnamese to purchase and lease-purchase floor space in buildings, providing a clearer legal basis for such transactions and helping to unlock trillions of Vietnam dong in investment capital tied up by legal uncertainties.
Secondly, to prevent the “premature sale” of properties, the sale of properties before they meet the legal conditions for entering the market, and address financial risks, the draft introduces stricter requirements for information disclosure and financial management.
Real estate businesses would be required to maintain active accounts on the Housing and Real Estate Market Information System, linked to their personal or organisational identification numbers. Before putting properties on the market, developers would have to publicly disclose comprehensive information on their legal status, planning and any mortgages or other encumbrances through the system. In addition, payments for real estate transactions would have to be made through banks.
Thirdly, the draft proposes greater decentralisation of authority by empowering provincial-level People’s Committees to approve the transfer of all or part of housing projects, including projects subject to investment policy approval by the Prime Minister.
The change is intended to address inconsistencies between substantive and procedural laws, shorten application processing times and facilitate mergers and acquisitions involving real estate projects.
Fourthly, the draft removes social housing and policy housing from the scope of the Law on Real Estate Business, leaving these matters to be governed by housing legislation.
The change is intended to eliminate overlapping regulatory responsibilities and simplify compliance procedures. It is also expected to encourage major housing developers to participate in affordable housing schemes.
Fifthly, regarding land valuation, the draft seeks closer alignment with the 2024 Land Law by linking real estate market information systems with the national land database. The integration would make public transaction records more accessible and support land valuations that better reflect actual market prices.
To ease cost pressures arising from annual land price adjustments, the draft also introduces the concept of “appropriately priced commercial housing” into standard contracts, together with preferential land use levies and simplified administrative procedures.
Sixthly, the draft establishes a standardised process for real estate transactions, with clearer responsibilities for housing project developers.
Notably, developers would be required to submit applications for certificates of house ownership on behalf of buyers within 50 days of handing over the properties or receiving full payment, and complete the relevant procedures, unless buyers choose to carry out the procedures themselves.
Seventhly, real estate trading floors would face greater responsibilities in property transactions.
They would be required to verify that properties comply with legal requirements, list properties and disclose relevant information, assist with contract negotiations and payments, implement anti-money laundering measures, and update information on the national system. These requirements would also increase their legal liability in the event of disputes.
Eighthly, the draft significantly tightens the conditions for conducting real estate business, particularly those relating to businesses’ financial capacity.
Real estate businesses would not be permitted to operate if they were subject to suspension or a prohibition on operations. They would also be required to maintain appropriate credit- and bond-to-equity ratios in line with the scale of their housing projects. These financial requirements would apply even when businesses undertake several developments simultaneously.
Finally, the draft strengthens the accountability of real estate businesses throughout project implementation and property transactions.
Businesses would be required to secure sufficient financial resources for their projects, comply with approved project schedules and promptly update any changes to project information on the Housing and Real Estate Market Information System.
In addition, real estate businesses would be prohibited from authorising third parties to sign deposit agreements or contracts for the purchase, sale or lease-purchase of real estate on their behalf.
They would also be required to settle all outstanding administrative penalties before entering into new contracts with customers.- (VLLF)
