The Ministry of Construction is going to issue a circular to clarify unclear points regarding capital raising in the recently issued Government Decree No. 71/2010/ND-CP guiding the Housing Law.
Under Decree No. 71, investors may borrow loans or issue bonds for fund-raising purposes. However, “creditors” will be given no priority in house purchase.
Explaining these provisions, Nguyen Manh Ha, director of the Construction Ministry’s Housing and Real Estate Market Management Department, said that lending credit institutions and banks could buy houses if they so wished, but they were not entitled to buy those within the 20 percent of houses allowed to be traded not through a real estate trading floor.
The draft paper also guides the method of calculating the number of houses to be divided as profits to capital contributors and/or cooperation parties. For cases of raising capital in one or all of the following forms: capital contribution, investment cooperation or business cooperation, the total of houses to be distributed to all capital contributors or cooperation parties must not exceed 20 percent of the total number of projects’ commercial houses determined according to projects’ approved detailed plans and dossiers. To-be-distributed houses may be villas, detached houses or apartments, depending on agreement between involved parties.
For cases in which grade-I investors transfer land use rights to grade-II investors, the latter would be distributed 20 per cent of the houses built by themselves on the land area received from grade-I investors.
Before raising capital, project investors would send written notices to local Construction Departments, clearly stating the amount of capital to be raised and the form of capital raising.
According to the draft paper, contracts on the sale and purchase of houses to be formed in the future may be transferred. In this case, the transferor would pay personal income tax and the ownership certificate would be granted to the last transferee.-