MOC is collecting opinions for the draft of the amended Law on Real Estate Business, in which it proposes new regulations related to real estate trading floors and brokerage.

According to the ministry, though the 2014 Law on Real Estate Business was progressive at the time of issuance, some provisions can’t catch up with the rapid development of the real estate market. Many problems have arisen during law enforcement.

Commenting about real estate services (trading floors and brokerage service), the ministry said the 2014 law contains provisions on the conditions and responsibilities of organizations and individuals providing real estate services, but the required conditions to provide real estate brokerage service and be tested on legal knowledge and brokerage skills are too simple, which cannot adequately control the activities of individual brokers.

Some real estate brokers are weak in their areas of expertise, not knowledgeable enough about laws, and not professional and too weak at business ethics. They provide bad services, don’t take responsibility for mistakes, and cause losses to customers.

In addition to brokers working at professional real estate trading floors, there are many freelance brokers who don’t have real estate brokerage certificates. Many brokerage individuals don’t declare and pay taxes as required by the law, but there is no tool to control this, which leads to a loss of revenue to the state budget.

The real estate trading floors are regulated, but there are still many problems in their operation and provisions are designed in a way which still do not ensure management over the floors and prevent money laundering. 

In addition, the regulations on the conditions for establishment and operation of trading floors are too simple. As a result, efficient transaction systems which can control the legality of real estate transactions and ensure consumers’ benefits still cannot be set up.

Real estate traders collude with each other to speculate on products and manipulate prices, causing artificial "price fever" and distorting the real estate market.

The types of real estate that must go through trading floors

Regarding the operation model of real estate trading floors, Articles 61 and 62 of the draft law state that institutions and individuals that provide real estate brokerage trading floors must establish businesses, satisfy the requirements, and register operation in accordance with the laws.

Regarding the types of real estate which must be transacted via trading floors, MOC proposes two options.

In Option 1, the investors of real estate projects, when selling and leasing houses and construction works to take shape in the future, or transferring, leasing and re-leasing land-use rights with technical infrastructure in real estate projects, must transact through real estate brokerage trading floors.

In Option 2, the real estate firms eligible for business in accordance with the provisions of the laws but still don’t have certificates for land use rights, ownership of houses and other assets associated with land will have to transact through trading floors.

Regarding the conditions for organizations and individuals providing real estate brokerage service, the ministry has also designed two options.

In Option 1, individuals must have a brokerage practice certificate and must practice in an organization or trading floor. MOC suggests option 1.

In Option 2, the provisions of the currently applied law will be maintained. Institutions and individuals providing a real estate brokerage service must set up legal entities and there must be at least two individuals who have brokerage practice certificates.

If an individual provides independent real estate brokerage services, he/she must have a real estate brokerage practice certificate and register for tax payment in accordance with tax laws.

Hong Khanh