When I recently met a major realtor, who was facing an accusation of breaking the laws, and asked him why he had committed the violations, he said: “Opportunity. If someone does not grasp opportunity, it will be missed."

Opportunities are short-lived in the real estate market, which has witnessed ups and downs. It often requires huge investment capital and 5-10 years for project execution because of complicated licensing and site clearance procedures, and other reasons. 

This explains why businesspeople in general and realtors in particular have to exploit all existing factors and even circumvent the laws to be able to ‘go through’ state management agencies to complete projects as soon as possible.

The Government has established working groups and issued many directions in an effort to restore the vitality of the real estate market. Land and real estate are the country's greatest resources, and when they are in danger, they affect other industries.

Hanoi Party Committee Secretary Dinh Tien Dung described the situation in a National Assembly forum. He said there are countless projects ‘lying dead’.

He said the real estate market is facing many legal problems. In the past, local authorities did not organize bids and auctions when seeking investors for projects, but just called for investment. The move, under current laws, is a violation of the law.

There are 712 projects which have proceeded very slowly or have been left idle for  10-20 years. Municipal authorities have canceled over 100 projects.

He said it is difficult to determine the fate of projects. 

“If we continue to leave projects pending, we will waste society’s resources. If we restart the projects, we will face legal problems,” he said, adding that activities have stopped and state agencies and investors have shrunk back for fear of ‘breaking the law’.

In a report to the State Audit, the Hanoi People’s Committee pointed out that laws related to land and real estate contain ‘shortcomings, contradictory and overlapping regulations, and many regulations have become unsuitable under current conditions’.

That is why the real estate associations complain about the legal framework, while noting that 70 percent of the difficulties lie in unreasonable regulations.

The Vietnam Chamber of Commerce and Industry (VCCI) also confirmed the overlapping of legal documents.

Investment real estate projects are covered by many laws, including the Investment Law, Environment Protection Law, Construction Law, Land Law, Housing Law, Law  on Real Estate Business, Law on Bidding, Law on Fire Prevention and Fighting, and many other legal documents.

Meanwhile, provisions in laws are inconsistent and sometimes controversial, which confuses investors as they don’t know which procedures to follow or to implement first.

The inconsistency in legal documents affects project implementation, wasting money and time. 

Unclogging cash flow

A study found that one hectare of agricultural land in HCM City can create a value of VND500 million a year, but if the land is used for industrial production, commerce or services, it can create a value of VND55 billion.

The added value from land which is called a ‘ground rent difference’ creates a big source of revenue for the state budget.

There is a great deal of agricultural land in Hanoi and HCM City. But no one dares sign decisions on converting the agricultural land into housing or commercial land, though housing demand is increasing rapidly as the inner city has become overcrowded and the environment is polluted.

So, what are the key problems of the real estate market? The controversy in legal documents? The state officers’ fear of making mistakes? The violations committed by real estate developers? 

Whatever the reason, the frozen real estate market must be warmed up for the sake of the national economy.

Tu Giang