Real estate market anxiously awaits new regulations
The National Assembly this morning began discussing the amending of eight laws.
Realtors are ‘holding their breath’, awaiting the approval of Investment Law amendments which remove bottlenecks to facilitate property market development.
According to the HCMC City Real Estate Association (HOREA) Chair Le Hoang Chau, the real estate market has witnessed a sharp fall in supply of housing products in HCM City. Legal obstacles are causing difficulties for realtors to implement projects.
The problem lies in the regulation recognizing only projects developed on residential land. As many as 173 projects in HCM City face this problem.
Clause c, Article 75 of the 2020 Investment Law stipulates that investors have to “have the lawful right to use residential land, and other types of land allowed by competent state agencies to change the land use purpose to residential land”.
As a result, hundreds of housing projects have been pending because these projects use agricultural and non-agricultural land, not residential land. And as a result of the supply shortage, the prices keep escalating.
Nguyen Quoc Hiep, Chair of GP Invest and Chair of the Vietnam Association of Construction Contractors (VACC), that in order to develop the real estate market to serve as the pillar of the economy, it’s necessary to reform the legal framework completely.
In order to solve existing problems, Hiep emphasized the amendment of Article 75 of Investment Law, Article 23 of the Housing Law and Decree 30 that guides the implementation of the Housing Law. All real estate firms want to remove the bottleneck.
The Investment Law needs to be amended to stipulate that investors that have lawful land use rights, including residential and non-residential land, should be allowed to change the purpose of land use and develop housing projects in accordance with approved land use plans.
Currently, investors are only allowed to change the purpose of use of agricultural land to residential land if it is consistent with the construction planning and land use plan approved by state agencies.
The use of agricultural land is being managed under specific regulations which sets specific requirements for businesses to receive the transfer of agricultural land. So, it’s not easy for investors to collect land and convert the land into residential land.
Market needs push
Nguyen Duc Lap, Head of the Real Estate Research and Training Institute, said that the bottleneck in the legal framework and the enforcement of legal provisions are the major reasons that hinder the normal development of the real estate market and cause real estate price increases. This impedes national socio-economic development as big resources are frozen once real estate properties have been created, but cannot be put into circulation and use.
Lap said that laws related to real estate which cover the activities of creating and trading real estate services, and decrees and circulars that guide the implementation of the laws must be consistent.
To help develop the market, it’s necessary to design a law that amends related laws due to overlapping in many laws. In principle, the legal framework needs to create a flexible mechanism to fit the new circumstances and adapt to the global environment.
Dang Hung Vo, a respected real estate expert, thinks that amending Clause c of Article 75 of the 2020 Investment Law is urgent. Currently, it takes 3-5 years to complete legal procedures for a project. The time would be even longer for large-scale projects.
“The decentralization will help shorten the time for procedures to develop projects, thus helping reduce costs. If so, the prices of products will decrease, thus bringing benefits to buyers and society in the context of the continued real estate price increases due to short supply,” Vo said.
“There is no reason to protest against the amendment of laws, including Investment and Housing Laws to remove the bottlenecks and bring the market back to the right track of development in accordance with supply-demand economic laws,” he said.
“I strongly believe that we need to make amendments. Only changes can create development. The 2014 Construction Law has been amended. And now, real estate development is stuck because of the Investment and Housing Laws,” he said.
Under the working agenda of the ongoing 15th National Assembly extraordinary meeting, on January 10-11, NA would approve the resolution on fiscal and monetary policies to support the economy, and the project of amending some laws, including Investment Law.
Price escalation is occurring everywhere, from rural to urban areas. People are buying land at surprisingly high prices.
Land fevers, apartment price escalation, new tendencies and land auctions were the key features of the real estate market in 2021.