Real estate business law introduces key changes
The new real estate business law, which comes into effect on July 1, includes certain important changes that are expected to have huge impacts on the real estate market.
1. Investors must be guaranteed by a credit organisation operating in Vietnam, when they plan to sell or lease houses that will be built in the future.
2. An investor must establish an enterprise when providing real estate services. Individuals, households or organisations that want to transfer, hire, purchase or lease small-scale real estate property do not have to establish enterprises, but have to register to pay tax. (The current tax rate on real estate transfers is equivalent to two per cent of the contract value).
3. The property must have legal capital no less than VND20 billion (US$917,000). The old regulation requires real estate businesses to have legal capital of no less than VND6 billion ($275,000).
4. The legal capital of a property business implementing a real estate project must be no less than 20 per cent of the total investment capital of a project using less than 20ha of land, and not less than 15 per cent of the total investment capital of a project using 20ha or more.
5. Foreigners are allowed to buy and own houses in Vietnam. Foreign individuals and organisations, foreign-invested businesses, branches and representatives of foreign businesses, and foreign investment funds and branches of foreign banks operating in Vietnam, as well as foreign individuals who are allowed to enter Vietnam are eligible as per the regulation. However, the number of houses that they may own is limited to 30 per cent of the total number of apartments in an apartment building.
6. The new law gets rid of the regulation that requires individuals or organisations providing real estate services to sell, lease or hire purchase real estate via a real estate transaction floor.
7. Investors of real estate projects are allowed to transfer the whole or part of the project to other investors to continue investing in the project.
8. Real estate brokers must undergo tests on brokerage knowledge. Individuals are required to graduate from high schools and undergo tests on brokerage knowledge in order to be awarded a certificate to work as real estate brokers. The certificate is valid for five years. A real estate business must have at least two people with real estate brokerage certificates.
9. Capital mobilisation and capital lending for implementing low-income housing support policies will be carried out via the Vietnam Bank for Social Policies.
10. Authorised agencies will decide the investment of a project or decide to revoke a project and transfer it to other investors, in case the project investors violate legal regulations relating to construction, planning and architecture without taking remedial measures as requested. The regulation is also applicable to projects that are subject to having their land revoked as per land usage regulations.
Investors of revoked projects are responsible for handling issues relating to the projects to ensure the interests and obligations of customers and other related parties.
Investors of revoked projects will not be allowed to become investors of any new real estate project for two years from the time their projects are revoked.