Assessment and Recommendations for the Amended Real Estate Business Law (2023)

TS. Cấn Văn Lực và Nhóm tác giả Viện Đào tạo và Nghiên cứu BIDV recently released an assessment on the impact of the amended Real Estate Business Law (2023) and provided recommendations. The report evaluates the changes made to the law and offers insights into its implications. Let’s dive into the key findings and recommendations.

General Assessment

On November 28, 2023, the National Assembly approved the amended Real Estate Business Law, which will come into effect on January 1, 2025. The revised law consists of 10 chapters and 83 articles, compared to the 2014 version with 6 chapters and 82 articles. The new law incorporates important changes that align with the resolutions of the Central Committee and ensure consistency with the amended Housing Law (2023), the amended Land Law (2024), and other related laws.

This law is a significant project that affects various entities in the economy. Together with the amended Land Law and the amended Housing Law (both effective from January 1, 2025), it represents a major step towards improving the legal framework and promoting the healthy, transparent, and sustainable development of Vietnam’s real estate market.

Ten Key Changes and their Impact on Individuals, Businesses, and the Economy

1. Unified and clarified important legal concepts: The amended law provides clearer definitions and criteria for various specific cases, such as foreign-invested economic organizations engaging in real estate business, projects investing in residential construction, and the issuance of land use rights and property ownership certificates.

2. Enhanced transparency in real estate information: The law now requires thorough disclosure of real estate information, including project details, housing and construction information, and land use rights. This transparency reduces risks and improves access to information for buyers. Moreover, the law prohibits certain deceptive practices to protect buyers.

3. Stricter business requirements: Real estate businesses engaged in multiple projects must meet certain capital requirements (not less than 20% of total investment for projects under 20 hectares and not less than 15% for projects over 20 hectares). They must also demonstrate the ability to mobilize funds for project implementation. This provision aims to limit risks associated with financially unstable businesses and ensures more responsible financial obligations towards the state.

4. Expanded real estate business rights for Vietnamese individuals residing abroad: Vietnamese individuals who reside abroad and hold Vietnamese citizenship are now allowed to engage in real estate business in Vietnam under certain provisions. This change encourages diversified investment sources and supports reasonable real estate development while ensuring proper management of foreign capital.

5. Refined regulations for existing and future construction projects: The law provides more specific conditions and criteria for including existing and future construction projects in real estate business. It introduces clear guidelines for establishing ownership rights upon acceptance of the property by the buyer, reducing disputes and protecting buyers’ interests.

6. Detailed regulations for real estate transaction intermediaries: The law includes provisions for real estate exchanges, brokers, consultants, and managers. It aims to enhance professionalism, transparency, and responsibilities within the real estate market. Detailed guidelines will be issued to ensure consistency and facilitate the professional development of these intermediaries.

7. Mandatory non-cash payment for certain transactions: When one party involved in a real estate transaction is a project investor or real estate business, the law requires payment to be made through a legal bank account. This provision intends to reduce the existence of dual pricing in real estate transactions, combat tax evasion, and improve data collection and analysis.

8. Improved regulations for real estate project transfers: The law sets stricter conditions for transferring all or part of a real estate project. It clarifies the requirements for both sellers and buyers, ensuring compliance with relevant investment and land laws. These provisions enhance the effectiveness of project transfers and minimize potential risks.

9. Management of real estate information and data: The law restructures the regulations on real estate market information, databases, and state management. It emphasizes the importance of information management, digital transformation, and green and energy transition. Detailed guidelines will be issued to ensure effective data management, transparency, and professionalism in the real estate market.

10. Transition provisions for compliance: The law includes transition provisions to allow businesses sufficient time to comply with the new requirements. Real estate businesses are given a six-month period from the effective date to meet the amended law’s provisions. This provision enables businesses and individuals to prepare and adapt to the new regulations effectively.

Recommendations

To ensure the efficient implementation of the amended Real Estate Business Law, the research team offers the following recommendations:

1. Timely issuance of decrees and circulars: The government should promptly issue decrees and circulars providing comprehensive guidance on the implementation of the amended law. These regulations should ensure consistency and coherence among the Land Law, Housing Law, amended Real Estate Business Law, and other related laws. Additionally, they should address transition provisions and allow for pilot programs to resolve contentious issues.

2. Development of real estate information systems and databases: The government should prioritize the establishment and management of real estate information systems and databases. Clear guidelines on data collection, management, and access should be provided. This would improve transparency, enable effective policymaking, and enhance decision-making by market participants.

3. Pilot program for commercial housing development using alternative land: The government should initiate a pilot program to allow the use of “alternative land” (non-residential land) for commercial housing development. This program would help address current issues and provide solutions for social housing and commercial projects.

4. Emphasis on digital transformation and green and energy transition: The law should include provisions that encourage digital transformation, the application of advanced technologies, and the adoption of green and energy-efficient practices in real estate development and management. These provisions would align with Vietnam’s commitment to Net Zero and foster sustainable development.

5. Additional guidelines for specific provisions: Further specific guidelines are needed for certain provisions, such as those related to partial project transfers, transfers of lease contracts, and contracts for future construction projects. These guidelines should provide clear instructions to ensure compliance and address practical challenges.

6. Enhanced public awareness and education: Extensive public awareness campaigns and educational programs should be conducted to disseminate knowledge on the amended laws, particularly the significant changes and areas that require clarification. This would foster a better understanding, compliance, and constructive engagement from businesses, individuals, and stakeholders.

By implementing these recommendations, Vietnam can fully leverage the potential benefits of the amended Real Estate Business Law and create a transparent, efficient, and sustainable real estate market.

For the original article, please visit Business Today.