Chairman of HoREA, Le Hoang Chau, Points Out a Series of Difficulties Hindering Real Estate Development

On the morning of March 11, 2024, Deputy Prime Minister Tran Hong Ha chaired an online meeting of the Government’s Working Group on reviewing, accelerating, and guiding the resolution of difficulties and obstacles in implementing real estate projects for localities and enterprises after the new Land Law, Housing Law, and Real Estate Business Law were enacted.

In a letter sent to the Prime Minister, the Government’s Working Group, and the Ministry of Construction, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), Le Hoang Chau, emphasized the importance of the conference to review the achieved results in the past year. It aimed to identify shortcomings, limitations, and causes, as well as to unify solutions to improve the effectiveness of the Government’s Working Group and local working groups’ activities. The collaboration with relevant ministries, agencies, and authorities is necessary to resolve difficulties and obstacles in implementing real estate projects for localities and businesses by the end of 2024. This is especially crucial in the context of the newly enacted laws to promote safe, healthy, and sustainable economic, social, and real estate market development.

Chau stated that the real estate market has encountered its most difficult period since the beginning of the third quarter of 2022 until the end of 2023. The HoREA identified legal obstacles as the largest hindrance, accounting for 70% of difficulties faced by real estate investment enterprises.

According to the Ministry of Construction, by mid-2023, there were approximately 1,200 commercial real estate projects across the country facing obstacles, mainly due to legal issues. Among them, Ho Chi Minh City accounted for more than 148 projects that could not be implemented or complete the necessary investment and construction procedures.

Thanks to the active efforts of the Government’s Working Group, including the Ho Chi Minh City Working Group, approximately 100 real estate projects and housing initiatives have overcome their obstacles nationwide. In particular, Ho Chi Minh City has resolved difficulties for around 30% of the 148 projects initially facing problems.

However, Chau believes that there are still some shortcomings and obstacles in handling issues related to real estate projects due to certain provisions within the laws.

Firstly, he points out the difficulty in simultaneously approving investment decisions and investor approvals. This issue arises from Clause 7, Article 31 of Decree 31/2021/ND-CP. The consequences of this difficulty have led to significant delays in approving investment decisions, especially for social housing projects. Failure to complete this procedure will subsequently hinder all subsequent investment and construction processes, affecting numerous real estate projects that have been reported to the Working Group.

Chau also shared that although the National Assembly has issued Resolution 98/2023/QH15, “Regarding the pilot implementation of specific mechanisms and policies for the development of Ho Chi Minh City,” it only resolves issues related to the compatibility assessment of investment projects with relevant planning for social housing projects. Therefore, social housing projects in Ho Chi Minh City and similar projects across 62 central provinces and cities are still facing obstacles.

The HoREA proposes that the Working Group consider amending Clause 7, Article 31 of Decree 31/2021/ND-CP to resolve the mentioned difficulties for all social housing projects across the country.

Secondly, there are obstacles in the handling of obligations for developers of commercial housing projects to allocate a portion of the land fund (20% of the land) for social housing development. Decree 100/2015/ND-CP requires projects larger than 10 hectares to include social housing within their development plans, while projects smaller than 10 hectares have the option to build social housing or compensate with an equivalent land fund or monetary payment.

However, complications arose from Clause 4 of Article 1 of Decree 49/2021/ND-CP, which stipulates that projects larger than 2 hectares should include social housing. This discrepancy has caused confusion and difficulties.

The HoREA requests that the Working Group and Ministry of Construction pay attention to amending the “transition provisions” in the draft Decree on the management and development of social housing. The amendment should address the aforementioned issues based on previous regulations (retrospective application), which benefit the entities affected by the laws governing the issuance of legal normative documents.

Thirdly, the Association appeals to local authorities to consider allowing developers to continue raising capital for the remaining 30-50% of unsold residential products, excluding commercial and service areas until the completion of all financial obligations with the state.

Lastly, there are certain obstacles for state-owned enterprises that have undergone equitization or are related to land and construction in projects under the ownership or use rights of the state.

The HoREA proposes that the Working Group and relevant authorities consider amendments and supplements to several provisions of the Law on Management and Use of State Assets 2017, Decree 126/2017/ND-CP, or add provisions to detailed decrees and guidelines for the implementation of the 2024 Land Law and the 2023 Housing Law.

In conclusion, Chairman Le Hoang Chau has pinpointed various challenges that are impeding the development of the real estate market. By addressing these difficulties, it is possible to foster safe, healthy, and sustainable growth in both the economy and real estate sector. The Ho Chi Minh City Real Estate Association, in collaboration with the Government’s Working Group and relevant government authorities, aims to find effective solutions and create a favorable environment for real estate development. For more information on the latest business updates, visit Business Today.