From 1/1/2025, when buying a property “on paper,” developers will only be able to accept a maximum deposit of 5% of the selling price. This will lighten the financial burden for homebuyers.
The revised Real Estate Business Law, passed by the National Assembly, will come into effect on January 1, 2025. It provides specific regulations for deposits when buying, selling, or leasing real estate that will be developed in the future.
Deposit Limit of 5% for Property Purchases
According to Article 23 of the new Real Estate Business Law, developers can only accept a deposit of up to 5% of the selling price for future properties, including houses and construction projects, that meet the necessary conditions for commercialization.
Furthermore, the deposit agreement must clearly state the selling or leasing price, as well as the floor area of the construction project. It is essential that no other organization or individual is authorized to sign deposit, purchase, transfer, or lease agreements for the property, or for the use of land with existing technical infrastructure in the real estate project, as specified in Article 17 of the Real Estate Business Law 2023.
Before selling or leasing future properties, developers must notify the provincial real estate management authority of their intention to engage in real estate business. Within 15 days of receiving the notification, the provincial authority is responsible for inspecting the conditions of the property and providing a written response to the developer regarding its eligibility for sale or lease. If the property does not meet the requirements, the reasons must be clearly stated.
This regulation ensures the true essence of the deposit process while limiting risks for homebuyers, who are often at a disadvantage in real estate transactions. Deposits are the first step in the buying process, implemented before the signing of contracts. Proper supervision is necessary to prevent excessively large deposits, which may lead to fraudulent activities and cause financial harm to buyers.
Payment Structure for Property Transactions
According to Article 25 of the Real Estate Business Law 2023, payments for property purchases or leases for future properties will be made in multiple installments. The initial payment, including the deposit, cannot exceed 30% of the total contract value.
The subsequent payment amounts must correspond to the construction progress. For property purchases or leases, the total payment for the floor area of the construction project should not exceed 70% when the seller has not handed over the property. If the seller is a foreign-invested economic organization, the total payment should not exceed 50% of the contract value.
For lease purchases, the total payment should not exceed 50% of the contract value until the seller has handed over the property. Previously, the limit was set at 70%.
If the buyer or lessee has not been granted a land use right certificate or ownership of assets attached to the land, according to the regulations of land law, the seller or lessor cannot charge more than 95% of the contract value. The remaining amount will only be paid when the competent state authority issues the land use right certificate or ownership certificate, as stipulated by land law, to the buyer or lessee.
This provision allows customers to retain a portion of the contract value while waiting for the issuance of the certificate.
Ensuring Fairness and Reducing Risks
These regulations prevent investors with insufficient capabilities from transferring projects and ensure that only what the seller or transferrer possesses can be sold or transferred.
According to Dinh Minh Tuan, the Southern Regional Director of Batdongsan.com.vn, the provision that allows developers to accept only a 5% deposit and refrain from collecting more than 95% before granting ownership certificates reduces risks for customers. This requirement also obliges developers to have a more robust financial plan before undertaking projects.
Pham Anh Khoi, the Chief Economist of Dat Xanh Service Joint Stock Company (DXS), stated that a 5% deposit is a reasonable amount, ensuring fairness in the market. This deposit rate is also a standard practice for property purchases in international markets such as the UK, Australia, and the US. However, it may pose challenges for small-scale developers with limited capital. For large-scale developers with various sources of capital, it will not be overly difficult.
Khoi also noted that this amendment will have significant impacts on both developers and homebuyers. For homebuyers, the reduced deposit rate will minimize risks, lessen financial burdens, and enable them to engage in transactions earlier. As for developers, this regulation will reduce the likelihood of capital mobilization from customers, increase the risk of customer withdrawals, and raise construction costs and completion time.