Decree 71 Irons Out Real Estate Market

Decree 71 Irons Out Real Estate Market

The real estate market will become more stable, open and transparent in the coming period, said Deputy Head of the Housing and Real Estate Market Management Agency, Nguyen Xuan Thien, after Governmental Decree 71/2010/ND-CP dated June 23, 2010 containing detailed regulations and guiding the implementation of the Law on Housing came into force.

The Ministry of Construction is now busy compiling a circular to guide the decree. Positive improvements were seen in the management of transactions made in the domestic real estate market thus far with support of the existing legal system, particularly the Law on Housing, the Law on Real Estate Business, the Land Law and relevant guiding decrees.

However, these guiding legal documents, particularly Governmental Decree 90/2006/ND-CP guiding the implementation of the Law on Housing, have exposed several problems as they have yet to all-inclusively cover housing issues and fail to keep up with the property markets rapid growth. Therefore, on June 23, 2010 the Government enacted Decree 71 to replace Decree 90/2006/ND-CP containing detailed regulations and guiding the implementation of the Law on Housing with a view to shedding more light on housing and real estate trading issues.

Phan Thanh Mai, MA, head of the Executive Committee of the Vietnam Real Estate Center Network in Northern Areas, said Decree 71/2010/ND-CP comprises open regulations on capital sources relative to the real estate market such as those covering bond issuances and loans from investment funds; regulations on the transfer of the land use rights with infrastructure to secondary investors after site clearance and the compensation phase - secondary investors, if raising capital for their projects, must get written approval from the primary investors after the primary investors obtain land use certificates; regulations on capital contribution for profits/products sharing, etc.

Decree 71 covers a wide range of issues, including the real estate market. Accordingly, clauses 4, 9, 43 as well as clauses 60-72 clarify grade 1 and grade 2 housing projects and independent housing projects and define and identify different types of property investors and traders in the market, including the developers of grade 1, grade 2 and independent housing projects, property businesses, individuals and organizations pooling capital on property projects and genuine buyers. Decree 71 also contains regulations describing ways the project developers raise capital from the buyers and concrete conditions to diverse capital-raising methods; regulations when individuals and family households transfer their land use rights to a buyer; regulations associated with property transactions via trading centers and those that are not required to take place at trading centers; regulations on mortgages and covering types of contracts in property transactions and time bases for the transfer of the ownership rights of land and housing transactions. Decree 71 also comprises regulations and detailed guidance concerning housing transactions of Vietnamese people residing abroad and foreigners owning or leasing houses in Vietnam.

With the presence of these regulations property transactions will certainly become more open and transparent, ensuring the legitimate rights of investors, property businesses and buyers, Thien said. The new decree is expected to gradually change former ways of making property transactions, thereby bringing more benefits to market players. Moreover, more open and transparent regulations concerning Vietnamese people living abroad and foreigners owning and leasing houses in Vietnam are expected to rev up the domestic property market.

Clause 9 in Decree 71 concerning capital mobilization to invest in housing construction draws particular attention from businesses, investors, credit organizations and local people.

In fact, there are two kinds of housing in the property market. One is finished housing with application and the other is properties that are being developed or will be in the near future. The property market is definitively subject to properties in the development phase, and therefore the demand for capital from project developers is tremendous; consumers are also active in investing into housing projects. Decree 71 will address the relationship between lenders and borrowers in property transactions as well as clearly define the obligations and responsibilities of parties involved in property transactions, as well as the responsibilities of state management organizations in ensuring capital raising regulations are adhered to by related parties.

Thien asserted that with the enactment of Decree 71, only capable investors will be in a position to handle housing and urban area development projects and give potential customers adequate confidence in projects for investment.

Reported by Viet Anh/ MONRE