Vietnamese real estate companies are still “shocked” at the information that the Ministry of Construction had officially proposed a ban on housing/land subdivision sales and incomplete house sales to the Prime Minister although they have presaged this policy.
In spite of contradictory opinions, a majority supports this policy as it is necessary for a healthy market under the current circumstance. Once in force, it will help reduce speculation and desertedness of housing subdivisions.
Ms Cao Hoai Thanh, Director of Vina Line Construction Company, said: The ban on land/housing subdivision is necessary because it will discourage a part of retail investors and diminish desertedness of housing plots in urban zones at present. This move will also keep back real estate companies with small operating scale, insufficient financial capacity, inability to construct and complete licensed projects, thus helping minimise risks against homebuyers and keep the progress of projects. For example, high-end villa and semi-detached house project, Mo Lao - European Viet Kieu Village, current has 186 out of 257 villas and 191 out of 262 semidetached houses left uninhabited.
However, Mr Bui Van Viet, Director of Huy Hoang Land Joint Stock Company, complained that this move will send ongoing projects to dilemma or even collapse. Property companies will be the first to be hurt by the policy. Under the current context of credit crunch, capital turnover is a daunting challenge for small and medium enterprises.
Mr Bui Van Dinh, a retiree in Dinh Cong Urban Zone (Hoang Mai district, Hanoi), said the Ministry of Construction should take firm action on this policy. He cited his residential zone as an example that Dinh Cong Urban Zone has been put into use for six years but many houses are left vacated. “This is a wasteful practice,” he added.
The ban on housing/land subdivision sales has been clearly defined in the Government’s Decree 181/2004/ND-CP dated October 29, 2004 guiding the implementation of the Land Law, and in the Article 30, Chapter 3 of the Housing Law 2005 and in the Law on Real Estate Business. However, the enforcement of these legal documents is weak in housing projects and new residential zones.
Although this policy will cause plenty of difficulties to real estate companies, capable ones actively support it. Immediately, it will hold back speculative behaviours and reduce current vacancy in urban areas. Remarkably, it will help purge incapable investors while increasing the capital turnover in the property market.
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Mr Nguyen Manh Ha, Head of Housing and Real Estate Administration Department under the Ministry of Construction
If [we] do not take tough action on the ban on housing/land subdivision sales (the root of speculation), risks and losses are always on the side of consumers. A policy must serve the vast majority of people. Subdivision is only for the interests of investors and speculators.
According to the Government’s Decree 181/2004/ND-CP dated October 29, 2004 which guides the implementation of Land Law, enterprises are allowed to transfer land-use rights only when the construction on such land [plots] has been completed as [stated] in the approved plan. In case a housing construction investment project has subprojects, the transfer of land-use rights is only permitted when investments of subprojects are completed as approved. Subdivided lands without houses are prohibited from transferring.
Prof Dang Hung Vo, former Deputy Minister of Natural Resources and Environment
In fact, the housing/land subdivision sales should have been practically banned for long. But, with collusion between local governments and businesses, this violation still occurs, resulting in the vacancy of urban zones.
Dr Hoang Van Cuong, Head of Postgraduate Training Institute, National Economics University
The ban on housing/land subdivision sales is absolutely right because it is not selling real estate but selling a future option. If this situation persists, many will purchase land plots and wait for higher values to transfer, creating unreal scarcity. In other countries, this behaviour is heavily taxed, with higher rates on increments. Thus, speculation is nipped in the bud. This will bring the real estate market to the right track where real estate businesses are market makers.
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Vietnamese
