Since early 2014, Vietnam's real estate has received positive signals, not only from the market but from new policies such as lower interest rates for housing loans, increased number of banks approved for giving the VND30 trillion loan for purchasing social houses, adjusted calculation method of apartment area in favour of homebuyers. These signals have been restoring confidence among the people and property investors.
Major changes from the VND30 trillion package
The State Bank has signed a decision to reduce the interest rate of the VND30 trillion package from six percent/year to five percent/year, coming into effect starting from January 2, 2014. Along with this, the Bank for Investment and Development of Vietnam (BIDV) has advised the government to give access to the VND30 trillion package to projects of commercial housing under 70m2 and priced below VND15 million/m2 which are under construction. Also, the Ministry of Construction should issue buyers of social housing certificates immediately and allow housing ownership transfer after receiving certificates.
As for the VND30 trillion package, BIDV has proposed increasing the lending period to 15-20 years and raising the rate of business loans, selecting more credit organisations to participate in the disbursement of the VND30 trillion package; adjusting interest rate one - two percent lower accordingly.
To provide easier access to the VND30 trillion package, the Ministry of Construction has issued Circular 18/2013/TT-BXD, expanding parties qualified for the package. Additions include individuals and families having no houses but owning land with land use right certificates, and that land is of smaller area than the construction licensed area under the regulations of Provincial People's Committee. Temporary residences having social insurance from one year older and guarantee from authorised agencies will also have access to the credit package.
Before that, with the advice from the Ministry of Construction, the government had issued Decree 188/2013/ND-CP on management and development of social housing. This Decree entered into force on January 10th 2014. Accordingly, eligible buyers have been expanded in types, adding households and individuals awaiting resettlement but yet to be arranged.
Flexible transition from commercial to social housing
As real estate businesses are facing difficulties in liquidity issues and excess inventory, the Government request to the Ministry of Construction to coordinate with ministries, agencies and localities to review and classify all housing development projects and to allow conversion of commercial housing to social housing projects has been a lifesaver. Real estate experts believed that these solutions not only favoured businesses but also a big help to people who wish to buy low-cost houses.
To remove procedural difficulties in social housing construction for enterprises, the Ministry of Construction and the Ministry of Justice recently discussed and agreed to soon introduce a guideline circular on mortgage and release of mortgage, creating more favourable conditions for settlement of disputes and bad debts related to real estate.
The Ministry of Construction is in the process of finalising legal documents on confirming purchase and sale of social housing. Instead of requiring two seals of authorised agencies as before, the purchasing files now only need one seal. People with jobs are only required income certification, while the unemployed need confirmation from Ward/ Commune People's Committee about housing conditions.
New regulations in the amended Law on Housing
Article 30 of the draft Housing Law stipulates: “Investors can decide on area of commercial houses to suit with construction plans, housing development programmes and plans of local approved and under building codes and standards”. Thus, once the draft is adopted, investors can make their own decision in terms of apartment area to best suit market demands.
Regarding the proposal of time-limited ownership for condominiums, the Ministry of Construction launched two options. Option 1: not specified ownership period. Option 2: ownership period would last as long as lease term or 70 years. Upon the expiry, owners must hand over the land use rights for construction of the condominiums to the State.
Many other proposals also caught public attention such as: housing development project and condominium must be in Vietnamese and not in abbreviated form; prohibits using houses as motels for business purposes; make students eligible social housing buyers.
The draft also proposes: remove the requirement of individuals and business organisation to go through real estate trading floor when selling, renting real estate or buildings. State only encourage individuals and organisations trading houses and land through the floor; real estate investor when making future housing contract must has guarantee from financial institutions or banks, these institutions are obliged to perform in investor’s stead if the investor fails to perform or perform improperly his obligations in contracts with home buyers.
Adjusting the apartment area calculation
The Ministry of Justice recently announced that the Ministry of Construction allowing investors to sell common ownership to turn it into private ownership is a violation of the Civil Code, which costs buyers an extra unreasonable amount of money. The Ministry of Justice has asked the Ministry of Construction to immediately and sufficiently deal with this issue and report back the results.
Ambiguity in the calculation rules of private and common area has been causing tension and disagreements between buyers and investors. Protests against investors over them including common areas such as columns and electric boxes in sale area have erupted, namely in Dai Thanh project, Xa La; Le Van Luong Residential project of Nam Cuong Group.
If the Ministry of Justice requested the Ministry of Construction to change Circular 16 in conformity with the Housing Law, it is expected that many housing projects will have to recalculate area. This decision will no doubt bring great benefit to the people.
Luong Tuan
Vietnamese
