Property Market and Legal Risks
Economic development entails rising property demands in all segments. Embracing this trend, a series of real estate companies have been established in Vietnam. The rapid growth of the real estate market has been driven by the engagement of many large corporations, while regulatory mechanisms and policies have not kept pace with market development.
Without a complete regulatory framework for the Vietnamese real estate market, circumventing the law has become a common choice of real estate companies, and this has gradually become considered necessary to be competitive on the market. As a result, many economic lawsuits have come as a matter of fact.
Violations in the real estate market are mainly involved in land. The market has witnessed prosecutions that resulted in convictions of companies, and even jailing of government officials.
Regulatory mechanisms and policies on real estate market are inadequate. In order to develop a real estate project, investors have to go through many steps in many agencies to have their project approved. This has resulted in numerous bad deeds. Normally, legal regulations on development of real estate projects are complex and involve many different areas such as land, housing, planning, construction and investment.
Real estate laws and regulations were revised in 2013 - 2014 but they seemed not to match the development speed of this market. According to many real estate companies, since the Land Law of 2013 took effect, a lot of shortcomings have been revealed. Ho Chi Minh City alone reflected 109 irrational contents, like dealing with State-stemmed assets, methods of calculating land use fees, or investment licensing procedures which still upset many enterprises. This troubles real estate developers on the one hand and motivates them to find ways to skirt or even disregard regulations instead of upholding the spirit of law.
The rapid growth of the real estate market in addition to the entry of many business models from private, joint venture and foreign-invested entities is leaving lawmakers unable to respond accordingly. As a result, problems have arisen. In 2018, the Ministry of Construction proposed revisions to four laws relating to the real estate market: Law on Construction, Law on Housing, Law on Real Estate Business and Law on Urban Planning.
However, its proposed revisions were not approved by the Standing Committee of the lawmaking National Assembly at the 23rd meeting session. The committee said that such separate amendments will not guarantee the consistency of the legal system relating to real estate, which is already complicated.
Therefore, while waiting for a more complete legal system for the real estate market, concerned businesses will have to accept living with legal risks.
Luong Tuan
Vietnamese
October 2024
Hanoi
