Clearing the Way for Real Estate Market

9:56:11 AM | 3/23/2023

The Government of Vietnam issued Resolution 33/NQ-CP dated March 11, 2023 on a number of solutions for the real estate market.

The resolution clearly states that the real estate market plays an important role in the economy and affects many other industries and fields. However, in 2022 especially in the second half of 2022, the real estate market faced many difficulties.

Some persistent shortcomings in the legal system related to land, investment, construction, and real estate business have not been completely overcome. Many real estate projects faced difficulties in implementation, leading to a decreased supply of real estate. Other limitations include unreasonable product structures, the surplus in the high-end segment; and the lack of social housing. Real estate businesses faced difficulty accessing credit loans, issuing bonds and mobilizing capital from customers.

To remove the difficulties, the Prime Minister established a working group and issued many Official Letters such as1156/CD-TTg, 1163/CD-TTg, and 1164/CD-TTg, requesting ministries, branches and localities to implement many tasks and solutions to promote the development of the real estate market. The working group, the Ministry of Construction, the Ministry of Finance, the State Bank of Vietnam and the other ministries, branches and localities have urgently performed the assigned tasks and obtained some achievements.

Currently, the real estate market has improved, but the market still has many difficulties in terms of institutions, credit sources, and bonds. More efforts are still needed to continue to remove difficulties for the market.

Completing the institution on real estate business

The government continues to study and perfect institutions, and build a legal system related to construction investment, housing and real estate business to ensure a synchronous and feasible process.

The need is urgent to develop and submit to the National Assembly for consideration and approval the Law on Land (amended), Law on Housing (amended), Law on Real Estate Business (amended), Law on Bidding (amended), Law on Auctions (amended), Law on Prices (amended), and Law on Credit Institutions (amended), and to develop and submit to the National Assembly for consideration and promulgation the "Resolution of the National Assembly on piloting some policies to promote the development of social housing”.

It is also urgent to amend and supplement decrees guiding the implementation of laws to remove current shortcomings, limitations, obstacles and difficulties related to the implementation of construction investment and business, transfer real estate projects, and ensure the consistency and synchronization of the legal system.

The government will focus on completing and promulgating the "Decree amending and supplementing some articles of decrees in state management of the Ministry of Construction" to remove difficulties and obstacles related to real estate projects; and ensure the consistency and synchronization of the legal system. The government will complete and promulgate the "decree amending and supplementing decrees guiding the implementation of the Land Law" to solve difficulties and problems related to land procedures, land valuation, and issuance of land use rights certificates and ownership rights certificates to non-residential real estate (tourism real estate, resort, and office real estate).

Besides, the government will study, develop and promulgate the "amended decree and supplement the decree detailing and guiding the implementation of a number of articles of the Investment Law".

The Government also requests a "decree stipulating the process, order and procedures for implementing investment projects to build commercial houses and urban areas" for localities to implement in a favorable and consistent manner. Localities need to immediately issue regulations, guidelines and solutions for problems under their decision-making authority; problems under the deciding competence of the Government or the Prime Minister shall be reported to the Government or the Prime Minister for consideration and decision. The government will complete mechanisms and policies to exploit and mobilize maximum financial resources at home and abroad for housing development in particular and the real estate market in general.

Facilitating social housing development

The resolution states that, while waiting for the National Assembly to pass the Law on Housing (amended) to remove all difficulties and obstacles in housing development in general and social housing development in particular, the government shall develop and submit to the National Assembly for consideration and promulgation the "National Assembly Resolution piloting some policies to promote social housing development” to immediately remove specific difficulties and obstacles to create motivation for social housing development in the coming time.

Special attention is paid to the content of major problems in the past time, such as the issue of land allocation for investment and construction of social housing projects; planning and allocating land funds for social housing development; selection of investors in social housing projects; benefits and incentives for investors; determining the selling price, rental price, and rental-purchase price of social housing; subjects and conditions to enjoy social housing policy.

In addition, it is urgent to complete, promulgate and effectively implement the project " Building at least one million social housing apartments for low-income people and industrial park workers in 2021-2030” to immediately remove specific difficulties and obstacles in social housing development, increasing the supply in line with demand.

In addition, to support capital for social housing development, it is proposed to implement a credit program of about VND120 trillion to lend to investors and home buyers of social housing projects with an interest rate of about 1.5 -2% lower than the average medium and long-term lending interest rates of state-owned commercial banks (including Agribank, BIDV, Vietcombank, Vietinbank) and non-state commercial banks eligible for each specific credit package.

Clearing the way for credit access

The government will implement monetary policy tools flexibly and synchronously to meet the demand for credit capital flows for socio-economic development; perfect mechanisms and policies to exploit and mobilize maximum financial resources at home and abroad for housing development in particular and the real estate market in general.

The government requires to facilitate businesses, home buyers and investors to quickly access credit sources; take appropriate handling measures for difficult real estate businesses (such as rescheduling principal, interest, restructuring debt groups); focus on feasible projects and loan plans, and customers with the financial capacity to repay debt in full and on time. The Government will also give priority to residential real estate projects that meet the real needs of the people and have efficiency and good liquidity such as social housing projects, renovation of old apartments, offices for lease, real estate for production, industry, and tourism.

It is necessary to take appropriate and effective measures to reduce lending interest rates and support the real estate market.

Promoting and controlling corporate bond channels

The government requires direction and guidance on capital mobilization activities (including bond issuance activities) of real estate businesses in the securities market in accordance with the law.

Besides, the government will control capital mobilization activities of real estate businesses on the stock market to avoid speculation, manipulation and price blowing. The government will create favorable conditions for enterprises to mobilize capital to support recovery and development.

The government will also step up inspection and supervision of compliance with the law on issuance, investment and provision of services on corporate bonds, especially private placement of bonds by real estate enterprises and credit institutions related to real estate businesses, businesses with large issuance volume, high-interest rates and businesses with losses, and issuers without collateral.

The government also requests to research and propose synchronous policies and solutions to develop the corporate bond market safely, healthily and sustainably.

By Duy Anh, Vietnam Business Forum