1/3 of real estate projects in Ho Chi Minh City are stuck due to financial issues
Mr. Hoang Hai, Director of the Department of Housing and Real Estate Market Management (Ministry of Construction) said that of the 168 projects facing difficulties in Ho Chi Minh City, 1/3 of the projects are related to financial issues.
At the Conference to disseminate the 2023 Housing Law and the 2023 Real Estate Business Law, which took place on the morning of October 11, Mr. Hoang Hai, Director of the Department of Housing and Real Estate Market Management (Ministry of Construction) said that one of the first conditions for organizations and individuals when doing real estate business is to establish a business.
At the same time, it is necessary to ensure the ratio of credit balance and bond balance to equity. According to Mr. Hai, it is very normal for a business to do many projects. But if the financial capacity is limited, the same cash flow is spread across many projects, then the business will start to consider issuing bonds and using financial leverage.
However, when there are problems, the project is stopped and blocked. “One-third of the 168 projects in Ho Chi Minh City are stuck with financial issues,” said Mr. Hai.
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| Mr. Hoang Hai, Director of the Department of Housing and Real Estate Market Management (Ministry of Construction) spoke at the Conference. |
Therefore, the Law on Real Estate Business 2023 has legalized a number of provisions of the Decree on conditions for organizations and individuals when doing real estate business and supplemented provisions on conditions for real estate business enterprises through real estate projects to have minimum equity capital, and to ensure the ratio of outstanding credit and outstanding corporate bonds to equity capital.
Accordingly, enterprises must have equity capital of not less than 20% of total investment capital for projects with a scale of less than 20 hectares, not less than 15% of total investment capital for projects with a scale of 20 hectares or more. In case of simultaneously implementing many projects, they must have equity capital to ensure the above ratio for each project.
"This is a prerequisite for approval of investment policy and selection of investor," he said.
These regulations, Article 5, Decree 96 detailing and guiding the implementation of a number of articles of the Law on Real Estate Business also provide more specific regulations.
Accordingly, enterprises must meet the financial safety ratios of the enterprise; comply with the provisions of the law on credit and the law on corporate bonds.
In case a real estate business enterprise borrows from a credit institution or issues corporate bonds to implement a real estate project that has been approved by a competent state agency as an investor, it must ensure that the total outstanding loan balance at the credit institution, outstanding corporate bond balance and required equity capital for each project does not exceed 100% of the total investment capital of that project.
The total ratio of outstanding loans at credit institutions and outstanding corporate bonds to implement the project must not exceed 4 times the enterprise's equity for each real estate project with a land use scale of less than 20 hectares and must not exceed 5.67 times the enterprise's equity for each real estate project with a land use scale of 20 hectares or more.
“When this regulation was issued, many people asked what would happen if the enterprise had issued bonds and had excess credit? The transitional regulations clearly stated that it was not allowed to continue issuing or borrowing capital,” he said, re-emphasizing that the total outstanding loans at credit institutions, outstanding corporate bonds and required equity capital for each project must not exceed 100% of the total investment capital of that project.
The 2023 Law on Real Estate Business supplements and legalizes a number of provisions of current Decrees, amends and supplements the provisions of the 2014 Law on Real Estate Business to ensure clear, strict and feasible legality for the transfer of all or part of a real estate project.
According to Mr. Hoang Hai, the conditions for transferring the project are simpler.
Specifically, the Law has removed the requirement of having a land use rights certificate for the project and the transferred real estate project part.
At the same time, supplement regulations on conditions for investors to transfer such as having a decision on land allocation, land lease, permission to change land use purpose to implement the project by a competent state agency.
The project has fulfilled its financial obligations regarding land of the project including land use fees, land rents and taxes, fees and charges related to land (if any) to the State of the project.
The Law has also amended and supplemented regulations that in case the transferee of the entire or part of the project is an economic organization with foreign investment capital, after a decision permitting the transfer is issued by a competent state agency and the parties have signed a transfer contract, land procedures shall be carried out in accordance with the provisions of the law on land.
At the same time, supplement regulations on cases where the Prime Minister authorizes the Provincial People's Committee to decide on allowing the transfer of part of a real estate project in cases where the real estate project is under the authority of the Prime Minister to approve the investment policy.
Source: https://baodautu.vn/batdongsan/13-du-an-bat-dong-san-vuong-mac-tai-tphcm-lien-quan-den-tai-chinh-d227208.html
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