Resolving legal issues for real estate projects
According to Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), the Conference on Deploying Monetary Policy Management Tasks in 2024 held on March 14, chaired by Prime Minister Pham Minh Chinh, plays a very important role in developing effective solutions to implement monetary policy in 2024, focusing on removing difficulties for production and business, promoting growth and stabilizing the macro economy.
Focus on removing legal obstacles for real estate projects to qualify for credit access and this is the most effective "non-credit solution" to promote credit growth in 2024.
Regarding the real estate sector, the Chairman of HoREA suggested that competent state agencies focus on removing legal obstacles for real estate projects to be eligible for credit access, and this is the most effective "non-credit solution" to promote credit growth in 2024.
According to Mr. Chau, the overall solution is that the Government and the National Assembly Standing Committee are considering the possibility of submitting to the National Assembly for consideration the possibility of allowing early application of the Land Law 2024, Housing Law 2023, Real Estate Business Law 2023 instead of taking effect from January 1, 2025 and especially building a Project to implement and submit to the National Assembly Resolution on piloting the implementation of commercial housing projects through agreements on receiving land use rights or having land use rights for other land and piloting the separation of compensation, support, resettlement, and site clearance into independent projects.
If approved by the National Assembly, it will remove legal obstacles for real estate projects, the most difficult of which is entanglement in some legal regulations, to create conditions for real estate businesses to access credit more easily and help commercial banks in approving credit loans.
In addition, the Association recommends that ministries and branches urgently complete about 25 draft Decrees and Circulars detailing and guiding the implementation of the Land Law, Housing Law, Real Estate Business Law, and Credit Institutions Law to ensure consistency, uniformity, and closeness to reality, similar to the Government's promulgation of Decree 08/2023/ND-CP, which has helped the individual corporate bond market overcome difficulties, "soft landing", and avoid collapse, or Decree 12/2024/ND-CP, which has removed difficulties and obstacles in land valuation.
According to the HoREA chairman, the specific solution is to request the Prime Minister's Working Group to continue to closely coordinate with ministries, branches and localities to consider removing difficulties and obstacles for projects in the area based on classifying each "obstacle group" so that it can be applied similarly to localities to restart "covered" projects that are eligible to access credit.
At the same time, the responsibility of real estate enterprises is to make efforts to restructure enterprises, restructure investments, restructure housing products towards the real needs of the market, which are affordable housing and social housing, strive to offer reasonable housing prices and sincerely cooperate with the Prime Minister's Working Group and competent state agencies to jointly remove difficulties and obstacles for the project.
Proposal for home buyers under 3.5 billion VND to borrow 120,000 billion VND credit package
According to the State Bank, there are currently 30 projects in need of loans from the VND120 trillion credit package for social housing. Commercial banks have disbursed VND640 billion for projects and VND6 billion for home buyers. The disbursement rate of this package is currently around 1%.
To promote consumer credit in the real estate sector, HoREA proposed that buyers of commercial houses under VND3.5 billion per unit be able to access a preferential loan package of VND120,000 billion.
The Chairman of HoREA commented that the disbursement of the 120,000 billion VND package was too low, while the Prime Minister had directed to ensure credit flows into growth drivers such as consumption, export, and investment.
According to him, real estate consumers are home buyers. To promote consumer credit in this sector, HoREA proposed that the State Bank add buyers of commercial houses under VND3.5 billion per unit (about VND35 million per square meter) to access the preferential loan package of VND120,000 billion.
HoREA also proposed that the Ministry of Construction and the State Bank restore the VND110,000 billion credit package for buyers and renters of social housing. This package is only equal to 30% of the total capital demand to implement the program of developing 1 million social houses by 2030, with preferential interest rates of 4.8-5% per year for a maximum period of 25 years.
The 110,000 billion VND package was proposed by the Ministry of Construction to the Government and the National Assembly in February 2023. The initial idea was that this package would be taken from refinancing sources and provided to commercial banks for lending, but the ministry later stopped proposing this option.
In addition, HoREA also proposed to remove legal obstacles for real estate projects so that they are eligible to access credit. "This is the most effective solution to achieve credit growth target this year," said Mr. Chau.
The association also recommended piloting commercial housing projects on other land and separating compensation, resettlement support, and site clearance into independent projects. This solution would make it easier for businesses to access credit and for banks to facilitate loan approval.
The real estate industry has been struggling since mid-2022, when credit for the sector was tightened, lending rates increased, and some business leaders were disciplined for violations in bond issuance. Many measures were taken to ease the situation, but the market has not fully recovered. Earlier this year, many real estate businesses still had difficulty arranging cash flow to pay debts and interest on maturing bonds.
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