Abandon the project because it cannot be solved
Data from the Ministry of Construction shows that in the second quarter of 2023, only 15 new commercial housing projects were licensed nationwide. Of these, the Northern region had 7 projects, the Central region had 3 projects, and the Southern region had 5 projects.
After about a year of the Government continuously removing difficulties, the real estate market still has not solved the supply problem because 70% of the problems of projects are due to legal issues.
While the revised draft Land Law is expected to create legal momentum for real estate, businesses are concerned that some regulations will become bottlenecks in the market's recovery.
Notably, Point b, Clause 1 and Clause 6, Article 128 stipulate the use of land to implement socio-economic development projects through agreements on receiving land use rights or having land use rights.
Accordingly, in the case of using land to implement a commercial housing project, an agreement on receiving the right to use: residential land or residential land and non-agricultural land other than residential land for which land use fees have been paid or land rent has been paid once for the entire rental period.
As a business that had to abandon a project due to residential land regulations, sharing with VietNamNet reporter, Mr. Nguyen Quoc Hiep, Chairman of the Board of Directors of Global Real Estate Investment Joint Stock Company (GP.Invest) said that his company should have done a 4ha project in Ha Dong (Hanoi) and a project in District 12 (HCMC)... However, he had to give up because he had been pursuing it for several years without success, and no one had resolved the issue just because of residential land regulations.
According to Mr. Hiep, from 2021, Decree 30 (amending and supplementing a number of articles of Decree 99/2015 detailing and guiding the implementation of a number of articles of the Housing Law - PV) stipulates that converting other land to residential land must have at least a small amount of residential land, which is very difficult to implement.
“This is the reason why hundreds of projects are stuck and cannot be converted. Even in the case of people using the land, the planning is there but they cannot be converted because there is not a single square meter of land in it.
The draft revised Land Law should have considered which ones are reasonable to keep and which ones are unreasonable to change. However, Article 128 is repeated, I think this is very difficult for businesses developing housing projects; the drafting committee should have seen that,” said Mr. Hiep.
Meanwhile, Mr. Vu Cuong Quyet, General Director of Dat Xanh Mien Bac, said that the regulations create constraints for state agencies.
Mr. Quyet gave an example: a district wants to plan a project, but that project is not located on residential land. Can those districts make a plan to put it up for auction?
“I am worried that state agencies themselves will also encounter difficulties when there are overlapping laws. As for businesses, when planning on land without residential land, most of it is commercial service land, land for planting trees... located near residential areas, located in areas planned for residential areas. At that time, if there is no residential land, businesses will not be able to plan, even if the planning includes residential land, the nature of the land has not been converted into residential land. These things will cause many difficulties and complications for businesses developing real estate projects,” Mr. Quyet said.
Furthermore, this leader said, even in Hanoi, currently developing widely to belt 3, belt 4... but right in belt 3, there is a lot of agricultural land; if regulated as in the draft, land will be wasted because that area is planned for residential land, it is possible to develop high-rise and low-rise buildings but there is not a single meter of existing residential land, then in the end it will be a deadlock.
Mr. Vu Kim Giang, Chairman of the Board of Directors of SGO Group Corporation (SGO Group), asked: If the provisions in the draft are passed, it will have many impacts, because the origin of the land from the past is mostly intertwined. If in the overall project there is a part of land types such as agricultural land, production land, etc., how will it be handled?
“I am afraid that if this draft regulation in the law is passed, we will have to adjust the general planning and zoning plans of each locality because in the past, many localities have almost fully updated the land planning in each area,” said Mr. Giang.
Impact on housing supply and urban housing prices
Speaking with VietNamNet reporter, Lawyer Nguyen Thanh Ha, Chairman of SBLaw Company, assessed that the above regulation will cause “blockage” and more difficulties for the real estate market when hundreds of old projects are having to resolve legal issues; while new projects are also difficult to implement, leading to even less housing supply.
The lawyer analyzed that it is difficult to have land on the land that is requested to change the land use purpose to do the project. Meanwhile, most of the new real estate development projects are currently implemented on the initial land fund of agricultural land, non-agricultural land, production land and other types of land.
Difficulty in regulations is only recognized if there is non-agricultural land that is not residential land and has paid land use fees or paid land rent once for the entire lease term. But in reality, most current projects are being implemented in the form of enterprises paying land rent annually. Thus, with projects paying land rent annually, it is impossible to develop real estate projects.
Along with that, the regulation makes it difficult to negotiate the transfer of projects to implement commercial housing projects because the regulation only applies to non-agricultural land, not residential land, for which land use fees have been paid or land rent has been paid once for the entire rental period.
In fact, current regulations are encouraging investors to negotiate the transfer of land use rights to implement urban and commercial housing projects; however, the requirement to have non-agricultural land for which land rent has been paid in full will prevent many projects from being converted.
“If following point b, clause 1 and clause 6, article 128 of the draft Land Law, enterprises will not be able to implement commercial housing projects. This will affect the supply of apartments and urban housing prices.
This regulation also goes against current guidelines to remove legal obstacles for the project, because it is narrower than the current regulations in Law No. 03/2022/QH15 amending 9 laws, including amending Clause 1, Article 23 of the 2014 Housing Law on types of land used for commercial housing. Accordingly, the regulation stipulates that enterprises are approved for investment policies; at the same time, investors in commercial housing projects are approved if they have land use rights or receive land use rights for residential land or residential land and other land that is not residential land that meets the conditions for permission to change land use purposes to implement investment projects," said Mr. Ha.
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