National Assembly discusses 'whether real estate transactions through the floor are mandatory or not'

On the morning of October 31, the National Assembly discussed a number of controversial contents of the draft Law on Real Estate Business (amended), including whether or not it is mandatory to transact through the floor.

Current regulations (Law on Real Estate Business 2014) do not require transactions through the floor. Submitted to the National Assembly at the 5th session (June 2023), the Government proposed two options, that is, buying, selling, transferring, and leasing real estate formed in the future must go through the floor, while other transactions are not required.

Many delegates at the 5th session disagreed with the requirement, saying that real estate transactions should only be encouraged through the floor. The National Assembly Standing Committee also agreed with this view, and the draft Law on Real Estate Business (amended) after explanation and acceptance removed the mandatory provision for real estate transactions to be made through the floor. Instead, the State encourages the purchase, sale, transfer, lease, and hire-purchase of houses, construction works, and land use rights through the real estate floor.

The Standing Committee of the National Assembly explained that the implementation of the 2014 Law on Real Estate Business shows that current real estate trading floors are not capable of ensuring the legal safety of transactions. There have even been many cases where real estate trading floors have acted to disrupt the market.

"Requiring real estate transactions through exchanges will lead to the risk of exploitation and will not ensure the development of a healthy, safe, and sustainable real estate market," the National Assembly Standing Committee stated.

In addition, to ensure strictness, the draft Law will add Article 59 on the management of real estate trading floors. Accordingly, it will clearly stipulate the responsibilities of the state management agency of housing and the provincial real estate market in managing the operation of the floors.

Real estate in the west of Hanoi, September 2023. Photo: Ngoc Thanh — Real estate in the west of Hanoi, September 2023. Photo: *Ngoc Thanh*

Also according to the National Assembly Standing Committee, regulations on future housing transactions (housing and real estate on paper) received many comments from National Assembly deputies at the 5th session.

Accordingly, regarding deposits when buying and selling real estate on paper, some opinions proposed to add a regulation that only deposits are accepted when the house or construction works are qualified to be put into business. Some opinions suggested that investors must be granted an Investment Certificate, a decision on land allocation, land lease and have a detailed 1/500 planning approved before they can receive deposits from buyers.

Due to many different opinions, the National Assembly Standing Committee proposed two options. First , project investors are only allowed to collect deposits from customers when the houses and construction works are qualified for business and have conducted transactions according to regulations.

The National Assembly Standing Committee believes that this is a low-risk option for customers - the vulnerable group in real estate transactions. Because the deposit is only made when the real estate meets the business conditions and the two parties sign a contract, thus limiting the occurrence of disputes. This option is chosen by the Government and 38% of the opinions of the National Assembly delegations and agencies of the National Assembly.

But this method also has limitations, that is, the investor does not have the opportunity to receive deposits and sign contracts with potential customers.

Second, the investor only collects the deposit according to the agreement with the customer when the project has a basic design that has been appraised by a state agency and has one of the documents on land use rights. The deposit agreement must clearly state the selling, renting, and buying price of the house or construction work. The maximum deposit amount is regulated by the Government but must not exceed 10% of the selling or renting price.

This option has the advantage that the investor can mobilize capital early, but it also poses risks for customers because they have to pay money before the project has started construction. In case the necessary procedures for the project to start construction such as construction permits, technical designs, and construction drawings are delayed or prolonged, it will cause disadvantages for the buyer, leading to disputes. The National Assembly Standing Committee proposed that the Government supplement the content of impact assessment for this option.

In response to the proposal not to regulate real estate business on paper, due to causing many consequences and market disturbances, the National Assembly Standing Committee said that the regulations on selling houses and construction works formed in the future are inherited from the 2014 law. The provisions in this draft amended law are also consistent with the general principles and provisions of the Civil Code on future-formed assets, the rights of organizations and individuals in deciding, establishing, changing, and terminating property transactions.

Capital mobilization by project investors and trading in future housing and construction works are two different types of transactions. The Civil Code has regulations on transactions of future assets. Therefore, the draft law regulates the sale of housing and construction works on paper to ensure the legitimate rights and interests of organizations and individuals participating in the transaction.

Regarding payments for buying, selling, and renting houses and real estate on paper, the National Assembly Standing Committee also proposed two options in the draft law.

Option 1 , the seller can only collect a maximum of 95% of the value of the sales contract if the buyer or hire-purchaser has not been granted a Certificate of land use rights, house ownership and other assets attached to the land. The remaining 5% of the value will be paid when the certificates are granted to the buyer by the competent authority.

Option 2 , the seller can only collect a maximum of 95% of the value of the sales contract if the buyer or hire-purchaser has not been granted a Certificate of land use rights, house ownership and other assets attached to the land. The remaining 5% of the contract value is transferred by the customer to the investor's account opened at the bank for management and the investor cannot use this amount. The costs and profits arising from this amount are agreed upon by the investor and the bank.

The investor may only use this amount together with profits (if any) when the competent state agency issues a Certificate of land use rights, house ownership rights and other assets attached to the land to the buyer or lessee.

According to the agenda, on the afternoon of October 31, the National Assembly discussed in the hall about the socio-economic situation in 2023, the planned plan for 2024; and the implementation of Resolution 43 on the socio-economic recovery program. The National Assembly also discussed the implementation of a number of pilot mechanisms in Da Nang city, as well as the results of the review of legal documents.

Hoai Thu

Source link