Tighten land subdivision and sale

DNVN - According to real estate legal expert Pham Thanh Tuan, new regulations of the Housing Law and the Real Estate Business Law (amended) have "tightened" the subdivision and sale of land by real estate businesses.

The Housing Law and the Real Estate Business Law 2023 are expected to take effect from August 1. Real estate legal expert Pham Thanh Tuan commented that these two new laws have “tightened” the “division and sale of land plots” by real estate businesses from two perspectives. That is, narrowing the scope of project areas that can be divided and sold and specifying the procedures that businesses must comply with.

Specifically, for regional scope, projects in wards, districts, cities of special, type I, type II and type III urban areas or projects (regardless of region) that select investors by auctioning land use rights to invest in housing construction projects according to the Land Law, investors will not be allowed to do real estate business by dividing lots and selling land.

Enterprises implementing projects by dividing plots and selling land to speculators have caused many land fevers to occur.

According to the Ministry of Construction, as of December 2023, Vietnam has 902 urban areas. Of which, there are 2 special-class urban areas, 22 class I urban areas (including 3 class I urban areas directly under the Central Government), 36 class II urban areas, 45 class III urban areas, 95 class IV urban areas and 702 class V urban areas.

“Projects in 105 cities and towns that are urban areas of type III or higher are not allowed to do real estate business by dividing lots and selling land. Thus, the scope of the area where businesses are allowed to divide lots and sell land is greatly reduced.

In other words, in urban areas of type III and above, investors must build houses for sale, no longer "dividing" land into small pieces for sale like before," Mr. Tuan commented.

Regarding the procedures that businesses must comply with, Mr. Tuan said that the new law stipulates that in order to transfer land use rights in the form of subdivision, businesses must meet both "necessary" and "sufficient" conditions.

The necessary condition is to have a document from the provincial People's Committee allowing the enterprise to transfer the land use rights in the project by dividing the plots and selling the land. The "sufficient" condition is that the investor must carry out the procedure of applying for a permit from the Department of Construction, similar to the case of signing a contract to buy and sell future housing.

The new regulation helps those who receive the transfer of land plots from investors to have a basis to clearly determine the time when the investor is allowed to sign the sale and purchase contract. This determination is based on whether the investor has received a document from the Department of Construction or not.

“The new regulation to tighten the subdivision is reasonable. Enterprises carry out projects by dividing plots and selling land to some individuals in the form of speculation, buying and reselling, leading to many land fevers. The peak in early 2021 occurred simultaneously from North to South, causing waste of social assets.

Meanwhile, current laws do not require construction to be put into use for buyers of subdivided land," said Mr. Tuan.

Also according to Mr. Tuan, one of the very noteworthy provisions stipulated in the Law on Real Estate Business (amended) is the requirement that the transferee of land use rights: "must build housing to ensure progress, in accordance with the approved design and detailed planning, construction permit in cases where a construction permit must be granted and in accordance with the agreement in the contract for transferring land use rights with technical infrastructure in the signed real estate project" (Clause 2, Article 34).

This is an important basis for not only investors but also competent authorities to supervise the construction of houses by buyers. Avoid the situation of buying land and leaving it abandoned or wasting it or for personal speculation.

Hoai Anh

Source: https://doanhnghiepvn.vn/kinh-te/bat-dong-san/siet-chat-phan-lo-ban-nen/20240616084210260