Considering that real estate manipulation is no less dangerous than similar behavior in stocks, National Assembly delegates proposed banning it to avoid price manipulation and bubbles in the market.
The draft Law on Real Estate Business (amended) supplements a number of prohibited acts in real estate business, such as forging documents, intentionally falsifying and not disclosing information about real estate put into business; cheating and defrauding customers...
Speaking at the National Assembly discussion session on October 31, Mr. Trinh Xuan An (full-time member of the National Defense and Security Committee) proposed adding the act of manipulating and fixing real estate prices to the list of prohibited activities in this business field.
He analyzed that manipulating the real estate market is no less dangerous than similar behavior in the stock market. Manipulation is not only through bidding at high prices and then abandoning deposits, but also using one project to "increase" the price of another project, leading to a bubble and creating a price level that is sky-high compared to reality.
"If not handled thoroughly, it will create a bubble, like the case of Chinese real estate company China Evergrande Group," Mr. An said, adding that it is necessary to prohibit real estate price manipulation and manipulation in the law and specific cases should be excluded.
Mr. Trinh Xuan An (full-time member of the National Defense and Security Committee) spoke at the discussion session of the draft Law on Real Estate Business (amended), on the morning of October 31. Photo: National Assembly Media
Sharing the same view, Mr. Nguyen Huu Thong (Deputy Head of the Specialized Delegation of Binh Thuan Province) and Trinh Lam Sinh (Deputy Head of the Specialized Delegation of An Giang Province) proposed to add regulations prohibiting acts of manipulating and disrupting the real estate market.
Mr. Thong noted that collusion in land use rights auctions and auctions to inflate prices in surrounding areas are common. This causes land prices to rise, and people who really need housing cannot buy land and build houses.
Meanwhile, also mentioning prohibited acts in real estate business, Mr. Nguyen Van Manh (Member of the Economic Committee) stated that the regulations on collecting and using money for buying and selling real estate for hire purchase in the future from the buyer and hire purchaser are illegal. Compared to current regulations, this draft law eliminates the act of mobilizing and illegally appropriating capital, according to Mr. Manh, unintentionally creating loopholes in the use of capital by investors, as well as creating other channels for capital mobilization.
He proposed to keep the regulation related to the prohibition of illegal occupation to limit this behavior from happening in reality.
Regulations on deposits for future housing transactions (housing, real estate on paper) also received many comments during the discussion session. Currently, the draft law proposes two options. One is that the project investor can only collect deposits when the housing and construction works are eligible for business. Or, the investor collects deposits 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 maximum deposit amount is regulated by the Government, but must not exceed 10% of the selling or rental price.
Ms. Tran Hong Nguyen (Deputy Head of the Law Committee) chose option 1, because she thought it was less risky for the buyer - the weak party in the transaction. Deposits are only made when the real estate meets the business conditions and both parties sign a contract, thus limiting the occurrence of disputes.
If the investor receives the deposit when the project has a basic design that has been appraised, or has one of the documents on land use rights (option 2), according to Ms. Nguyen, the buyer will bear many risks, because the time from receiving the deposit to the project construction is long.
In fact, the real estate market has recently become complicated, with project investors taking advantage of deposits and capital contribution contracts to arbitrarily raise capital. "Many projects that have received deposits after 5 or 10 years have not yet been implemented, so it is necessary to have regulations to "tighten" deposits for real estate projects that will be formed in the future," said the Deputy Chairman of the Law Committee.
Meanwhile, Mr. Nguyen Dai Thang (Deputy Head of the specialized delegation of Hung Yen province) and Mr. Pham Van Hoa chose option 2, because they thought that the regulations clearly defined in which cases the investor could collect the deposit, the deposit amount, and were public and transparent.
Mr. Pham Van Hoa said that the investor does not have 100% of the capital to carry out the project and must borrow from the bank. The deposit of 10% of the value of the apartment for sale is also suitable for reality. "A house worth 1 billion, a deposit of 10% means 100 million, a house worth 4 billion has a deposit of 400 million, I think for customers this amount is not a large amount when they buy a house. Customers deposit in advance, sometimes the investor sells the house at a lower price", he said.
Furthermore, investors have documents on land use rights to receive deposits, according to him, "they are not dishonest". Therefore, the draft law needs to provide flexible regulations so that investors can mobilize capital to implement projects, creating trust between investors and customers.
Regulations on completing financial obligations on land when transferring real estate projects were also discussed. At the 5th session (June), Chairman of the Economic Committee Vu Hong Thanh, when presenting the report explaining and accepting the National Assembly Standing Committee, said that many opinions agreed with the requirement of "compulsory completion of obligations" before transferring projects. However, there were also opinions that conditions should be created for investors who no longer have enough capacity.
Therefore, the Standing Committee of the National Assembly proposed two options.
Firstly , in case the investor transfers but has not fulfilled the financial obligations regarding the project land or the transferred project part with the State, the two parties can agree to continue performing the unfulfilled financial obligations.
Second , if the transferor has a decision to allocate or lease land to implement the project from a competent state agency and has fulfilled the financial obligations regarding the project's land (land use fees, land rent, taxes, fees, etc.), it is not required to have a land use right certificate for the entire or part of the transferred project.
The National Assembly Standing Committee chose option 1. This option ensures strict regulations and prevents the selection of incompetent investors to transfer projects and make profits.
Mr. Pham Van Hoa agreed to choose option 1, which means that when the investor transfers the project or part of the project to another person, the recipient will have to fulfill the financial obligations to the State. Mr. Hoa said that the State will not lose anything because the financial obligations will continue to be fulfilled.
"Investors who are "malnourished" and no longer have the ability to continue with the project must transfer it, and forcing them to fulfill their financial obligations before being able to transact is not advisable," he stated.
Mr. Pham Van Hoa expressed his opinion at the discussion session of the draft Law on Real Estate Business (amended) on the morning of October 31. Photo: National Assembly Media
Mr. Trinh Xuan An, a full-time member of the National Defense and Security Committee, also said that flexibility is needed in transferring real estate projects. He suggested that the parties should be allowed to negotiate their own financial obligations to the State.
Standing member of the Committee for Science, Technology and Environment Nguyen Ngoc Son is concerned that there are currently many different understandings of the meaning of "transferring all or part of a real estate project".
Mr. Son cited the fact that the investigation and inspection agencies also face difficulties when handling projects that change investors through forms such as transferring land use rights and assets attached to land, selling assets attached to land. Therefore, he suggested that the draft law should clearly define the concept and method of asset transfer to avoid exploitation.
The National Assembly is expected to vote to pass the draft Law on Real Estate Business (amended) on November 27.
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