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The Ho Chi Minh City Real Estate Association (HoREA) has sent a document to the State Bank of Vietnam proposing amendments to Clause 1 of Article 1 of Circular 22/2023 (amendments to Clause 11 of Article 2 of Circular 41/2016).
HoREA suggests making the changes before Circular 22 takes effect on July 1, 2024, to allow individuals to use the future commercial properties they purchase as collateral for their loans.
HoREA expresses concerns about the provisions in item (ii), point a of Clause 11 of Circular 41/2016 (amended and supplemented in Clause 1 of Article 1 of Circular 22).
According to these regulations, when individuals take out loans secured by real estate to buy commercial properties, commercial banks and foreign bank branches can only grant loans to individuals for the purchase of properties that are “completed and ready for handover”, meaning properties that are already built. In cases where individuals borrow credit to buy commercial properties that are secured by those properties themselves, credit institutions can only grant loans for properties that are “completed and ready for handover”, meaning properties that are already built.
Therefore, Circular 22/2023 does not allow commercial banks and foreign bank branches to grant loans to individuals for the purchase of “commercial properties that are not yet completed and ready for handover” (meaning commercial properties that will become available in the future) with those properties as collateral.
As a result, individuals who want to borrow credit to purchase “commercial properties that will become available in the future” must provide other forms of collateral or use other assets as collateral.
According to HoREA, if the above content is not amended in a timely manner before it takes effect on July 1, 2024, it could lead to negative consequences, create difficulties, and hinder the normal operation of the real estate market. This will also have a negative impact on the short-term and long-term recovery and development of the real estate market.
Not allowing credit institutions to grant loans to individuals for the purchase of “commercial properties that will become available in the future” with those properties as collateral is not appropriate, inconsistent, and does not align with existing legal provisions.
