The National Assembly passed the Real Estate Business Law and the Housing Law in November 2023, with an effective date of January 1, 2025. According to a draft resolution announced by the Ministry of Justice, the Government proposes to advance the effective date of these laws to July 1, 2024, six months earlier than originally planned.
According to the Ministry of Construction, the early enforcement of the Real Estate Business Law and the Housing Law will help timely institutionalize the Party’s guidelines and the State’s policies and laws on the development and strict management of the real estate market. It will also contribute to perfecting mechanisms and policies for the healthy and sustainable development of the market and ensuring its smooth operation. At the same time, it will ensure the stable, open, and transparent development of the real estate market.
Moreover, the six-month advancement of the effective date of these laws is intended to synchronize them with the Land Law 2024, which is also being submitted by the Government to the National Assembly for approval to take effect on July 1, 2024.
Increasing supply in the market
Mr. Vu Cuong Quyet, CEO of Dat Xanh Mien Bac, shared with reporters that the early implementation of these laws would positively impact the real estate market, and the market recovery and improvement would come sooner.
“Businesses are also looking forward to it. Issues like land pricing and land taxes are currently on hold, awaiting the new laws… Many projects are waiting. So, when the new laws take effect, there will be specific guidelines on land tax calculations, which will immediately impact the market’s supply, gradually improving it.”
Unblocking projects to increase supply in the real estate market. Photo: Hoang Ha |
The new Real Estate Business Law includes stringent provisions on the conditions for project sales, ensuring buyers’ safety and reducing risks, making the market more transparent. The provisions on compensation and land clearance at market prices will also balance and harmonize the interests of investors and residents.
However, Mr. Quyet noted that when the laws are promulgated, the decrees and circulars must be synchronized. If these legal documents lag, the laws will become confusing and challenging to implement effectively.
Many investors are also waiting for the Real Estate Business Law, the Housing Law, and the Land Law to take effect so they can pay land taxes and continue their projects. Pricing, compensation, and other aspects of numerous projects are also awaiting the new laws to be implemented.
Mr. Nguyen Van Dinh, Vice President of the Vietnam Real Estate Association, agreed that the early enforcement of the new laws provides a basis for resolving issues with some real estate projects, increasing supply, and stabilizing the market. However, many projects will have to go back and complete procedures, such as auctions, tenders, or adjustments to incompatible planning.
Policies encouraging the development of affordable commercial housing and social housing will further boost these projects. “The real estate market will grow better with the early enforcement of these laws, but it will not ‘boom’; instead, it will develop steadily. Improved control and stricter management of investment, business, and brokerage activities will lead to a more transparent, fair, healthy, and sustainable market,” Mr. Dinh assessed.
Caution is needed to avoid ‘haste makes waste’
Mr. Nguyen Quoc Hiep, Chairman of GP.Invest and the Vietnam Contractors Association, agreed that the Real Estate Business Law and the Housing Law taking effect on July 1, 2024, would undoubtedly unblock many stalled projects. The real estate market would have more advantages in applying the new laws.
According to Mr. Hiep, the Real Estate Business Law and the Housing Law are not complicated, so it is feasible to shorten the time and implement them sooner.
However, the Land Law involves complex issues such as land pricing and conversion of land use purposes. Therefore, businesses expect the decrees to carefully consider and incorporate diverse perspectives to balance the interests of the State, the people, and enterprises.
The Chairman of GP.Invest cited the issue of bidding for projects with land use rights as an example. All decrees guiding both the Bidding Law and the Land Law have not yet clearly defined the criteria for bidding on projects. It is challenging for both the bidding evaluation agency and the bidder.
“In land-use right auctions, the highest bidder wins, while in project bidding, the lowest bidder wins. The winning criteria are clear in these cases. However, in bidding for projects with land use rights, there are no specific criteria, only a general statement about ‘economic efficiency.’ What is economic efficiency, and who will calculate it for evaluation? The criteria are still vague and unclear,” Mr. Hiep commented.
While the Government wants all three laws to take effect on July 1, Mr. Hiep cautioned that the Land Law involves complex issues. Therefore, the decree guiding its implementation, prepared by the Ministry of Natural Resources and Environment, needs to be carefully considered to avoid any obstacles when applied.
These laws, when enforced, will affect people and businesses, especially enterprises, which will impact the overall economic development. Therefore, the drafting agency needs to be cautious in preparing the decree’s content.
“Haste makes waste. If we rush without thorough consideration, it may not turn out well,” warned the Chairman of GP.Invest.
Nguyen Le
