The Law on Real Estate Business 2023 introduces updated regulations regarding down payments and installment payments for real estate purchases, aiming to protect buyers and promote transparency in the real estate industry.
According to Clause 5, Article 23 of the Law on Real Estate Business 2023, real estate project investors are permitted to collect a down payment of up to 5% of the selling price for off-plan properties. This includes the sale or lease-purchase of houses, construction works, or floor space in a building under construction. However, investors must first fulfill specific conditions before accepting any down payments. These conditions include obtaining a construction permit, submitting a construction commencement notice, and possessing land use rights and ownership papers for the property in question.
The down payment agreement must clearly state the selling price or lease-purchase price of the house, construction work, or floor space being purchased. This transparency ensures that buyers are fully aware of the financial commitments involved in the transaction.
Illustration of the payment process for purchasing off-plan properties according to the Law on Real Estate Business 2023. Graphic: Hong Khanh |
Article 25 of the Law on Real Estate Business 2023 stipulates that buyers and sellers must make multiple installment payments. The initial payment cannot exceed 30% of the contract value, including the down payment. Subsequent payments must align with the construction progress but must not exceed 70% of the contract value before the handover of the property. This regulation provides a more detailed framework compared to previous legislation, offering better protection for buyers.
In cases where the seller is a foreign-invested organization, the total payment before handover cannot exceed 50% of the contract value. Additionally, if the buyer has not yet been granted a red book (land use right certificate and home ownership certificate), the total payment collected must not exceed 95% of the contract value. The remaining balance will be settled once the buyer receives their red book.
The new law also introduces provisions for lease-purchase agreements, which were not covered in the Law on Real Estate Business 2014. For these arrangements, multiple installment payments are also required, with the initial payment not exceeding 30% of the contract value, including the down payment. Subsequent payments are made according to the construction progress, but the total pre-handover payments must not exceed 50% of the contract value. The remaining amount is then calculated as rent and paid to the lessor within an agreed-upon timeframe.
Hong Khanh
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