Experts pick holes in new bank guarantee for apartment buyers

"Now, with the guarantee, all the risks pile on banks if a project gets into trouble", Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company said. Photo dothi.net

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, told a seminar held in HCM City to collect feedback on the draft decree that generally a developer needs bank loans for land clearance and buying land use rights and then for construction.

Now, with the guarantee, all the risks pile on banks if a project gets into trouble, he pointed out.

In reply, Vu Van Phan, deputy head of the Ministry of Construction's Housing Management and Real Estate Market, said the State Bank of Vietnam would issue a circular to address this.

Phan said the guarantee is to safeguard buyers' rights since many people who paid to buy apartments have been unable to get back their money when projects stalled.

Le Hoang Chau, chairman of the HCM City Real Estate Association (HoREA), said the government should allow insurance companies to join the business (provide the guarantee) to offer developers a wider choice in sharing the risk.

Nguyen Trong Ninh, standing deputy head of the Ministry of Construction's Housing Management and Real Estate Market, said that even foreigners who are in the country for just a day are allowed to buy houses.

He also said that foreigners get ownership for 50 years and can apply for a single extension of 50 years at most.

They can resell their assets with the buyers getting the title for the remaining duration, he said.

Participants said the new owners should enjoy another 50 years.

The amendments to the housing and real estate business laws took effect on July 1, but decrees guiding their implementation are yet to be issued.

Chau said foreign institutions and individuals are allowed to own 30 per cent of the total number of units in an apartment project but only 10 per cent of houses if a development comprises both apartments and houses. He called for greater flexibility in places like Ha Noi, Da Nang, Binh Duong, Dong Nai, and HCM City, especially areas like Phu My Hung and Thao Dien in HCM City that attract a large numbers of foreigners.

"Local governments should be empowered to make decisions appropriate for their situation."

Yoshida Akio, chief representative of Japanese-owned Kitakei Co, which sells housing materials and equipment and construction work systems, said the Japanese community in Viet Nam wants to buy houses to live in the country for a long term, adding the 30 percent rate should be increased to 40 or 50 per cent.