The draft law will put scores of developers under the hammer
The change comes in a clause of the long-expected draft Real Estate Business Law, which will be submitted to the National Assembly for approval this month.
The reference for calculating interest on deposits will be interest rates at commercial banks at the time of delivery. The draft law also states that buyers who fail to pay within the time frame set in the contract will have to pay developers interest on the amount they owe.
The articles are aimed to mitigate losses for buyers, as most developers have failed to deliver properties on time at the expense of buyers. The bill also set forth regulations on deposits to prevent developers from misusing or abusing deposits for other purposes. Under the draft, developers would be able to mobilise in advance less than 70 per cent of contract value. That mobilisation must be carried out in phases, and the first round may begin after project infrastructure is complete. Developers may then take the next round of cash raising when construction on the first phase finishes.
Lawmakers have raised concerns over wording in the draft on transferring land use rights. Head of the National Assembly’s Law Committee, Vu Duc Khien, expressed fear that developers might try to acquire land strictly to sell rather than to build properties.
“So the transfer of land use rights must be considered very carefully,” said Khien.
Lawmakers have also added a new clause that requires approval from authorities for transfer of whole projects, and the bill has one chapter on realty brokerage, a service often blamed for land and house speculation that has pushed prices up over the past few years.
The bill as well details conditions that a property brokerage company should meet if it wants to operate as a realty brokerage. It requires a property agent to have at least five staff who are certified brokers. A member of the management board or a manager of the company must obtain a realty broker certificate also. Brokering staff must also take part in a training course and pass an examination.
The government has said it would provide regulations on brokers’ certificates and managing brokering services.
The Real Estate Business Law is expected to provide a legal framework for a realty market growing sporadically due to insufficient laws. The draft provides regulations on purchase, leasing and transfer of properties as well as on real estate consulting, management and advertising.
Housing development is currently regulated by the Housing Law, passed by the National Assembly last year. Circulars guiding its implementation are expected soon.
No. 759/May 1-7, 2006