Property law set to mend market flaws

Info grab: properties’ history will be spelt out in black and white

This compulsory article was included in the draft Real Estate Trading Law, which was submitted to the National Assembly’s Economic and Budget Committee last week for consideration, said Chu Van Chung, director of Legislation Department under the Ministry of Construction.
Lack of information about properties is one of the biggest problems in the real estate market at present. About 70 per cent of property transactions are not registered with state management agencies, so the government cannot collect taxes on implicit trading.
Banks are also cautious about lending to property projects, as they lack reliable information to appraise the feasibility of developments.
The draft law provides that property information will be made public at real estate transaction offices or floors established by developers or other organisations.
Developers will have to expose the location, scale, characteristics, planning, auxiliary infrastructure and services, ownership and legal documents, sale or lease prices and the rights of properties, stipulates Article 10 of the bill.
“This is a very important regulation to enhance the transparency of properties and to mitigate implicit transactions that avoid taxes and remain unaccountable to customers,” Chung said.
He said the state would monitor the business and transactions surrounding properties at trading offices to collect taxes.
All individuals and organisations, Chung said, could establish property trading floors, provided they had knowledge of property dealings and at least one staff member with a property brokerage certificate.
“The state will not interfere in the operation of trading floors, but will create a legal framework for them to work effectively,” Chung said. “The main objective of setting up property transactions floors is to increase the market’s transparency and to force property dealers to fulfill their responsibilities to customers and the state.”
The government said it wanted to build a transparent and healthy real estate market to use the industry for economic development, prioritising the creation of a legal framework such as the Real Estate Trading Law and the Property Registration Law.
In addition to the Real Estate Trading Law, the National Assembly is also expected to consider the Property Registration Law during its year-end meeting, which will commence in October.
Nguyen Si Dung, vice director of the National Assembly office, said the state had to set up a property registration agency so all property transactions would be made public.
Dung said the registration system should certify the existence of a property with details such as location, area and construction, rather than to whom the property belongs.
“If we want to build real estate laws to facilitate property transfer and to create a momentum for economic development, we will have to build the property registration system,” Dung told Vietnam Investment Review.
Chung added that building the Real Estate Trading Law would create a clear legal framework for property investment and trading so the government could better manage the industry.
He said the draft law under consideration provided details about what kinds of property were eligible for trade in the market, instead of the vague provisions outlined in the draft law that was made public a few months ago.
Chung said properties eligible for trade included houses, apartments, offices, hotels, guesthouses, commercial centres, supermarkets, schools, markets, hospitals, warehouses, factories, roads and bridges, just to name a few.
He said another change to the previous version of the bill was that all real estate transactions would not be required to be conducted at trading floors. Instead, the bill “encouraged” transactions to be carried out at the floors.
The Real Estate Trading Bill contains 67 articles to govern trade of houses, construction works and land use rights, property valuation and brokerage, real estate service trading floors and contracts.
Chung said the National Assembly was expected to discuss the draft law at its year-end meeting.