Housing estates like this one in HCM City may be developed and fully owned by foreigners in the future
A draft Housing Law has been submitted to the National Assembly, the country’s legislative agency, for discussion and approval with the aim of creating a legal framework for residential developments and property transactions.
The bill provides rules on housing ownership, development, management, and transaction, as well as rights of foreigners and Overseas Vietnamese (Viet Kieu) in housing development.
One of the changes to the current rules is the right of Viet Kieu to purchase houses in Vietnam. The bill stated that those Viet Kieu who stay in Vietnam for a consecutive 3-month period are allowed to purchase and own a house or an apartment.
Under current regulations only four categories of Viet Kieu are permitted to purchase a house, including those who make a contribution to the country, culturalists, scientists who work regularly and those who are allowed to live permanently in Vietnam.
Construction minister Nguyen Hong Quan said the changes aim to create favourable conditions for Viet Kieu and foreigners to come to Vietnam for investment and business.
However, Vu Duc Khien, chairman of the Legal Commission of the National Assembly asked for careful consideration of rules on Viet Kieu’s rights to purchase houses.
Khien said current rules allow several categories of Viet Kieu to purchase houses but they are permitted to own just a single house for residence. However, under the housing bill, there are no limits on the number of houses that Viet Kieu are allowed to own.
He said the decision to allow more categories of Viet Kieu to purchase housing should be carefully considered since housing accommodation demand for local residents is pressing.
Khien asked for stricter regulations to be added to the draft law since the article that allows Viet Kieu who stay in Vietnam for a consecutive three-month period eligibility to purchase houses was a loophole that could be abused.
Article 115 of the bill states that foreign individuals and organisations who build houses for lease in Vietnam will be granted house ownership certificates for the floor area they build.
If foreigners build a house for sale, they will not have to clear procedures to obtain house ownership certificates. Authorised state agencies will grant the certificates to the purchasers.
The bill provides that foreigners staying in Vietnam for more than three months will be allowed to lease houses.
Eligible foreign organisations must have a licence to set up representative offices, investment licence or business cooperation contracts and individuals should have legal passports and a visa allowing more than three-month stay.
The housing bill has is large part dedicated to housing development. Minister Quan said the state’s policy is to eradicate subsidising housing accommodation and encourage individuals and organisations to develop houses.
Houses will be developed through three main resources. Businesses will develop commercial houses for sale and lease, the state will build houses for social purposes and individuals build houses and their own residence.
Quan said the draft law allows local and foreign businesses to develop commercial houses on an equal and fair basis.
Developers will be allocated land through land auctions, project tenders or land lease, a case applicable to foreign developers.
Quan said commercial housing projects that have more than two businesses registered to develop should be tendered to select developers.
The bill also stipulates that commercial house developers are allowed to mobilise capital through joint ventures, borrowing or up-front deposits from purchasers or lessees.
However, the bill only permits developers to take deposits when they have finished building the foundation of the house and the total up-front mobilised capital should not exceed 70 per cent of the contractual value.
Khien said many members of the Legal Commission have asked for increased responsibilities of commercial house developers, including making financial contributions or taking part in construction of shared infrastructure.
Currently, developers of houses for sale or lease are obliged to earmark a piece of land for building infrastructure that will be managed by local authorities.
Vu Duc Khien said two different opinions of commercial houses have emerged within the Legal Commission. The first agreed with the bill, claiming that the state should not interfere in the pricing of commercial houses because this is a civil transaction.
The second claimed in several cases that the state should manipulate commercial house transactions by setting price frames in order to prevent speculation, an issue that will be further discussed by the on-going National Assembly meeting.
The bill provides that the state is responsible for building houses for social purposes. Quan said the state should have 10 to 15 per cent of a housing fund in urban areas to meet the demand of purchasing and leasing from state employees and low-income earners.
Quan said the bill regulates the floor area of a social apartment should not exceed 60 square metres and it should be high-rise apartments in big urban areas or low-rise houses in other areas.
Arguments have also been raised in the Legal Commission over the ruling on whether or not a house or apartment should be granted a house ownership certificate, a contentious issue that has been discussed for a long time.
Khien said the first opinion supported the scheme that would grant only one certificate for both land use right and house ownership.
The supporters of this rule said land use right and house ownership are one-and-the-same, since transferring house ownership also means the shifting of land use rights. In addition, the rule will simplify administrative procedures for owners.
However, opponents to this rule claimed that there should be two separate certificates for land use rights and house ownership, claiming that land is owned by all people and individuals and households are only allowed to own the land use right. Meanwhile, houses are an asset on land and house ownership only emerges after land use right is established.
Supporters of this opinion said house ownership certificates have various technical criteria concerning the types of houses and scale that a land use right certificate cannot cover.
Moreover, development of hi-rise apartments and houses built on leased land is getting more common and these types of houses can not be granted one certificate for house ownership and land use right.
Minister Quan said a house ownership certificate was an important legal basis for the state to protect ownership rights as well as create favourable conditions for owners to take part in property transactions.
The third opinion claimed that the granting of one or two certificates should depend on specific cases.
For example, houses built on land allocated to individuals could be issued one certificate while houses on leased land should have two certificates.
A circular issued by the Ministry of Natural Resources and Environment last month provided that house ownership can be temporarily registered in the land use right certificate.
Officials from the ministry claimed that in the long term, house ownership should be regulated by a Property Registration Law, which is under consideration by the Ministry of Justice.
However, the government recently concluded that house ownership should be allocated a separate certificate and the Ministry of Construction is preparing a decree governing this issue for the government’s approval.