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|Key pieces of legislation paved the way for changes in the property market last year|
Decree 71/2010/ND-CP, on the implementation of the Housing Law, had a big impact as it clarified the fundraising activities of investors when it came into force in August, 2010.
Circular 16/2010/TT-BXD then offered guidelines to Decree 71 and combated speculators’ rising influence since when it went live in October, 2010.
Tran Oanh, general director of Nam Cuong Hanoi Group, said the legal documents increased transparency of the real estate market.
LNT & Partners attorney Huynh Thi Phuong Vy said Decree 71 stated many provisions clarifying the fundraising activities of investors in comparison with Decree 90/2006 detailing and guiding the implementation of the Housing Law.
She added that this decree aimed to create more strict controls on cash raising activities for housing development.
Circular 16, meanwhile, was a touchstone for real estate investors, she said.
Vy said developers were very eager to get guidance for a number of provisions of Decree 71 and Circular 16 was considered a further step in clarifying many issues which were not clearly set out in Decree 71.
Vy said Decree 71 presents five forms of raising capital for housing development. They are contracting with credit institutions and investment funds or issuing bonds, contracting with a second investor, entering into contribution contracts to share profits or receive a completed unit, contracting with a real estate company, advanced payments for housing purchases. Circular 16, to clarify such forms, has certain provisions.
Circular 16, Vy said, clarified that the investor may only enter into house purchase contracts after having technical designs of the houses approved, completely built house foundations, completed procedures for house purchases through a real estate trading floor under the Law on Real Estate Business.
Another noticeable point of Circular 16 is that it permits a household, individual or organisation not being a real estate company to assign a contract for the purchase and sale of a housing unit in the future.
“With Decree 71 and Circular 16, we hope that the Vietnamese real estate market will develop more stably and be a powerful contribution for the growth of Vietnamese economy,” Vy said.
Concerns still remain
However, experts have also raised concerns about the shifting legal foundations.
Oanh said the new policies had cooled the market because investors needed time to become familiar with these new policies.
“The investors and developers need a while to wait and see, before deciding which business solution should be implemented after the new documents came into effect,” Oanh said.
Nicholas Holt, valuations manager from real estate consultant Knight Frank Vietnam, said the recent legislation was deeply unpopular with developers and investors.
“The government may have to review and clarify certain points in 2011,” Holt said.
Meanwhile, Savills Vietnam valuation director Troy Griffiths said the legal policy implemented in 2010 had had a “limbo” effect and its positive impacts should be felt in 2011.
“After some challenges in 2010, state-owned enterprises remain worthy to monitor as the public sector unwinds and performance is strengthened,” he said.
Phan Truong Son, director of Investment and Construction Company HUD3, said Decree 71 and its guideline circular had helped the market become more transparent. However, it had also reduced the number of transactions because investors, developers and speculators had waited to see how the new regulations panned out.
“Investors will be forced to clarify which segments [of the real estate market] they should take part in, make more professional investments and increase their prestige in the market.
“A new environment will be more challenging, but I believe that it is really good for Vietnam’s real estate market, which will thrive this year,” Son said.