The draft revised Law on Real Estate Business should stipulate that future-formed real estate products must go via trading floors, said the government in its proposal sent to the Standing Committee of the National Assembly on Thursday.
In the latest draft of the bill, Article 57 states that two types of real estate transactions must go through trading floors, including investors’ selling and leasing future-formed housing or construction developments, and the transfer, lease or sub-lease of land including technical infrastructure. Meanwhile, other transactions are encouraged to be made on floors.
This regulation was specified in the 2006 version of the Law on Real Estate Business, but was later removed when the law was amended in 2014. Over the past eight years, the non-compulsory purchase, sale and transfer of real estate via exchanges has reduced transparency and information disclosure, especially for future real estate projects, according to the proposal.
“The "tightening" of future-formed housing transactions will ensure the rights and responsibilities of project investors to buyers and avoid speculation,” the government said, adding that current conditions for establishing a real estate trading floor are inadequate, leading to difficulties in management.
Therefore, the cabinet proposes tightening conditions for property trading floor establishment, and the rights and obligations of operators, organizations and individuals participating in exchanges.
In fact, although it is not a mandatory requirement, most developers sell real estate through trading floors.
In another new point, the draft dedicated one chapter to feature market regulation and stabilization measures in case the realty market is overheated or frozen.
The government said that insufficient and lax regulations have resulted in unplanned market development. Currently, there are no mechanisms and regulations on state agencies’ responsibility and power for controlling and regulating the real estate market.
In addition, property prices, especially in urban areas, are now higher than the average income of residents and economic growth rate. The market has an excess of high-end products, while lacking mid- and low-end equivalents.
"Property speculation is still quite common across localities," the government noted.
Therefore, in this amendment, the Ministry of Construction shall coordinate with other ministries, agencies and localities to propose to competent authorities regulatory measures when the market sees supply-demand imbalance and abnormal fluctuations in transaction numbers and prices or when there is a natural disaster, war, or economic crisis.
Tools for the government to regulate the real estate market will include policies on investment, construction, planning, housing, land, real estate business, tax, credit and finance. The market regulation will follow the principle of respecting market rules and decentralization of management.
The current Law on Real Estate Business was adopted by the National Assembly in 2014. Although the law was considered modern and progressive at the time of its promulgation, certain shortcomings have been revealed over time.
Particularly, several provisions overlap with other relevant laws such as the laws on land regarding the transfer of land use rights, the laws on housing regarding purchases, hiring or hire-purchase of residential houses, and the laws on investment regarding the transfer of real estate projects.