Real estate transactions must move to trading floors: experts

Real estate transactions should be conducted on trading floors, except for those involving relatives, experts have suggested.

The proposal was made at a seminar to look at feedback on the draft revised Housing Law and Law on Real Estate Business in Ho Chi Minh City on Tuesday.

In the latest draft of the Law on Real Estate Business, Article 57 stipulates that two types of real estate transactions must go through trading floors, including investors’ selling and leasing of future-formed housing or construction developments, and the transfer, lease or sub-lease of land use rights with technical infrastructure.

Lawyer Le Hong Nguyen, head of the representative office of Vietnam Bar Federation in HCMC, said the regulation was stated in the Law on Real Estate Business 2006. This requirement was crossed out when the law was amended in 2014 to facilitate the real estate market.

"This solution has created conditions for the property market to develop, but its consequences are too great," he said, citing recent real estate bubble and fraud, including the case of HCMC-based developer Alibaba, with alleged fraudulent sale of 58 projects.

He said tax authorities have come up with solutions to make the market transparent and prevent tax losses, such as blocking transactions worth VND10 billion ($423,000) with declared value of VND1 billion to pay lower taxes. However, the declaration of lower value in real estate transactions is not yet under control. As a result, transactions are often done through brokers, leading to a subdivision of plots for sale.

"Without trading floors, we can't control market prices, thus affecting monetary security. When land fever hits, people will pour money into real estate without any control," he said.

Sharing the same view, lawyer Nguyen Van Hau cited the Party Central Committee’s Resolution 18/2022, which requires land prices to be made public, transactions made through trading floors, and cashless payments. “This regulation should be added to the law immediately," he noted.

According to chairman of the Ho Chi Minh City Real Estate Association (HoREA) Le Hoang Chau, Article 57 of the draft Law on Real Estate Business needs to supplement the regulation that individuals and households who divide their land area into plots for sale must make transactions through a real estate exchange, except for family members.

“The goal is to protect the interests of customers and contribute to preventing fraud as well as land fever," he said.

This proposal shows a change in HoREA’s stance. In 2021, it proposed removing the regulation that real estate transactions must go through trading floors to avoid incurring costs, thus reducing the burden on homebuyers.

Previously, Chau had proposed allowing property developers to transfer their projects when they are unable to fulfill financial obligations. He said the law needs to include a regulation that allows investors to transfer a project or part of a project without fulfilling land-related financial obligations, including land use taxes, land rent and related taxes, fees and charges, the transferee is responsible for covering the costs.

Listening to experts’ comments, vice chairwoman of Vietnam Fatherland Front Central Committee Truong Thi Ngoc Anh said she would send them to relevant agencies to look at the amendments.

The latest version of the Law on Real Estate Business was adopted by the National Assembly on November 24, 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 of the current law 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.