New law offers small steps forward
New law offers small steps forward
Real estate developers anticipate a better environment if the draft revised Law on Real Estate Business and the draft revised Law on Residential Housing are approved by the National Assembly later this year.
According to David Lim, head of the Land Sub Group under the Vietnam Business Forum (VBF), provisions have been inserted in the draft revised Law on Residential Housing (LRH) to expand the rights of foreigners to purchase and use residential property.
However, there continue to be limitations on the rights of foreigners who will still not be permitted to lease their property, own residential houses other than in prescribed commercial residential housing projects, or use property as collateral to access loans from the bank.
“We think the amendment of the laws to allow greater rights for foreigners would be very beneficial for a foreign developer when they can sell a large number of apartments in a specific building for a foreign investor, then this investor can re-sell or re-lease those properties,” Lim said.
Regarding the draft Law on Residential Housing (LRH), foreign commentators said that while some meagre efforts had been made to increase the rights of foreign investors to undertake real estate transactions in Vietnam, foreign investors were still not permitted to purchase houses and buildings for resale or lease, be allocated land by the state, receive and transfer land use rights or invest in infrastructure for transfer or for leasing land with infrastructure.
Lim optimistically claimed that the participation of foreign investors in the real estate market would help the real estate market to mature further.
“Over the years, we have seen domestic investors gain in experience and capabilities arising from a thriving real estate market which includes the contributions of foreign investors. It is not uncommon today to see many iconic developments undertaken by domestic developers. The risk that domestic investors will be disadvantaged by allowing foreign developers more rights in Vietnam continue to diminish over time. The granting of more equal rights to foreign developers wouldn’t be at the expense of domestic investors in any way,” said Lim.
Nguyen Manh Khoi, vice director, Housing and Real Estate Market Administration under the Ministry of Construction said the two draft laws had addressed those issues.
“Supplements will be made to the draft to allow foreign investors coming to Vietnam for the first time to deal in property. For example, instead of requiring registered real estate trading as an eligible line of business, first time foreign developers may be required to provide proof of capital competency or track records and real estate trading capacity in another country,” Khoi said.
Initially the government opened the housing-for-sale market to foreign developers with the Phu My Hung project in Ho Chi Minh City and Ciputra in Hanoi. Since then, foreigners have slowly gained more rights.
According to real estate expert Dang Hung Vo, foreign investment was helping stimulate the real estate market. “If the rights for foreigners are improved in the current revised land laws, the real estate market could revive more quickly,” Vo said.
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