At the moment, the recently implemented Real Estate Business Law 2023 is receiving big attention from the management board, investors, real estate brokers, project investors and other entities. Besides the provisions taken over from Real Estate Business Law 2014 (amended and supplemented in 2020), Real Estate Business Law 2023 has some new, optimizing points. Therefore, in this article, TNTP will deliver to our readers new and highlight points of the Real Estate Business Law 2023.
1. Real Estate Business Law 2023 narrows the scope of governing
Article 1 of Real Estate Business Law 2023 which stipulates the scope of the law has added the case that the Law will not be applied such as: Selling the house, construction site, transfer the land use right due to liquidation, dissolution, split-off, split-up; transfer ownership of housing or buildings and/or land use rights in case of split-off, split-up, consolidation or merger; sell, transfer or lease real estate which is public property; sell housing or buildings or transfer land use rights according to judgments or decisions issued by competent courts or arbitration awards or decisions, or decisions issued by competent authorities when settling disputes; transfer, lease or sublease land use rights, except investors that transfer, lease, sublease rights to use land that already has infrastructure within real estate projects; and Leasing of social housing to workers and employees by the Vietnam General Confederation of Labour that acts as the supervisory authority of such social housing projects…
It can be seen that the Real Estate Business Law 2023 has narrowed the scope of governing compared with Real Estate Business Law 2014. This helps the provision of this Law will not overlap the provisions of the Civil Code, Real Estate Law, Housing Law, Civil Judgement Enforcing Law, Enterprise Law, Investment law,…
2. Supplementing and completing regulations on conditions for organizations and individuals doing real estate business
2.1 Conditions for real estate business organizations
Specifically, the Law on Real Estate Business 2023 has added several conditions such as: Maintaining the safe ratio of outstanding credit debt, outstanding corporate bond debt to the owner’s equity, and equity allocation to ensure the minimum ratio percentage of total project investment capital in case a real estate enterprise simultaneously implements many projects.
Stricter regulations aim to screen real estate businesses that have enough financial capacity to participate in the market, partly limiting risks for investors.
2.2 Change conditions for individuals doing real estate business
A notable point of the Real Estate Business Law 2023 for individuals is the regulation that Vietnamese people residing abroad are Vietnamese citizens with full rights to do real estate business, buy, rent, and lease purchase real estate like domestic individuals.
Thus, Vietnamese people residing abroad who are Vietnamese citizens (holding Vietnamese nationality) have the same rights and obligations related to real estate business as Vietnamese citizens in the country.
3. Amend and supplement to strictly regulate conditions and conduct business of housing and construction works formed in the future.
3.1 Project investors must fulfill financial obligations regarding land for land use rights associated with houses and construction works put into business.
In addition to the provisions of the Real Estate Business Law 2014, which stipulates the conditions for houses and construction works in real estate projects to be put into the business by the investor, Point c, Clause 2, Article 14 of Real Estate Business Law 2023 add the following condition: “The project investor has fulfilled its financial obligations regarding land including land use fees, land rent and taxes, fees, and charges related to land (if any) to the State according to the provisions of law for land attached to houses and construction works put into business”.
Adding the above regulations helps the state control and limit cases where investors avoid fulfilling tax obligations to the state.
3.2 Regulations on guarantee terms for the sale, lease and purchase of housing formed in the future
• Guarantee terms in the sale and lease purchase of future housing are specifically stipulated in Article 26 of the Law on Real Estate Sales 2023.
Accordingly, the project investor, before selling or leasing housing formed in the future, must obtain bank approval to issue a guarantee for the investor’s financial obligations to the buyer or tenant-buyer when the investor does not hand over the house as committed.
• In addition, the provision further stipulates guarantees for the sale and lease purchase of housing formed in the future, allowing customers to choose whether or not to have a guarantee for the investor’s financial obligation to them in the event of not handing over the house as committed.
This new regulation ensures both strictness and flexibility for the parties to negotiate, and customers can choose and decide whether or not to have a guarantee for the investor’s financial obligations to them.
4. Additional regulations on real estate project transfer
The Real Estate Business Law 2014 allows investors to transfer real estate projects in the event that there has been a decision to allocate land, lease land, allow change of land use purpose and fulfill land-related financial obligations, including land levy, land rent and other relevant taxes, fees and charges (if any), towards the State in respect of the land area used for implementing the project or its part to be transferred without requiring certificate of land use rights as prescribed by the Land Law.
In general, Real Estate Business Law 2023 still retains the provisions of the Real Estate Business Law 2014 on authority and procedures for transferring investment projects. However, Real Estate Business Law 2023 adds regulations on cases where the Prime Minister authorizes the Provincial People’s Committee to decide to allow the transfer of part of a real estate project for which the investment guidelines or investment has been decided or approved by the Prime Minister.
5. Tighten regulations on lot division and sale of plots
Pursuant to Article 31, Real Estate Business Law 2023 stipulates that it is not allowed to self-transfer land use rights to individuals who self-build houses in 01 of the 02 following cases: (1) Located in a ward, district or city of the special-class, class-I, class-II, class-III; (2) land use rights are not put for sale in an auction for constructing a housing investment project according to the provisions of the Land Law. For the remaining areas, the Provincial People’s Committee, based on local actual conditions, determines areas in which rights to use land that already has infrastructure can be transferred by project investors to individuals for building their own housing.
Thus, the new regulations have tightened the division of plots and sale of plots for all ward areas of class-III urban areas.
6. Payment in real estate business must be transferred
• Pursuant to clause 2, Article 48 of the Real Estate Business Law 2023 regulating Payment in Real Estate Business, accordingly “Real estate project investors, real estate enterprises, and real estate service enterprises shall receive payments for real estate business contracts or real estate service contracts from clients through their accounts opened at Vietnamese credit institutions or foreign bank branches lawfully operating in Vietnam”.
Therefore, real estate project investors and real estate enterprises must receive payment through banks. Consequently, the new law has gradually improved the legal framework and increased the implementation of non-cash payments in real estate transactions to control cash flow in real estate transactions and prevent violations such as tax evasion and money laundering.
• However, it should be noted that the Real Estate Business Law 2023 does not regulate the case of individuals doing small-scale real estate business, organizations and individuals selling houses and construction works for non-business purposes or below the prescribed level on whether payment must be received through bank transaction.
Above are some new and highlight points of the Real Estate Business Law 2023. TNTP hopes the article will come in handy to our readers.
Best regards,
