Reduce capital mobilization operations and safeguard consumers' interests

DNHN - Dr Dang Van Cuong is the Director of the Chinh Phap Law Office of the Ho Chi Minh City Bar Association. Hanoi thinks that strict rules should be put in place to keep an eye on how money is raised, especially for future real estate projects.

In 2014, the Real Estate Business Law was enacted. Many items are no longer compatible with reality, even in theory, after 8 years of execution, making the task challenging.

Furthermore, since the legislation has not yet established an efficient legal framework for all sorts of real estate companies, many new real estate properties have been unable to enter the market.

Dr Dang Van Cuong is the Director of the Chinh Phap Law Office of the Ho Chi Minh City Bar Association. Hanoi identifies four existing issues in the present Real Estate Business Law.

To begin with, in terms of the kind of real estate placed into business, the Law on Real Estate Business 2014 is encountering several difficulties in providing ownership certificates for tourist and resort real estate.

Second, the legislation demands an explicit assurance from the bank for future circumstances for purchasing and selling real estate. But many projects are kept secret because it's hard to figure out how much money a company has and how much collateral it has.

Third, many banks are presently apprehensive about taking guarantees for future housing developments and building projects. Because there are several possible risks in this business, the bank has to take on a lot of responsibility for customers while only getting a small guarantee service charge.

Fourth, the interests of those involved in the real estate sector are diverse. According to the Law on Real Estate Business, 2014, domestic businesses and people are not restricted in terms of the situations and kinds of real estate that may be acquired, transferred, or leased, as well as the purpose of use for them. Meanwhile, Vietnamese citizens living abroad and foreign-invested businesses face some constraints.

"The Law on Real Estate Business 2014 has become an unseen obstacle to growth for new housing products such as resort real estate," Mr Cuong remarked.

Aside from the aforementioned flaws, real estate developments are also "deformed," according to lawyer Cuong. Many initiatives mobilize resources while they are ineligible, wasting cash and resulting in bankruptcy. Some investors even create "ghost projects" to fraudulently mobilize and usurp funds.

Since then, many kinds of buying and selling, such as loan contracts, and pledges to maintain the right to purchase, transfer, and deposit, have all been identified as potentially dangerous. "If a conflict emerges, hundreds of investors may be forced to lose money," Mr Cuong said.

Land prices have soared in numerous areas around the nation since last year, owing to a supply-demand mismatch in the real estate industry. People who wish to purchase a property encounter challenges in terms of both housing availability and cash flow. On the contrary, many individuals become wealthy rapidly.

Dr Dang Van Cuong recommends strengthening inspection and control measures by competent authorities over business entities; transaction conditions and real estate goods put into the transaction; and model contracts when investors sign with customers, particularly enhancing information channels for customers when participating in transactions, to perfect the law on real estate business transactions, particularly those formed in the future.

The Law on Real Estate Business must take steps to strengthen restrictions on assuring sales and rental operations for future real estate developments. In particular, new laws need to be made about contracts, payment, handover, and the duties and responsibilities of each party in the housing industry and building activities.

Concerning guarantee operations, Mr Dang Van Cuong pushed for the law's requirements to be unified, putting the interests of consumers first. This would make it less likely that a company wouldn't be able to do business but would still take the company's cash.

Mr Cuong said that investors who try to break the law to get money and sell things will be treated very badly.

Mr Cuong said it is vital to clearly define the investor's obligations and adopt steps to rigorously control illicit business operations, particularly in social housing, to defend the interests of consumers in general, income earners, etc., and low-income households in particular.

Ha An