At the ‘2018 Real Estate Forum: Opportunities from policies’ held recently, Luc reported that the number of new firms in the real estate sector surged sharply by 162 percent to 5,100 by the end of last year. The number continued rising by 42 percent in the first four months of this year.
Vietnam had 5,100 real estate firms by the end of last year
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Besides, Luc said, real estate finance is a system of mechanisms, policies and markets on taxes, fees, capital sources and financial products. These are essential factors for the real estate market to grow healthily.
However, in the current real estate finance system, there are some limitations. For example, the housing savings fund has not developed mainly due to a lack of capital and operation mechanisms that are unsuitable for the market. In addition, the system of financial institutions is not diversified, which is a barrier to the development of the housing finance market.
Luc suggested a long-term common housing savings fund similar to those of Thailand and Singapore. At the same time, medium- and long-term sources of capital must be created and the financial market structure must be balanced, creating capital for housing savings and social housing programs.
In addition, Luc said, it is necessary to focus on attracting foreign direct investment (FDI) in the targeted real estate sector, such as essential and transport infrastructure. Finalizing a decree on investment through Public-Private-Partnerships (PPP) would also benefit the sector.
At the forum, Dang Hung Vo, former deputy minister of Natural Resources and the Environment, said since the real estate market began to recover in 2014, the country’s laws regulating the market have transformed significantly. But as the laws have developed, many of them overlap, creating redundancies that the Government must now try to eliminate.
The 2003 Land Law allows enterprises to use land they will own for a long time to build housing for their employees. The law is especially intended to encourage businesses to create accommodations for workers in industrial areas, as well as to develop rental housing projects. The 2014 Housing Law continues to regulate businesses’ rights to use residential land they own in accordance with the provisions of the 2003 Land Law.
In contrast, the Land Law of 2013 only allows enterprises to use residential land for a definite term equal to the term for the project as a whole. This provision has made it impossible for businesses to build housing for their employees, while also limiting the development of the rental housing market.
According to Vo, this provision of the Land Law 2013 needs to be renewed to comply with the Housing Law 2014, which allows businesses and organizations to use land for the long-term, with no specifications about when ownership will lapse.
In the period from 2014 until today, especially since the government of Vietnam issued policies to turn tourism into a spearhead economic sector, a series of real estate development projects for tourism and resorts have been built in many tourist areas. However, each locality has introduced different ways of enforcing the law. At the moment, it is necessary to fill the legal gaps regarding the construction of tourism and resort real estate.
