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Experts say that after the new Land Law, Housing Law, and Real Estate Business Law come into effect, it will help stabilize real estate prices in the market, and there will no longer be a phenomenon of overheating.
Recently, the Government has issued a telegram requesting ministries, branches and localities to speed up the progress of drafting and promulgating documents providing detailed guidance on three Laws including:Land Law,Housing Law, Real estate business law to be implemented immediately after being approved by the National Assembly to take effect early - expected from August 1, 2024.
Three new laws are expected to remove legal bottlenecks, especially in project investment procedures and processes, helping to increase the supply of real estate and increase market competitiveness.
According to Architect Huynh Thanh Khiet, Deputy Director of the Ho Chi Minh City Department of Construction, if the 2014 Housing Law does not have regulations on the main orientation for apartment building development, the 2023 Housing Law stipulates that in type I urban areas, wards, districts, and cities belonging to special urban areas, apartment buildings will mainly be developed.
In wards, districts, and cities of special, type I, II, and III urban areas, housing project investors must build houses for sale, lease-purchase, or lease. Land with land use rights auctioned for housing investment according to the Land Law must be used for housing construction. The above regulations all support the increase in housing supply.
In addition, the Housing Law 2023 has provided many incentives for investors building social housing such as exemption from land use fees and land rent for the entire land area of the project; not having to carry out procedures for determining land prices, calculating land use fees, requesting exemption from land use fees and land rent. At the same time, investors are entitled to incentives on value added tax, corporate income tax, and preferential interest rate loans, etc.
"Clearly stating in the law that there is no need for procedures to determine land use fees will shorten administrative procedures for investors in social housing projects," Mr. Khiet assessed.
Thus, when the Housing Law comes into effect soon, many apartment projects, especially social housing projects, will have their project procedures shortened, supporting increased supply.
“With current regulations, the legal procedures to implement a housing project take investors up to 600 days to complete. In fact, some projects take up to 2-3 years, causing costs to increase, pushing up housing prices. When the Housing Law and the Real Estate Business Law 2023 come into effect, the time for procedures will be shortened to 160-300 days. From there, investors' costs will decrease, and apartment prices will also be more reasonable, not as high as in recent years.
Architect Huynh Thanh Khiet, Deputy Director of Ho Chi Minh City Department of Construction
Sharing the same view, Mr. Tran Khanh Quang, a real estate expert, said that the Land Law, Housing Law and Real Estate Business Law have resolved overlapping and inconsistent problems that have caused difficulties for investment and business activities of enterprises. With clear procedures and shortened time, product prices have the opportunity to be adjusted to a reasonable level. When supply is abundant, investors must also recalculate selling prices to suit homebuyers' incomes.
Dr. Le Ba Chi Nhan, an economic expert, commented that when the three new laws come into effect, although real estate prices will hardly decrease, there will no longer be a situation of indiscriminate price increases. Because the regulations in these three laws will help the market to be open, transparent, with a clear legal framework, abundant supply and more favorable transactions.
The revised Land Law will have a positive impact on the real estate market, helping to speed up legal procedures for new issuance and project adjustment. When compensation prices are close to market prices, the time for site clearance for projects will be shortened. The market will be able to filter out investors with weak financial capacity, and strengthen cooperation between investors with projects and more potential partners.
The Laws that come into effect in the short term have not reduced real estate prices, but in the long term will help stabilize price levels.
Meanwhile, the revised Law on Real Estate Business stipulates that real estate project investors are only allowed to collect deposits of no more than 5% of the selling price, lease-purchase price of houses and future construction works when they meet the conditions for putting them into business.
This means that investors must prepare more carefully financially before opening the project for sale. According to Dr. Huynh Phuoc Nghia, Director of the Center for Law and Management Economics, Ho Chi Minh City University of Economics, the new law will have stricter regulations, better protecting the rights of future home buyers.
The Land Law, Housing Law and Real Estate Business Law taking effect earlier will help the market recover by the end of 2024. Because when the above laws are applied, the current legal problems of the projects will be resolved, helping to increase supply, creating momentum for the market to grow again from the end of 2024.
Dr. Huynh Phuoc Nghia, Director of the Center for Economics, Law and Management, University of Economics Ho Chi Minh City
Most importantly, the Law on Real Estate Business has an additional provision that land use rights cannot be transferred to individuals who want to build their own houses in special, type I, II and III urban areas. This provision is expected to prevent the subdivision and sale of land plots, one of the causes of virtual fever and real estate speculation in most urban areas.
Current legal problems of the projects will be resolved when the Land Law, Housing Law, and Real Estate Business Law are implemented.
According to Dr. Nhan, the Land Law, Housing Law and Real Estate Business Law will take effect soon, but there still needs to be a Decree and Circular guiding their implementation soon so that the above laws can be put into practice.
Along with that, ministries, branches and local authorities actively remove legal bottlenecks to help the supply of social housing and commercial housing grow. When supply increases, it may not reduce real estate prices in the short term, but in the long term it will stabilize the price level.
Mr. Tran Quoc Dung, Deputy General Director of Hung Thinh Corporation, said that land use fees account for a significant portion of the input price list to build real estate prices.
Draft Decree guiding implementationLand Law2024 land price is too high while business expenses are not fully calculated, leading to high project development costs, which means increasing housing prices.
Ultimately, the loss will fall on the buyer, which is not beneficial to the market and social security in the long run.
Therefore, Mr. Dung recommended that businesses include inflation costs in the process of calculating land use fees for projects.
The draft Decree guiding the implementation of the 2024 Land Law needs to supplement the cost of labor and material price inflation during the construction process, contingency costs and other reasonable and valid costs according to tax and construction laws.
