Law changes make it difficult for incompetent real estate businesses to "survive the wave"

Real estate businesses will be screened

From August 1, the Land Law, Real Estate Business Law and Housing Law… officially took effect. According to experts, this is one of the important milestones for the real estate market because the law directly affects all businesses and customers.

In addition to a series of terms and regulations on buying, selling, and business being tightened and information being transparent, real estate project development businesses are also expecting a race to remove project obstacles when this law comes into effect.

Speaking with Nguoi Dua Tin , Mr. Nguyen Van Dung, CEO of Vuong Cat Group, commented: "The provisions of the Land Law, Housing Law, and Real Estate Business Law have all been thoroughly researched and applied to each specific case. Accordingly, transparency and accuracy will be very high, and stricter regulations will affect investors and businesses in the real estate sector that do not operate properly."

Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Real Estate Brokers (VARS), said that the new regulations will tighten real estate business and brokerage activities .

In particular, regulations on land funds for developing commercial housing projects, removing land price frames, etc. will gradually filter out investors with weak capacity, finance, land funds, etc. from the real estate market.

VARS assessed that in fact, in recent times, many businesses operating in the real estate sector have been "grabbing" projects that are not legally compliant and completed according to legal regulations, but have already started selling them.

That is why, recently, when the government agencies have taken strong measures to "tighten" the situation, many businesses are still in a "frozen" state.

In particular, the new Land Law clearly stipulates the calculation of land use fees, and the land price will be much higher than before. This means that people will receive more compensation while businesses will face greater pressure on available capital.

If in the coming time, businesses do not prepare enough economic potential and do not have a clear strategy, it will be very easy to be eliminated from the real estate market.

Real estate businesses must have capacity

Assessing the impact of the new laws, Mr. Ha Van Thien, Deputy General Director of Tran Anh Group, said: "The new law officially coming into effect will help shape and filter investors very clearly. If in the past, investors skipped many stages, now they are forced to slow down, correct legal steps and prepare strong financial resources to have enough strength to develop the project."

Meanwhile, sharing with Nguoi Dua Tin, Mr. Ngo Quang Phuc, General Director of Phu Dong Real Estate Joint Stock Company (Phu Dong Group) said: "The Land Law, Real Estate Business Law and Housing Law officially coming into effect will have a huge impact on the market. From here, many bottlenecks in the legal corridor can open up, helping businesses find the "right direction" to fully implement project procedures".

"We can see the real estate market has been going down in the past 2 years, most businesses are stuck with legal issues so they cannot launch new projects, this limits supply. However, there are still many investors who can develop projects such as Nha Khang Dien; Phu Dong; Nam Long... Because these are businesses that have implemented legal procedures quite properly at the present time and have great economic potential and internal potential within the business, so they can launch projects even in difficult times", said Mr. Ngo Quang Phuc.

Citing a new provision of the Law on Real Estate Business, real estate project investors are only allowed to collect deposits of no more than 5% of the selling price, lease-purchase price of houses, construction works, and construction floor area in construction works from the depositor for purchase or lease-purchase when the houses and construction works have met all the conditions for putting into business according to regulations.

Mr. Ngo Quang Phuc said that real estate businesses will not be able to freely mobilize capital like before, but will be strictly managed. This will also contribute to classifying and screening the capacity of investors.

"Previously, real estate investors could mobilize more than 5% of capital through many forms, but now it is impossible to do so. The amount of 5% in the overall correlation to develop a project is very little, requiring the financial capacity of the enterprise itself. Enterprises must have real potential, financial capacity, guaranteed cash flow... to be able to develop real estate products," Mr. Phuc assessed.