Legal document newsletter week 20/08/2024

KEY HIGHLIGHTS OF VIETNAM’S REAL ESTATE BUSINESS LAW NO. 29/2023/QH15, EFFECTIVE FROM AUGUST 1, 2024 (FIVE MONTHS EARLIER THAN INITIALLY PLANNED)

At the 7th session of the 15th National Assembly on June 29, 2024, the National Assembly of the Socialist Republic of Vietnam approved amendments to the Real Estate Business Law No. 29/2023/QH15. Accordingly, the Law will take effect from August 1, 2024 ( five months earlier than initially planned). Some notable new points in the Real Estate Business Law include:

  1. Mandatory disclosure of real estate information prior to business activities:

Before conducting business activities involving real estate or real estate projects, real estate businesses must publicly disclose full, truthful, and accurate information on the housing and real estate market information system and on the electronic information website of the real estate business. Law No. 29/2023/QH15 has detailed and specifically guided the information that must be provided about real estate before it is put into business, including information about real estate projects, information about houses, future construction works, information about existing houses and construction works, and information about land use rights with technical infrastructure in real estate projects.

  1. Tightening restrictions on subdividing and selling land, including in type III urban areas:

The transfer of land use rights to individuals for self-construction of housing is prohibited in the following two cases:

(1) Located in wards, districts, or cities of: Special type; Type I; Type II; or Type III.

(2) In cases where land use rights are auctioned for investment in housing projects as prescribed by the Land Law.

For other areas, the People’s Committee of the province shall, based on the conditions of the locality, determine the areas where project investors are allowed to transfer land use rights with technical infrastructure to individuals for self-construction of housing. Thus, Law No. 29/2023/QH15 prohibits the subdivision and sale of land in Type III urban areas.

  1. Deposit for Off-the-Plan Housing limited to 5% of the selling price:

Law No. 29/2023/QH15 stipulates that project investors can only collect a deposit of no more than 5% of the selling price for the lease-purchase of houses and construction works formed in the future when they have met the conditions for putting them into business.

  1. Reduction in prepayment ratio for Off-the-Plan Housing:

Payments for the purchase and sale of houses, construction works, and the floor area in the construction works formed in the future shall be made in multiple installments, with the first installment not exceeding 30% of the contract value, including the deposit, and subsequent installments must be commensurate with the construction progress but the total must not exceed 70% of the contract value when the house, construction work, or floor area in the construction work has not been handed over to the buyer. It shall not exceed 95% when the buyer or lessee has not been granted a certificate of land use rights or ownership of assets attached to land. For payments in the lease-purchase of houses, construction works, and the floor area in the construction works formed in the future, the advance payment to the lessor shall not exceed 50% of the value of the house (instead of 70% as before).

  1. Mandatory non-cash payment and accurate recording of actual transaction price in contracts:
  • Project investors, real estate businesses, and real estate service businesses shall receive payments under real estate business contracts and real estate service business contracts from customers through accounts opened at domestic credit institutions or branches of foreign banks operating legally in Vietnam;
  • Organizations and individuals conducting real estate business shall record the actual transaction price in the contract; and shall be responsible for recording the transaction price in the contract that does not match the actual transaction price.
  1. Real estate brokerage businesses only require one licensed individual:

Law No. 29/2023/QH15 stipulates that real estate brokerage businesses only require one individual with a real estate brokerage license (instead of two as previously required).