Speculators, bureaucracy add to real estate market malaise

Do you agree that real estate trading regulations still have many limitations?

The real estate sector is regulated by many laws including the Civil Code, laws on Land, Construction, Investment, Bidding, Housing, the Environment plus regulations relating to taxes and finance. The laws have created a relatively systematic framework on managing real estate trade and investment.

However, the management of real estate trading services is still limited as, so far, it is solely regulated by the law on real estate business. Real estate trading floors operate inconsistently, leading to a lack of transparency and difficulties for customers to access market information. There is also a lack of control over real estate brokers. Any broker or brokerage can impose brokering or consultation fees.

Although the ministries of Construction and Justice issued contract forms for housing and land transactions, a majority of investors compile their own contracts with contents favourable to them and their clients usually suffer losses in cases where conflict occurs. This not only makes the issuing of such documents a waste of time, labour and money but also affects the healthiness of market.

What is the biggest difficulty that the real estate businesses currently face?

The biggest issue is how to determine land prices. In fact, procedures for land price determination are overly complicated. This means investors have to hire independent qualified agencies to assess the value of land. Thanks to these assessments, a provincial council responsible for assessing land prices will decide what price to impose, and this can be relatively close to the market price. However, the councils in many provinces use the assessment for reference only. So, the independent assessment is not used effectively, while investors are forced to pay the value determined, no matter how unrealistic. Moreover, it usually takes authorities between one to three months to decide land prices after receiving an independent assessment. This leaves investors waiting and inflates project input costs.

Planning is always the first steps in any property development project. However, do you think it has yet to receive enough attention?

At present, almost all the provinces and cities have their master development plans approved, but the number of approved detailed plans remain modest. So, when investing in any project, the businesses have to undergo that very first stage of planning, which is exactly the same process as undertaken for unplanned areas. Additionally, bidding and auctions for land use rights are not really transparent, plus each locality requires different procedures, causing difficulties to businesses.

Many people are concerned about the fact that although housing prices and housing demand in urban areas are both on the rise, many houses remain unused. In your opinion, what is the cause of this situation?

As the mass media has reported, people buy houses not for residential purposes but for speculation. In addition, the shortcomings in legal procedures have also contributed to the situation. Although functional authorities pass regulations on management to every new urban area and housing project, few investors hand over the projects for localities to manage.

Moreover, the regulations do not mention a due date for the hand-over, nor outline fines for late completion. As the results, there are a large number of unused houses in new urban areas including those that have remained empty for 5-7 years.

Can you suggest some solutions for the current real estate market?

To solve the problem, it is necessary to take measures such as mapping out a national strategy on urban planning and development to 2030 and publicise the planning scheme so that localities complete detailed planning for particular sectors. In addition, relevant policies such as administrative reform, and the issuance of property-use rights certificates would help, combined with the construction of a real estate database that facilitates land price assessments and makes the information public. — VNS