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New Land Law has potential to clear real estate bottlenecks

Update: January, 22/2014 - 09:15

Actual impact of the revised law on real estate revival will depend on implementation, Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, tells Thoi bao Kinh Doanh (Business Times).

Do you think the 2013 Land Law will help the real estate market get out of its present sluggishness?

Under the new law, if land use zoning is done well, it can create very good conditions for the real estate market to develop and improve market management at the same time.

However, to see how the law will impact land supply, we have to wait until it is actually implemented. From my own experience, I have to concede that law enforcement and implementation, including that of the Land Law, has been poor in our country.

For example, under the 2003 Land Law, the Provincial People's Committees (PPCs) was assigned to develop a land price table for the locality, with the proviso that prices are kept close to the market price. But in reality, the land prices set by the PPC, or even by the central government, were many times lower than that of the market price.

Will this change and will the 2013 Land Law have positive impacts on the real market? It is too early to say.

How about the problem of "suspended" projects?

I should say that the 2013 Land Law has adopted a much stronger approach to projects delaying their completion deadline or their implementation. The extension deadline in both instances is 24 months. The difference is in the sanctions. In the first case, the project owner will have to pay a fine. In the second case, the land can be revoked without compensation, except in the case of force de majeure.

However, in my opinion, this mechanism is likely to be abused and dampen investors' interest in real estate development.

My understanding is that market demand does not depend on land. It depends a lot on finance. So I should also say that the Land Law may not have much impact on the real estate market.

What is your assessment of the government's handling of suspended projects?

I'm not happy with the way the government is handling the problem. Let's take Ha Noi as an example.

Ha Noi authorities have confirmed that the city now has 132 suspended projects. Under the new regulation, land allocated to these projects must be revoked. But what will be the next step following the land revocation? This still hangs in the balance.

I still remember that in 2005, there was a nationwide campaign to revoke the land allocated to "suspended" projects. However, following the revocation, the land lay unused. Project owners who had their land revoked came to provincial authorities demanding that their investment be paid back.

Their demand was totally in line with the investment law.

However, it was not the government's responsibility to take money from the state budget and pay the project owners. As a result, the government had to look for new project owners and let them negotiate with each other. But, the interests of the new project owners were not always the same as those of the old project owners. The stories became more intricate and complicated.

To prevent all this from happening, I think there must be a radical change in land management in our country.

One of the draft amendments to the Housing Law is to allow foreign investors, particularly overseas Vietnamese, to buy and own houses. What do you think about this proposal?

If it is approved by the National Assembly, the proposal could be considered as "real estate export right on the spot." But, as an international practice, it is important for us to apply a reciprocal policy when it relates to foreign residents.

If it is simply a matter of wanting to rescue our real estate market, the proposal is a good idea as it will make our economy more open to the outside world. I don't think that the proposal, if accepted, will lead to the problem of housing speculation or a real estate bubble. The main thing, in my opinion, is that we have to change our market management mechanisms. — VNS


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