Amendments to the Real Estate Law should make the property sector more transparent, Pham Sy Liem, former Deputy Construction Minister tells the Dai doan ket (Great National Unity) Newspaper
What do you think about the proposal that foreign entities and individuals as well as overseas Vietnamese be allowed to engage in the real estate business in the country?
This remains an open question. In my opinion, amendments to the present law should not contain very strict regulations regarding this. As of now, we do not have much experience with this issue.
I agree with Dau Ngoc Xuan, former Chairman of the Investment Co-operation Committee, who once said that the country "has to decide how it is ruled and who can invest and what they can invest in".
From a purely housing perspective, I totally support the idea of letting foreigners participate in the real estate business. However, there must be specific conditions attached to this.
If, in the future, foreigners are to be allowed to buy houses in the country, what should be the conditions they have to meet?
Real estate is not gold or silver. It can't be taken away. The real estate business is open to all people who are interested in it. However, as I said earlier, specific conditions have to be set for foreigners, particularly in sensitive regions. This is a normal practice worldwide.
During the 15th century reign of the Le Dynasty, the Hong Duc Law stated very clearly that any one who sold a piece of land in the border area to a foreigner would be executed immediately. Areas near a military base or a major political centre of the country are usually considered sensitive areas.
Many countries don't want to have areas reserved especially for foreigners. For example, Thailand has a law regulating that in a residential high-rise building, foreigners cannot own more than 49 per cent of the apartments. A similar law is also applied in the USA. In Viet Nam, some residential areas inhabited mainly by South Koreans or Japanese have already been established.
We should think carefully about this issue so as to avoid unwanted influences from creeping into our country.
One of the draft amendments of the revised law is to allow real estate investors to make futures contracts. Do you think this is a good idea?
The introduction of futures contracts would facilitate the raising of collateral for loans. For example, if I want to borrow money from the bank to invest in a housing project, I'll use the project as collateral.
However, a feature of the futures contract is that a final purchase is not a certainty. The buyer pays a certain sum of money as a deposit with the seller. But there is no legally binding commitment to buy. If the real estate market is bearish and the buyer does not want to buy, he/she will only lose his/her deposit money. On the other hand, when the market is bullish and the seller does not want to sell, he/she would have to return the deposit.
I support the idea of futures contracts. However, I don't think it is easy to implement them in Viet Nam as our credit regulations are very tight, for both lenders and borrowers.
What about the proposal to drop the regulation that real estate transactions have to be done through established exchanges?
As a matter of fact, not all activities of the real estate business will go through the exchange. And even if they are required to, the problem of under-the-table deals will crop up.
Let's ask the question: Who owns these exchanges in Viet Nam? Mainly owners. So there is no doubt that the exchanges function to the benefit of the sellers and not the buyers.
So, if I want to sell my house to my neighbour, why should I have to go through the exchange? If I do so, I would have to pay a commission based on the value of the house. Furthermore, there are real estate brokers everywhere in Viet Nam.
In my opinion, if the brokers are regulated and organised, it will help stabilise the market and make it more transparent and accountable. That's why these people must have knowledge of legal issues related to real estate transactions and professional certificates that testify to their ability as well as legality. Such requirements should be part of the amendments to the Real Estate Law. — VNS