Buyers in glum mood

Many developers said that Article 8 in the new Circular 16/2010/TT-BXD, promulgated by Ministry of Construction, which will come into force on September 15, concretely regulating and providing guidelines for the implementation of Decree 71/2010/ND-CP, dated June 23, 2010 would not help developers mobilise investment capital.

Article 8 of the circular allows developers to mobilise capital from banks, non-banking institutions, investment funds, corporate bonds, raise capital from secondary investors or even raise upfront capital from individuals or groups.

However, capital raised via individuals or groups cannot be over 20 per cent of the total investment capital of a residential project. The number of residential units for these individuals or groups can occupy only 20 per cent of total housing units in the under construction project.

The circular also provides that each individual or household can sign only a capital contribution contract with a developer in a city or province. Their capital contribution can only be exchanged for a residential unit in a project and not for another in other turns of developer’s mobilising capital in any case.

All of contribution capitals are not allowed to be transferred in any circumstance. In the case a contractual party died, his inheritor would receive the legacy.

The capital contribution contracts can also not be notarised by local authorities until they are transformed into a house purchasing contract. 

Groups signing capital contribution contracts can re-divide their residential units to other individuals or households, however they have to conform to the above regulation.

These individuals and groups joined into the channel are allowed to be unlisted on trading floor, however, they must send information to the municipal or provincial construction departments 15 days before such contracts are signed.

The department will manage the list of information and ensure that all capital contribution contracts are lawful. In the case the department finds someone violating the above regulations, it will report to relevant authorities to punish them and all of signed contracts will become counteracted.

Nguyen Manh Ha, head of MoC’s Housing Management Department, said: “I believe the circular’ regulations will give the property market more transparency and sweep short-term investors and speculators out of the market.”

Tran Van Thanh, chairman of Vietnam House Joint Stock Company, said “It is difficult for the government to prevent short-term investors or speculators joining the market by the circular as the investors can use the personal information of another one to sign into the contribution contract. Vice versa, the circular would prevent capital from flowing into the market, restraining its development.”

Thanh felt disappointed and said in the circumstances, the Circular No.13/2010/TT-NHNN, issued by State Bank in May 20 set a 250 per cent coefficient risk for all loans secured by real estate, has tightened loans to real estate market.