MoC proposes controlling bond issuance of property firms

Newly constructed Dai Thanh Residential Complex in Thanh Tri District, Hanoi. - VNA/VNS Photo Doan Tung

“The real estate market is closely related to the financial market. Recently, the financial market has been growing quickly and the real estate market has also seen strong development. Therefore, the ministry believes regulations are necessary for the healthy development of capital mobilised from bond issuance activities," Khoi said.

The ministry has proposed amending Decision 153/2020 with the goal of managing corporate bond issuance activities to avoid the property bond market overheating.

Khoi said that the State Bank and the Ministry of Finance are in charge of the management and control of bond issuance activities. Meanwhile, the Ministry of Construction is to propose solutions to manage bond issuance activities of real estate enterprises.

“In the past, there were some real estate enterprises that issued bonds to exceed the target, causing the financial market to develop quickly. The Minister of Construction also reported this issue to the National Assembly, and proposed solutions to improve the health of the real estate market, including strictly controlling the issuance of bonds by real estate enterprises, especially individual bonds," Khoi said.

Like businesses in other sectors, real estate enterprises have mobilised capital to implement projects via many channels such as issuing bonds, building joint ventures to contribute capital, and borrowing credit from banks or core capital.

However, most domestic real estate enterprises do not have much core capital and depend on loans from banks. After the State Bank tightly controlled capital for the real estate market, businesses had to switch to issuing bonds. Therefore, to develop the domestic real estate market in a more healthy and sustainable direction, it is necessary to control and adjust capital flowing into this field.

“Therefore, MoC proposes prioritising capital for projects that can provide a fast supply of housing to the market. The ministry expects that capital will continue to be poured into the real estate market, but it is necessary to have regulations for more effective using of the capital," Khoi was quoted as saying by Phap luat Tp. HCM (HCM City Law) online.

At the press conference, Deputy Minister of Construction Le Quang Hung said: "The general policy is to never restrict capital into the real estate sector, but only control and direct capital inflows in feasible projects to promote the efficiency of the capital and meet practical housing needs of people."

For property tax, a MoC representative said that the Ministry of Finance has just proposed collecting this tax. MoC would study this issue and provide recommendations with the goal of controlling housing prices. That will help the market become more healthy and sustainable.

“However, imposing tax on real estate assets is a huge issue relating to many fields, especially with a direct impact on people who own real estate. Therefore, it needs to be studied carefully," Hung said.

The MoC representative also said that the proposal on imposing tax on property has not yet been officially studied. The National Assembly's law- and ordinance-making programmes have not yet focused on this proposal.

MoC also reported at present, housing prices have shown signs of cooling down, but are still at a high level compared to the same period in 2021 and the end of 2021.

The Department of Housing and Real Estate Market Management believes that the real estate market in 2021 witnessed unusual development.

Housing prices in many places increased rapidly, especially land plots in suburban districts that are developed to be urban districts, or projects with information about planning. In some areas, the price increased by 15 per cent for apartment buildings and 30 per cent for individual houses.

The high price increase in the real estate market was due to the limited supply of houses, the source of credit in the real estate sector, and lack of market information. Therefore, the ministry has requested localities to manage the market, especially disclosing information about planning in a timely manner.