Viet Kieu real estate rules reviewed

The new decree backing the Law on Residential Housing overhauls ownership rights and fee obligations

According to the new Decree 90/2006/ND-CP, limitations on the number of houses Viet Kieu may own will be lifted, as long as the purchaser “returns for long-term investment purposes according to the Investment Law, contributes to national development, are scientists engaged in regular activities in the homeland or otherwise allowed to return to settle in the country”.
Viet Kieu that meet these categories will be extended the same rights as Vietnamese nationals in purchase, exchange and inheritance of real estate, without limitation on quantity. Previously, legal entitlement extended to one property only.
The decree also provides for Viet Kieu who reside in Vietnam for at least six months, enabling them to purchase one apartment or stand alone house. However, those falling under this category will have to wait longer for legal reform, as it will take time for the ministries of foreign affairs and public security to issue specific guidance on the method used to calculate how long a Viet Kieu individual has been in the country.
The Ministry of Foreign Affairs will then work out specific regulations to certify Viet Kieu who are eligible for home ownership in Vietnam.
According to the decree, developers of commercial residential housing projects include domestic companies, foreign investors, Viet Kieu and cooperatives who register real estate businesses or hold a business licence.
Qualified housing developers must have ownership capital equalling at least 15 per cent of total investment for a residential development of less than 20 hectares, and the ratio must be bigger than 20 per cent on projects exceeding 20ha.
Lots available for residential development will be made public for investor registration, and bidding will be initiated if there are two or more investors applying for a given block.
Provincial People’s Committees will have to publicize the list of planned housing projects to both foreign and local investors, and applicants will be evaluated on criteria ranging from ability, experience, and architectural design, through to technical and environmental standards.
Developers who have laid infrastructure for housing projects can transfer land use rights or cooperate with other investors for property development, in keeping with approved master plans and construction progress benchmarks.
Real estate developers building houses for rental will be issued with an ownership certificate for these properties. Real estate developers building houses for sale will not be issued with such certificates, which will be issued directly to the homeowners.
The law stipulates that if design of the property has been approved, and the construction of the foundations completed, the developer will be entitled to call for advanced payments from persons wishing to purchase or rent the residential property. In cases of purchase, this amount may be up to 70 per cent of the property’s value.
If developers fail to hand over the property on the date committed in the purchase contract, they have to pay interest on the deposit for the duration of the delay. Buyers are also required to pay interest on any outstanding amount they fail to pay on time.
The law provides that real estate developers of residential property for sale must offer a structural integrity guarantee of at least 60 months for buildings with nine floors or more, and any other homes built using state funds. Buildings of four to eight floors must be backed by a least 36-month guarantee, while the period is 24 months for any other type of residential property.
The decree further states that should a developer fail to provide the appropriate guarantee; property end owners are entitled to take legal action. If developers do not fully comply with their responsibility and cause damages to the end owner, they must provide compensation or face prosecution.
The decree also requires developers to set aside funds for maintenance of high-rise residential blocks. Accordingly, developers selling projects since the law took effect must furnish an amount equivalent to 2 per cent of total property value, a sum that is allowed to be included in the sale price.
Developers will have to pay maintenance fees on floor space that they do not sell, except on public space. The amount equates for 2 per cent of the total value of a given space, with value calculated based on the highest sale price of a residential unit within the block.
For projects that were sold before the law took effect, on which developers have not collected maintenance fees, residents must pay a fee equal to 70 per cent of the total sum. The remainder will be offset by state funds.
These maintenance fees will be deposited in commercial banks and managed by the management committee of the building, which represent the interests of owners.




No. 779/September 18-24, 2006