The amended laws on housing and real estate takes effect from July 1. -- File Photo

HA NOI (Biz Hub) — Two long-awaited amended laws on housing and real estate, effective from July 1 and expected to have a significant impact on the property market, may not be as effective.

The two new laws were introduced amid the recovery of the property market starting from the end of last year, after seven years remaining frozen, with amendments to drive the market back on track. Still, market participants are awaiting further detailed instructions.

As most of the documents instructing the implementation of the two new laws had not been promulgated, the Ministry of Construction on Thursday issued a document saying that decrees and circulars under the previous laws will remain in effect, as long as they do not conflict with the new laws.

According to CBRE, the impact of the new laws might be significant and might mark an important step toward opening up the real estate market to overseas investment. The effects may not be felt immediately, CBRE said, adding that foreigners are likely to adopt a wait-and-see approach before making any decision.

In fact, many property developers have begun to take advantage of amendments in the new laws such as getting guarantees from banks for under-construction projects and selling apartments to foreign buyers.

Lawyer Nguyen Mai Phuong from Zicolaw observed that it was too early to affirm that the property market would thrive rapidly as the legal framework had not been completed.

Major amendments

Opening up the market to foreign buyers and Viet kieu (overseas Vietnamese): Foreigners are allowed to own houses in Viet Nam for 50 years. However, the number of apartments owned by foreigners in a building or houses in a ward-level zone must be less than 30 per cent. There is no limit on the number of houses that Viet kieu can own.

Bank guarantees for future property projects

Following Article 56 of the Law on Real Estate Business, property developers, before selling or leasing unfinished or future property, must obtain guarantees from commercial banks as assurances of their financial obligations to buyers. The regulation is expected to protect the rights of home buyers, as well as contribute toward cleaning up the realty market.

Minimum legal capital of property firms increased

The minimum legal capital requirement for property firms has been raised from VND6 billion (US$284,000) to VND20 billion ($945,000). Existing firms, which had not met the requirement, must raise their legal capital within one year since the law comes into force. This is aimed at enhancing the financial capacity of property developers.

Transactions through property trading floor not compulsory

The Law on Real Estate Business 2014 removed the compulsion of property transactions conducted through trading floors as the regulation proved ineffective after years of implementation. — VNS