Vietnamese local authorities last month placed 524 new urban development and residential housing projects in 11 major regions on hold for falling behind schedule, according to the country’s Ministry of Construction.
Projects with less than 30% of the assigned land cleared, and those where it has been determined that their investors are financially incapable of completing them, will remain suspended, get cancelled, or be replaced.
Vietnam can afford to be strict in the enforcement of sanctions for project delays because, according to the ministry, the commercial housing market is already saturated.
Besides, and more importantly, the government wants to rid the real estate industry of unscrupulous property developers who collect deposits from home buyers but who actually may not have the capability to finish their projects.
The Ministry of Construction’s Circular 11/2013/TT-BXD, issued July 31, requires real estate projectsto regularly report to provincial construction departments on the progress of their projects.
The ministry has been holding consultations on planned amendments to the country’s real estate business law to plug loopholes that currently allow developers, even those without constructionlicences, to sell future residential units after just building the basement of a housing project. Often, these developers have been found to have used the collected money for purposes other than completing the project.
Under the draft revised real estate business law, property developers must have both a constructionlicence and approved project dossiers before they can sell incomplete units. Moreover, their projects must have been guaranteed by financial institutions. Home buyers will make their payments through financial institutions which will ensure that the money is disbursed following an approved project schedule.
The ministry is expecting to have the new law on real estate business ratified by October next year.