On the morning of October 11, at the Conference to disseminate the 2023 Housing Law and the 2023 Real Estate Business Law organized by the Ho Chi Minh City People's Committee, Mr. Hoang Hai - Director of the Department of Housing and Real Estate Market Management ( Ministry of Construction ) stated the reasons why a series of projects in Ho Chi Minh City were stuck.
1/3 of real estate projects in Ho Chi Minh City are stuck due to financial problems.
According to Mr. Hoang Hai, one of the first conditions for organizations and individuals when doing real estate business is to establish a business and ensure the ratio of outstanding credit and outstanding bond debt to equity.
It is normal for a business to do many projects. However, many businesses with limited financial capacity choose to spread out many projects, and only when they encounter financial difficulties do they start to consider issuing bonds and using financial leverage. That is also the main reason why many of those projects are blocked.
“Of the 168 stuck projects in Ho Chi Minh City, up to one-third are related to financial issues,” the Director of the Department of Housing and Real Estate Market Management emphasized.
For this reason, the 2023 Law on Real Estate Business has legalized a number of provisions of the decree on conditions for organizations and individuals when doing real estate business and added provisions on conditions for real estate business enterprises through real estate projects to have minimum equity capital, and to ensure the ratio of outstanding credit and outstanding corporate bonds to equity capital.
Enterprises must have equity capital of not less than 20% of total investment capital for projects with a scale of less than 20 hectares, not less than 15% of total investment capital for projects with a scale of 20 hectares or more. In case of simultaneously implementing many projects, they must have equity capital to ensure the above ratio for each project.
Mr. Nguyen Van Sinh - Deputy Minister of Construction said that the real estate market plays an important role, attracting resources, creating large fixed assets for the economy , meeting people's housing needs.
Recently, the National Assembly passed the Housing Law No. 27/2023 and the Real Estate Business Law No. 29/2023, which will take effect from August 1, 2024. The research, development and promulgation of detailed regulations have ensured consistency and synchronization between the provisions of the Housing Law and the Real Estate Business Law with other relevant laws such as the Land Law, Investment Law and Bidding Law.
In addition, the issuance also promotes decentralization, delegation of power, and strengthens the role of local authorities in housing management and real estate business activities; strengthens administrative procedure reform, minimizes unnecessary investment and business conditions; promptly removes existing problems and limitations in the real estate market.
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