Proposal to have specific regulations on small-scale real estate business

The Ministry of Construction will carefully study the recommendations of Lam Dong province voters to propose in the Government's Decree to clearly define small-scale real estate business to ensure specificity and feasibility in application.

The Ministry of Construction has responded to the petition of Lam Dong province voters on the need for specific regulations on small-scale real estate business.

According to the proposal of voters of Dong province, regarding housing development and the real estate market, Clause 2, Article 10 of the Law on Real Estate Business stipulates: "Organizations, households, and individuals who sell, transfer, lease, or lease-purchase real estate on a small scale and irregularly do not have to establish an enterprise but must declare and pay taxes in accordance with the provisions of law". This clause is guided by Article 5 of Decree No. 02/2022/ND-CP dated January 6, 2022 of the Government .

Specifically, organizations, households and individuals selling, transferring, leasing, or leasing-purchasing as prescribed in Clause 2, Article 10 of the Law on Real Estate Business are not required to meet the conditions of organizations and individuals doing real estate business, including: Agencies and organizations selling houses, construction works, transferring land use rights due to bankruptcy, dissolution, separation according to the provisions of law...; Organizations, households and individuals selling, leasing, leasing-purchasing, or transferring real estate that they have invested in and constructed but is not a real estate construction investment project for business according to the provisions of law.

However, Decree No. 02/2022/ND-CP (formerly Decree No. 76/2015/ND-CP) does not clearly stipulate that small-scale real estate and irregular activities must establish a real estate business investment project (minimum land area when investing in the construction of houses and construction works for business; residential land area and other land area for business).

Therefore, voters of Lam Dong province recommended that the Ministry of Construction propose to the Government to have specific regulations on small-scale, irregular real estate business so that localities have a basis for implementation.

Regarding this issue, the Ministry of Construction said that the 2014 Law on Real Estate Business and Decree No. 02/2022/ND-CP dated January 6, 2022 of the Government detailing the implementation of a number of articles of the Law on Real Estate Business have stipulated the conditions for organizations, households, and individuals to sell, transfer, lease, or lease-purchase small-scale, irregular real estate.

However, the Ministry of Construction recognizes that the content of the above regulations still has some unclear points that need to be revised and supplemented to ensure feasibility and easier understanding in application as recommended by voters of Lam Dong province.

Recently, the Law on Real Estate Business No. 29/2023/QH15 (replacing the Law on Real Estate Business 2014) was passed by the National Assembly and will take effect from January 1, 2025. Clauses 3 and 4, Article 9 of the Law on Real Estate Business No. 29/2023/QH15 stipulate: “Individuals who conduct small-scale real estate business do not have to establish a real estate business enterprise but must declare and pay taxes in accordance with the provisions of law. Organizations and individuals who sell houses, construction works, and construction floor areas in construction works not for business purposes or sell, lease, or lease-purchase houses, construction works, and construction floor areas in construction works below the small scale level do not have to comply with the provisions of this Law but must declare and pay taxes in accordance with the provisions of law; in the case of individuals who sell or lease-purchase houses, construction works, and construction floor areas in construction works, they must also carry out notarization and certification in accordance with the provisions of Clause 5, Article 44 of this Law”.

Thus, the Law on Real Estate Business No. 29/2023/QH15 has more specific provisions on the case of individuals doing small-scale real estate business than the Law on Real Estate Business 2014.

The provisions of Clause 6, Article 9 of the Law on Real Estate Business No. 29/2023/QH15 have assigned the Government to specify the determination of small-scale real estate business as prescribed in Clauses 3 and 4, Article 9 of the Law.

However, the Ministry of Construction will carefully study the recommendations of Lam Dong province voters to propose in the Government's Decree to clearly define small-scale real estate business to ensure specificity and feasibility in application.

Source