Proposal to tighten loans for second home purchases: Need transparent data and appropriate roadmap

Recently, the Ministry of Construction has proposed a new limit on loans for second and subsequent home purchases to control real estate speculation and cool down housing prices. Specifically, buyers of second homes can only borrow up to 50% of the contract value, and for third homes and beyond, the loan limit cannot exceed 30%.

At the seminar "Decoding real estate capital flows and opportunities for real estate buyers" organized by Lao Dong Newspaper, Lawyer Pham Thanh Tuan, Lawyer of Hanoi Bar Association, real estate legal expert, gave comments on this proposal.

The proposal to limit loans for second home purchases to prevent speculation is considered reasonable. (Illustration photo/CP)

From a legal perspective, what do you think about the proposal to restrict credit for buyers of second homes or more?

- Overall, the proposal to limit credit to multiple property owners, including second homes, would theoretically hit multiple property owners hard.

Because normally home buyers, especially investors, have to use financial leverage and have a combination of 3 parties such as the investor, the bank and the home buyer.

Applying credit limits for second homes and beyond as proposed by the Ministry of Construction will impact the capital resources of banks for investors. First of all, this proposal will impact the number of transactions between investors and home buyers.

However, the proposal is fundamentally reasonable and is considered a measure that needs to be applied with an appropriate roadmap and under appropriate circumstances. Looking at market reality, the effective application of the policy requires two conditions: necessary conditions and sufficient conditions.

The prerequisite is a real estate market database. The data must be truly clean, alive, complete and always updated.

Because, when we do not have full data on the real estate market, on the number of houses each person owns, there is no basis to determine how many properties an individual owns. This is considered a prerequisite.

The sufficient condition for application is that our policies must be consistent. In addition to credit policies, we must apply new policies on interest rates and anti-speculation taxes. The most important thing is to improve supply.

I think the above proposal is basically reasonable, but when applied, there must be specific conditions in terms of data and ensuring synchronization. Only then will the above policy be both on target and accurate.

Does this proposal have a clear legal basis, and if implemented, what regulations will need to be added to avoid conflicts with other laws such as the Housing Law, Land Law or Law on Credit Institutions, sir?

As mentioned, there are two factors, of which the most important is policy synchronization, which means removing legal difficulties and obstacles for projects.

Because the most important thing is to create a supply source to ensure the supply and demand factors. We have done this very well in the past time when the number of projects that have been resolved and implemented in the market has clearly demonstrated.

For example, the problem of implementing housing projects without land, Hanoi alone has resolved for 298 commercial housing projects with about 1,500 hectares. Such resolution requires amending many legal regulations.

Second, on credit policy. Credit policy involves many legal factors, not only the law on credit institutions and other relevant laws. This requires the management of monetary policy, fiscal policy and financial policy.

Additionally, I propose a progressive tax on multiple property holders.

However, the “backbone” to improve this issue is the data factor. Without enough data, all policy mechanisms cannot be implemented effectively. Every policy mechanism must be based on complete and transparent data.

The "backbone" to improving this problem is the data factor. (Photo: VNP)

If this policy is applied, what do you think will be the biggest difficulties in the implementation process, sir?

- This is also a concern of many countries, not only Vietnam but also other countries when applying tax or credit policies based on the amount of real estate that each person owns or manages.

In fact, the issue here has two most important factors to evaluate. First, we need to clearly distinguish between speculative behavior and real residential ownership behavior.

This is a very difficult task, because for example, a speculator can ask his parents, siblings or relatives to register real estate in their names to avoid the policy. If only based on the number of real estate, the policy cannot hit the target.

For example, speculators who ask their parents, siblings, or relatives to stand in their names on those properties will clearly be identified in this case.

The above policy, if based on the number of real estates, is a necessary condition but will not be sufficient. To identify the right target, it is necessary to apply other tools and measures such as applying progressive tax.

Second, the real estate database is currently in the process of completion and synchronization. The resource sector manages land data, the construction sector manages housing, the tax sector manages tax data, the notary public manages notary data, and the bank manages credit data.

However, the consolidation, sharing and synchronization of these data to form a common database is still in the process of completion. Therefore, when disbursing loans, commercial banks do not have a complete database to determine how many real estates a person owns.

In fact, banks have also admitted that they cannot accurately determine the number of properties owned or managed by an individual. Therefore, the responsibility of loan appraisal based on the number of properties is a big challenge. This is a necessary tool but the time and roadmap for application must be considered.

Regarding the criteria to distinguish between real home buyers and speculators, developed countries often rely on cash flow and money sources to manage very tightly.

Through data on electricity and water bills, who paid the costs, etc. to determine the real owner of the property. However, with the current conditions in Vietnam, applying these criteria is still very difficult due to the limited relevant data.

Thus, although aiming for standards like OECD countries, in the current period, we need to have a roadmap to gradually complete the database so that tax and credit policies based on real estate ownership can truly be effective.

Thank you!

Source: https://congluan.vn/de-xuat-siet-cho-vay-mua-nha-thu-hai-can-du-lieu-minh-bach-va-lo-trinh-phu-hop-10315073.html