Businesses worry about increased costs if they 'buy and sell real estate through the floor'

While the Government maintains the view that "real estate transactions must be through the floor", businesses and experts continue to express concern that this will increase costs.

At a workshop on giving comments on the Law on Real Estate Business on May 12, Mr. Nguyen Quoc Hiep, Chairman of the Vietnam Association of Construction Contractors, assessed that the regulation requiring all transactions to go through the floor seemed "rigid".

According to him, currently many investors are flexibly coordinating between their own direct sales team and some trading floors. But usually, the volume of products they sell themselves is larger than that of trading floors. Investors are also the ones who understand the project better, will have more detailed advice than brokers, creating good liquidity.

Mr. Hiep said that the commission costs of external exchanges are many times higher than letting businesses sell themselves. "I think we should limit the creation of an intermediary level, meaning it is not necessary to force all transactions through the exchange, to reduce procedures and costs," he said.

Real estate in the East of Ho Chi Minh City. Photo: Quynh Tran — Real estate in the East of Ho Chi Minh City. Photo: *Quynh Tran*

Expert Nguyen Van Dinh also acknowledged that the regulation requiring all transactions to be conducted through the exchange will create procedures and costs for both businesses and buyers.

He said that according to the Notary Law, when notarizing a sales contract, the notary will assess the legality of the property. This work will overlap with the operation of the floor according to the new draft law. In addition, if the notary fee is not more than 0.1% of the contract value, then through the floor, the intermediary cost will increase by about 3-3.5%, an increase of 35 times.

"This regulation also shows signs of hindering people's freedom, business autonomy, and market search," he said.

The Vietnam Federation of Commerce and Industry (VCCI), in its recent comments to the National Assembly's Economic Committee, also suggested that the current regulations should be maintained - that is, not requiring all transactions to go through the exchange, but instead, giving investors the right to decide on real estate transactions. This would create an open mechanism for the real estate market.

In fact, the regulation that real estate must be transferred through the floor is not new. This regulation was included in the 2006 Law on Real Estate Business, but was later abolished in the 2014 amendment to remove difficulties for the real estate market as well as create favorable conditions and reduce administrative procedures for businesses and people. According to VCCI, if it is re-applied now, old problems may appear, creating more procedures for the parties, thereby affecting the volume of transactions in the market.

Previously, in the draft law submitted to the National Assembly on April 26, the Government maintained its view that investors selling or leasing future houses must go through the floor. This agency said the above regulation is based on a series of policies of the Party and the Central Government and affirmed that "it has carefully assessed the impact".

Accordingly, cases of direct buying and selling, transactions (not through the trading floor, not through notary) lead to many risks for buyers because it is difficult to verify the quality, legality, and price of real estate. At the same time, the Government also assessed that the regulation requiring transactions through the floor does not unreasonably increase costs for investors, or selling prices. Because, instead of investors spending money to organize sales themselves, they hire real estate floors to do it, which will save more costs.

The Real Estate Business Law Project will be passed by the National Assembly at its session next October.

Duc Minh

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