Draft Law on Real Estate Business increases “sub-licenses”

The Vietnam Federation of Commerce and Industry (VCCI) has just had some comments on the Draft Law on Real Estate Business (amended) in the version used in the expanded meeting of the Standing Committee of the Economic Committee on April 10, 2023.

According to VCCI, one of the important objectives in developing the Draft is to promote administrative procedure reform, creating more favorable conditions for businesses when carrying out investment and business activities. This objective is consistent with the recent efforts of the State in strongly implementing activities to reduce compliance costs for businesses, and facilitating investment and business activities.

However, reviewing the entire Draft, there are still some regulations that do not reflect the spirit of administrative procedure reform, and even make business activities less favorable because more procedures must be carried out.

First, the procedures before making real estate transactions.

The draft is designing regulations in the direction of before carrying out real estate transactions such as: Selling, leasing and purchasing future housing (Clause 2, Article 25); Signing contracts to transfer land use rights with technical infrastructure in the form of dividing plots and selling them (Clause 4, Article 32).

The project investor must send a written notice to the competent authority for real estate business management at the provincial level regarding eligibility. The competent state agency will conduct a field inspection and issue a document on whether the conditions for conducting the transaction are met or not.

"This is considered a form of "sub-license" in the business operations of enterprises and makes business operations more complicated and difficult," VCCI commented.

According to VCCI, the control of future housing conditions or land use rights that are eligible for transactions should be controlled through post-inspection and sanctions applied if the project investor violates instead of the "pre-inspection" form as designed in the Draft.

VCCI proposes to remove the regulations on procedures before performing transactions specified in Clause 2, Article 25, Clause 4, Article 32 of the Draft.

Second, procedures related to the operations of organizations and individuals doing real estate business.

According to the provisions of Article 71 and Article 73 of the Draft, organizations and individuals providing real estate consulting services and real estate management services, in addition to establishing a business, do not have to meet any other conditions. Before conducting business activities, these entities must send information about the enterprise to the Department of Construction of the locality where the enterprise is established to have the information posted on the information portal of that Department of Construction.

According to the provisions of the Draft, these industries are not conditional business industries, but are other normal business industries. With this nature, the requirement for enterprises to notify the management agency before operating seems unnecessary and creates additional administrative procedures for enterprises. If the state management agency wants to know information about these enterprises, it can get information from the business registration agency.

To facilitate administrative procedures, VCCI proposes to remove the regulation that enterprises must carry out notification procedures before conducting business activities as prescribed in Article 71 and Article 73 of the Draft.

Third, procedures for transferring all or part of a real estate project in case the transferee is an economic organization with foreign investment capital.

Clause 3, Article 43 of the Draft stipulates that in case the transferee is an economic organization with foreign investment capital, after the competent state agency has issued a decision permitting the transfer and the parties have signed a transfer contract, the procedures will be implemented as follows: the transferor will carry out procedures to return the land to the State; the transferee, after being recognized as the project investor, will be allocated land or leased land by the State in accordance with the provisions of the law on land.

The design of the investor having to carry out the procedure in the direction of: the transferor returns the land and then the State transfers the land to the transferee after being recognized as the project investor, will complicate the procedure and prolong the time to carry out the transfer activity. The fact that the competent state agency allows the transfer means that the factors and conditions of the transferee have been assessed. Therefore, designing the procedure into two steps as in the Draft seems to be unnecessary.

VCCI recommends considering designing procedures for transferring all or part of a real estate project in cases where the transferee is an economic organization with foreign investment capital, similar to the transfer cases of economic organizations with domestic capital.

Wisdom

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