HoREA proposes 9 credit solutions to ease difficulties for real estate

Ho Chi Minh City Real Estate Association (HoREA) has just reported on the real estate market in the first 10 months of 2023 and proposed a number of credit solutions to effectively implement the directives and management documents of the Government and the Prime Minister , especially Official Dispatch No. 993/CD-TTg.

According to HoREA, in order for commercial banks to continue promoting credit lending to the real estate sector, the first solution is a "non-credit" solution, depending on the competent authorities from the central to local levels urgently removing legal obstacles for real estate projects, to both have enough conditions for credit loans and create conditions for investors to implement the project.

To implement "non-credit" solutions and remove legal obstacles for real estate projects, HoREA believes that it is necessary to further promote the role and responsibility of the Head of the Working Group of the Minister of Construction .

And along with non-credit solutions, HoREA proposed to the State Bank a series of credit solutions.

Firstly, HoREA proposed that the State Bank consider amending and supplementing Article 7 of Circular 39/2016/TT-NHNN in the direction of "relaxing a little" the loan conditions, not stipulating "customers who meet all the conditions" but only stipulating "customers who meet the conditions" and adding the method "customers agree with credit institutions to hire an independent consulting unit to conduct an appraisal of the feasibility of the investment project, appraisal of the project's cash flow; appraisal costs are paid by customers", to support commercial banks in appraising and evaluating the feasibility of investment projects and creating conditions for customers to access credit more conveniently.

Second, the State Bank directed commercial banks to continue implementing Circular No. 02/2023/TT-NHNN on restructuring debt repayment terms and maintaining debt groups to support customers facing difficulties for a certain period of time until the economy recovers and returns to normal growth, to increase businesses' "resilience" and have more opportunities to access new credit loans.

HoREA said it highly appreciated the State Bank's timely issuance of Circular 02/2023/TT-NHNN and considered this a Circular with a very special role and position, an "unusual solution" to handle the "unusual situation", so the Association proposed that the State Bank direct credit institutions to continue implementing Circular 02/2023/TT-NHNN for a certain period of time until the economy recovers and returns to normal growth.

Third, the State Bank considers amending and supplementing Clause 5, Article 16 of Circular 22/2019/TT-NHNN (amended and supplemented in Article 1 of Circular 08/2020/TT-NHNN and although the regulation has been effective since October 31, 2023) to extend the effective date by 12 months, until October 31, 2024 to increase the money supply for credit institutions while still ensuring the safety of the credit system.

Fourth, the State Bank considers amending and supplementing Circular No. 03/2023/TT-NHNN in the direction of "removing" Point a, Clause 8, Article 4 of Circular No. 16/2021/TT-NHNN, which stipulates that credit institutions are not allowed to purchase corporate bonds in cases where corporate bonds are issued for the purpose of restructuring the debts of the issuing enterprise itself.

Fifth, the State Bank considers abolishing section (iii) point b, clause 2, Article 22 and clause 5, Article 26 of Circular No. 39/2016/TT-NHNN (amended and supplemented at point c, clause 6 and point b, clause 9, Article 1 of Circular No. 06/2023/TT-NHNN), to ensure consistency and uniformity with the provisions of the 2015 Civil Code on measures to ensure performance of obligations, including "deposit, mortgage, guarantee" and guaranteeing the "rights" of the "deposit, mortgage, guarantee recipient", including the "deposit recipient" being the investor of real estate and commercial housing projects.

Sixth, the State Bank considers abolishing Clauses 8, 9 and 10, Article 8 of Circular No. 39/2016/TT-NHNN (amended and supplemented in Clause 2, Article 1 of Circular 06/2023/TT-NHNN) to facilitate credit institutions and customers in reviewing and approving loans and credit loans.

Seventh, the State Bank is considering "expanding" some subjects eligible for loans from the VND120,000 billion credit package, including investors and home buyers of commercial housing projects with selling prices not exceeding VND3 billion/unit, with priority given to first-home buyers.

HoREA recommends that the Prime Minister request the State Bank to preside over and closely coordinate with the Ministry of Construction to carefully review the procedures and conditions for favorable, open, and controllable lending and accelerate the implementation of the VND120,000 billion credit package for preferential loans for the development of social housing, workers' housing, and the renovation and reconstruction of old apartments. Direct commercial banks to urgently guide credit loan procedures for projects that have been announced as eligible and in need of loans for both investors and home buyers of the VND120,000 billion credit package.

HoREA believes that the first solution for commercial banks to speed up the implementation of the VND120,000 billion credit package is also the above-mentioned "non-credit" solution, depending on the competent authorities from the central to local levels urgently removing legal obstacles for the projects.

Eighth, the State Bank considers amending and supplementing Clause 4, Article 101 of the draft Law on Credit Institutions (amended), adding the method of "customers agreeing with credit institutions to hire independent consulting units to conduct appraisals of the feasibility of investment projects, appraisals of project cash flows; appraisal costs are paid by customers", to support commercial banks in appraising and evaluating the feasibility of investment projects and creating conditions for customers to access credit more conveniently.

Ninth, the State Bank considers amending and supplementing Clause 1, Article 194 of the draft Law on Credit Institutions, adding the provision "the implementation of the transfer of a project or part of a real estate project as collateral for that debt in accordance with the provisions of the law on real estate business" to "refer" to the Law on Real Estate Business, ensuring consistency and uniformity of the legal system.

Real estate market situation in the first 10 months of 2023

HoREA found that the real estate market has passed the most difficult period and it can be said that the first quarter of 2023 is the "bottom" of the real estate market. However, in general, the real estate market is still very difficult, but the level of difficulty tends to decrease over time, the following month is better than the previous month, the following quarter is better than the previous quarter, clearly shown in the real estate market of Ho Chi Minh City, the first quarter of 2023 had negative growth of -16.2%; by the first 6 months of 2023, it still had negative growth of -11.58% but had decreased by 4.62% compared to the first quarter of 2023; by the end of the third quarter of 2023, although it still had negative growth of -8.71%, it had decreased by 2.87% compared to the first 6 months of the year and after 09 months, the level of difficulty of the real estate market had decreased by 42.3% compared to the first quarter of 2023.

In the first 9 months of 2023, the housing supply in Ho Chi Minh City had 13 commercial housing projects eligible for capital mobilization with 15,020 units (an increase of 1.37 times compared to the same period in 2022, but the mobilized revenue decreased by 4.7%) including 13,767 apartments (accounting for 91.6%) and 1,253 low-rise houses (accounting for 8.4%), of which the high-end housing segment had 9,969 units, accounting for 66.37% (higher than the national rate of 58%), the rest was the mid-range housing segment with 5,051 units, accounting for 33.63% (higher than the national rate of 26%) and the situation of no affordable housing continued, nor was there any more social housing.

The real estate rental market including houses for rent, offices for rent, commercial and service premises for rent is still very difficult.

In the dark picture of the real estate market, there is still a "bright spot" which is the industrial real estate market.

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