Tighten control over land subdivision and sale.

According to real estate legal expert Pham Thanh Tuan, the new regulations of the Housing Law and the Real Estate Business Law (amended) have "tightened" the subdivision and sale of land plots by real estate businesses.

The Housing Law and the Real Estate Business Law of 2023 are expected to take effect from August 1st. Real estate legal expert Pham Thanh Tuan commented that these two new laws have "tightened" the "land subdivision and sale" activities of real estate businesses from two perspectives: narrowing the scope of project areas where land subdivision and sale are permitted, and specifying the procedures that businesses must comply with.

Specifically, within the regional scope, projects in wards, districts, and cities of special, type I, type II, and type III urban areas, or projects (regardless of region) where investors are selected through land use right auctions for housing construction projects under the Land Law, the investor will not be allowed to engage in real estate business in the form of subdividing and selling land plots.

Businesses that carry out projects by subdividing land and selling plots to individual speculators have caused many land price surges.

According to the Ministry of Construction , as of December 2023, Vietnam had 902 urban areas. These included 2 special-class urban areas, 22 Class I urban areas (including 3 Class I urban areas directly under the central government), 36 Class II urban areas, 45 Class III urban areas, 95 Class IV urban areas, and 702 Class V urban areas.

"Projects in 105 cities and towns classified as type III or higher are not allowed to engage in real estate business in the form of subdividing land and selling plots. Therefore, the scope of areas where businesses are permitted to subdivide and sell land plots has been significantly reduced."

In other words, in urban areas of type III and above, developers must build houses for sale, and can no longer subdivide land into smaller plots for sale as before," Mr. Tuan commented.

Regarding the procedures that businesses must follow, Mr. Tuan said that the new law stipulates that, in order to transfer land use rights through land subdivision, businesses need to meet both the "necessary" and "sufficient" conditions.

The necessary condition is that the provincial People's Committee must issue a document allowing the enterprise to transfer land use rights at the project site through the method of subdividing and selling plots. The "sufficient" condition is that the investor must go through the procedure of applying for a permit from the Department of Construction, similar to the case of signing a contract for the sale of housing units under construction.

The new regulations provide those who receive land plots from developers with a basis to clearly determine when the developer is authorized to sign the sales contract. This determination is made by checking whether the developer has received a document from the Department of Construction.

"The new regulations tightening land subdivision are reasonable. Businesses implementing projects by subdividing land and selling plots to individuals for speculative purposes, buying and selling repeatedly, have led to numerous land price surges. The peak occurred simultaneously from North to South in early 2021, causing a waste of social resources."

Meanwhile, current laws do not yet have any binding requirements for buyers of subdivided land to build and put the land into use,” Mr. Tuan said.

According to Mr. Tuan, one of the very noteworthy regulations stipulated in the amended Law on Real Estate Business is the requirement that the transferee of land use rights: "must construct housing in accordance with the approved design, detailed planning, construction permit (in cases where a construction permit is required), and in accordance with the agreement in the land use rights transfer contract for land with technical infrastructure in the signed real estate project" (Clause 2, Article 34).

This is an important basis for not only the developer but also the competent authorities to supervise the construction of housing for buyers. It prevents situations where land is purchased and then left vacant, leading to waste, or used for personal speculation.

Hoai Anh

Source: https://doanhnghiepvn.vn/kinh-te/bat-dong-san/siet-chat-phan-lo-ban-nen/20240616084210260