Is Circular 22/2023 really creating more barriers for the real estate market?

At the end of 2023, the State Bank of Vietnam issued Circular No. 22/2023/TT-NHNN amending and supplementing a number of articles of Circular No. 41/2016/TT-NHNN regulating capital adequacy ratios for banks. Circular 22/2023 came into effect on July 1, 2024.

The head of the Legal Department (State Bank of Vietnam) affirmed that the regulations in Circular 22/2023 do not restrict the mortgaging of future-formed real estate to borrow capital for purchasing houses.

However, it was only recently that the real estate market became abuzz when the Ho Chi Minh City Real Estate Association (HoREA) "discovered" that Circular No. 22/2023 contains a regulation that is being interpreted as "not allowing individuals to borrow credit to purchase commercial housing under construction, secured by the house itself...".

Specifically, HoREA stated that Circular 22/2023 amends Clause 11, Article 2 of Circular 41/2016 regarding loans secured by real estate for individuals to purchase houses that have been completed and are ready for handover according to the sales contract.

HoREA argues that the regulation has led many people who need to borrow money to buy a house to understand that houses under construction will not be accepted by commercial banks as collateral for loans.

"Therefore, Circular No. 22/2023/TT-NHNN does not allow commercial banks or branches of foreign banks to lend to individuals to purchase 'commercial housing that is not yet completed for handover (i.e., commercial housing under construction)' secured (mortgaged) by the house itself. Therefore, individuals who want to borrow credit to purchase 'commercial housing under construction' must implement other security measures or provide collateral in the form of other assets," HoREA concluded.

Therefore, this Association has sent a letter to the State Bank of Vietnam, requesting amendments and additions to Clause 11, Article 2 of Circular No. 41/2016/TT-NHNN (amended and supplemented by Clause 1, Article 1 of Circular No. 22/2023/TT-NHNN) before Circular No. 22/2023/TT-NHNN takes effect from July 1, 2024. Otherwise, it could lead to negative consequences, causing difficulties and hindering the normal operation of the real estate market, negatively impacting the recovery and development of the real estate market both in the short and long term.

On January 31st, in an exchange with a reporter from the Nguoi Lao Dong newspaper, a leader of the Legal Department (State Bank of Vietnam) affirmed that the regulations in Circular 22/2023 do not restrict the mortgaging of future-built real estate to borrow capital for purchasing houses. Article 1 of Circular 22/2023 states "Houses that have been completed for handover according to the sales contract" - this is merely a definition for commercial banks to determine whether a mortgage loan is for housing. Therefore, future-built houses are still accepted by commercial banks as collateral for loans to purchase those houses.

Similarly, leaders of several commercial banks in Ho Chi Minh City also stated that after Circular 22/2023 came into effect, the banks still provide loans to customers for purchasing houses with future-built housing as collateral.

Source: https://nld.com.vn/thuc-hu-thong-tu-22-2023-dung-them-rao-can-voi-bat-dong-san-196240131112438042.htm