The Construction Ministry has released a draft plan for the property market, designed to increase housing supply, fight speculation and make the market more transparent.
Housing projects on more than 10 hectares must set aside a portion of the land for affordable housing, under a draft proposal released by the central government’s Construction Ministry.
The ministry is seeking feedback from the real estate sector on its draft blueprint, which recommends new taxes and selling mechanisms.
Once finalized, the real estate plan will be submitted to Prime Minister Nguyen Tan Dung for approval.
A dire shortage of housing, fueled by the government’s weak management and speculation, has inflated property prices in the country’s major cities, especially within the past year.
In these cities, Western-style suburbs and apartment blocks are sprouting up, driven by more than 8 percent annual economic growth that has given investors ready cash to spend.
Realtors said the pace was so fierce that prices had zoomed off the charts – no mean feat in a country where per-capita gross domestic product (GDP) is less than US$900.
In just one year, some Ho Chi Minh City neighborhoods have seen apartment prices jump as much as 100 percent, investors said, adding that more than 80 percent of those investing in property were paying in cash.
The market has been relatively stagnant recently after the government’s tightened monetary policy and announcement of a higher property tax plan.
But even though sales have slowed, property prices have hardly come down.
The Construction Ministry, in its proposals, is seeking to increase the housing supply by forcing property developers to build more affordable homes.
The ministry also plans to streamline licensing procedures for housing projects.
It supports the government’s legislation to limit speculation by imposing higher taxes on people who have unused land and housing.
Obligatory affordable housing areas
Under the ministry’s proposals, housing project developers building on 10 hectares or more would have to use 20 percent of the land for affordable housing for rent or sale.
Provinces and cities, meanwhile, would have to reserve 10 percent of their urban development land for affordable housing.
They would also have to ensure that medium-sized apartments – those with areas ranging from 70-90 square meters – made up half the total number of apartments of any apartment building project.
The percentage for large-sized apartments – with areas larger than 120 square meters – would be 20 percent.
The remaining 30 percent could be apartments with areas of 45-60 square meters.
The ministry proposed that concerned government agencies improve licensing formalities to accelerate the supply of housing to the market.
The government could study Japanese and South Korean models of social housing development corporations in implementing its social housing program, the draft also suggested.
Tightened grip on speculators
The government’s credit and tax policy had to support real estate developers but constrain speculators, the ministry said.
The ministry proposed a progressive land tax scheme in which owners had to pay increasingly higher rates on excessive or unproductive land.
However, if the properties were part of a business’ assets for which their owners had paid corporate tax or income tax, they wouldn’t be subjected to the progressive tax, the ministry said.
The ministry said the real estate transaction tax should be reduced to 1 percent from current 4 percent of the trade value.
This tax could also be included in the personal income tax or corporate income tax, it suggested.
This would encourage people to legalize their transactions instead of dealing under the table to evade the tax.
The ministry, on the other hand, suggested that property owners pay higher tax if they sold properties within two years after buying them.
The proposed tax rate was about 25-28 percent of the disparity between the declared buying and selling price.
Real estate exchanges
Under the ministry’s plan, all real-estate transactions would be conducted at exchanges to improve transparency.
Trades of properties which did not have appropriate certificates would also be done at the exchanges, it said.
This provision is, in fact, not included in the current Real Estate Trade Law.
Le Cao Tuan, the Housing Administration’s Real Estate Department director, said it should be added to prevent “cases in which someone attempts to sell a property which is not his or hers.”
“We would explain this [to the government] so that it will exist in the [approved] circular.”
The real estate exchanges would report to the local construction department about its transactions every month, the ministry said.
Housing Management head Nguyen Manh Ha told Thanh Nien that exchanges caught violating the regulations would be fined.
Real estate businesses attending the conference, held to release the ministry’s proposals, called on policy makers to ensure stability for the market.
They proposed the government delay its plan to levy higher property taxes, enact regulations concerning overseas Vietnamese’s and foreigners’ home purchase in Vietnam, and listen to businesses in making real estate policies.
(Thanhniennews)
