Vietnam Law on Real Estate Business 2024

On November 28, 2023, the National Assembly passed the Real Estate Business Law 2023. With the introduction of this Law, regulations on real estate business, rights, and obligations of organizations and individuals in business are established. real estate business and state management of real estate business. The Real Estate Business Law 2023 takes effect from August 1, 2024 (adjusted 5 months earlier than the original regulations). To learn about the outstanding new features of the Real Estate Business Law 2023 in preparation for its application next year, Viet An Law Firm would like to present the article below.

Context of promulgation of the Vietnam Law on Real Estate Business 2023

The real estate business is an important economic sector, playing a role in promoting socio-economic development, solving housing problems for people, and contributing to social stability. In recent years, Vietnam’s real estate market has made strong developments, positively contributing to the country’s socio-economic development. However, there are still some limitations in the process of implementing the provisions of the Real Estate Business Law 2014 as follows:

• Firstly, about the real estate business. Regulations on the scope of the Law on Real Estate Business, on trading in houses and construction works or formed in the future have not been clearly stated.
• Second, about real estate service business. There has been a phenomenon in which real estate brokerage teams are weak in expertise and business ethics, causing damage to clients. Or the fact that real estate trading floors have not yet ensured the management of real estate transactions, anti-money laundering, and protection of consumer rights. In addition, state management of real estate business activities is still ineffective, leading to speculation, price manipulation, and inflated real estate prices.
• Third, about regulating and stabilizing the real estate market. Solutions related to this issue do not ensure synchronization and lack of proactive resources, so the implementation of regulation and stabilization still faces many difficulties and slow impacts.
• Fourth, about the management of real estate business activities. The construction and management of information systems serving real estate business management is still slow, faces many problems, and does not meet requirements. The work of inspection and handling of violations in the real estate business field is not done well, not regularly or continuously.

Therefore, the promulgation of the Real Estate Business Law 2023 to overcome the above shortcomings is extremely urgent, to contribute to the development of a healthy, stable, and sustainable real estate market.

Highlights at Law on Real Estate Business 2023

Scope of law

To clarify the scope of regulation, the Real Estate Business Law 2023 has added regulations on cases of non-applicability or more specific regulations on types of real estate put into business in turn in Article 1.2, Article 5 of the Law. Specifically, the new Law adds cases where the Law does not apply:

“2. This law does not apply to:

a) Authorities or organizations that sell housing or buildings and/or transfer land use rights in case of bankruptcy, dissolution, or division; transfer ownership of housing or buildings and/or land use rights in case of division, consolidation, or merger in accordance with the law;

b) Authorities, organizations, or units that sell, transfer, or lease real estate which is public property in accordance with regulations of law on management and use of public property;

c) Organizations or individuals that sell housing or buildings or transfer land use rights according to judgments or decisions issued by competent courts or arbitration awards or decisions issued by competent authorities when resolving disputes;

d) Organizations or individuals that transfer, lease, or sublease land use rights, except investors that transfer, lease, or sublease rights to use land that already has infrastructure within real estate projects;

dd) Leasing of social housing to workers and employees by the Vietnam General Confederation of Labour that acts as the supervisory authority of such social housing projects by regulations of the Housing Law”

Specifically, Article 5 has added specific regulations on types of existing construction works and future construction works with educational, medical, sports, cultural, office, commercial, service, tourism, accommodation, industrial purposes, and construction works with mixed service functions.

It can be seen that the Law on Real Estate Business 2023 also amends and supplements several contents compared to the Law on Real Estate Business 2014 to clarify and ensure publicity and transparency of real estate business activities and avoid overlap and interference of the legal system.

Regarding the disclosure of information about real estate put into business

In Article 6 of the Law on Real Estate Business 2023, instead of general regulations on real estate content as in the Law on Real Estate Business 2014, the new Law specifically stipulates cases that must be fully and centrally disclosed accurate information about real estate projects, housing and construction projects formed in the future; about available housing and construction projects; Information on land use rights with technical infrastructure in real estate projects.

Unlike the previous Law, the provision here is supplemented that public information must be updated when there are changes.

The deposit to buy a house formed in the future should not exceed 5% of the selling price

According to the new regulations in Article 23.5 of the Law on Real Estate Business 2023, it is stated that real estate project investors are only allowed to collect a deposit of no more than 5% of the selling price, lease-purchase price of houses and construction works, the construction floor area of a construction project from a client when the house or construction project has met the conditions for being put into business according to the provisions of the Law.

The deposit agreement must clearly state the selling price, lease-purchase price of the house, the construction project, and the construction floor area of the project.

Housing and construction projects formed in the future can only be put into business when there is one of the documents on land use rights; construction permit; notice of construction commencement; Documents on acceptance of completed technical infrastructure construction.

The amendments and supplements to this regulation are intended to protect the interests of clients and limit the situation where real estate project investors mobilize capital when they are not qualified to put real estate into business.

Conditions for real estate brokerage services

According to Article 61 of the Law on Real Estate Business 2023, organizations and individuals providing real estate brokerage services must establish real estate service businesses and must meet the following conditions:

• There must be regulations on real estate brokerage services;
• Must have physical and technical facilities that meet operational requirements according to Government regulations;
• Have at least 01 individual with a real estate brokerage certificate;

Before operating real estate brokerage services, the brokerage enterprise sends information about the enterprise to the state management agency on real estate business at the provincial level where the enterprise was established for approval. To post on the housing and real estate market information system.

Conditions for individuals practicing real estate brokerage

Individuals practicing real estate brokerage must meet the following conditions:

• Have a real estate brokerage practice certificate.
• Must practice in a real estate trading floor service business or a real estate brokerage service business.

Real estate brokerage content

Real estate brokerage content specified in Article 62 includes:

• Find partners that meet clients’ conditions to participate in negotiations and sign contracts.
• Represent to perform work related to procedures for buying, selling, transferring, leasing, and subleasing leasing real estate.
• Providing information and support for parties in negotiating and signing contracts for purchase, sale, transfer, lease, sublease, and lease purchase of real estate.

Remunerations and real estate brokerage commissions

In Article 63 of the Law on Real Estate Business 2023, it is stipulated that real estate brokerage remunerations and commissions are as follows:

• Individuals practicing real estate brokerage are entitled to receive remunerations and commissions from businesses providing real estate trading floor services or businesses providing real estate brokerage services.
• The level of remuneration and real estate brokerage commission is agreed upon by the individual real estate broker and the real estate trading floor or business. Real estate brokerage remuneration does not depend on the price of the real estate brokered transaction.

Effect of Real Estate Business Law 2023

According to Article 82 of the Law on Real Estate Business 2023, this Law takes effect from January 1, 2025. On June 29, 2024, the National Assembly passed the Law amending and supplementing a number of articles of the Land Law No. 31/2024/QH15, the Housing Law No. 27/2023/QH15, the Real Estate Business Law No. 29/2023/QH15, the Law on Credit Institutions No. 32/2024/QH15, adjusting the effective date compared to the original date (January 1, 2025) 5 months earlier. Accordingly, the Law on Real Estate Business 2023 will change the effective date to August 1, 2024.

The Law on Real Estate Business 2014 will cease to be effective from the time the Law on Real Estate Business 2023 comes into effect.

Clients who need advice on regulations on real estate business law, housing law, enterprise law, and related amended decrees, please contact Viet An Law Firm to get the best advice.