I. RESOLUTION NO. 33/NQ-CP
Removing difficulties in credit for real estate business and promoting the development of social housing
Resolution No. 33/NQ-CP (“Resolution No. 33”) on certain solutions to resolve difficulties and promote the real estate market to develop safely, healthily, and sustainably was issued by the Government on 11 March 2023. Some outstanding and crucial policies of Resolution No. 33 are recognized as follows:
Firstly, the Government set out targets for resolving difficulties that the real estate market have been facing within the past time, relating to credit source, bonds, investment fund, etc, aiming to ease capital flow for the real estate market, helping to increase market liquidity as well as overcome stuckness of the money flow. Aforesaid targets are specifically implemented by some primary responsibilities, solutions such as flexible controlling of monetary policy instruments for the purpose of satisfying the credit capital flow needs, making the maximum call for onshore and offshore financial power to support the growth of the real estate market; creating the necessary conditions so that businesses, homebuyers, and investors can quickly approach the credit capital source; along with solutions to resolve difficulties that the real estate businesses have encountered such as lowering loan rate interest, restructuring of debts, stretching the principal debts, at the same time directing and instructing for the fundraising activities (including bonds issuance) of business in order to achieve the legal, transparent, and effective implementation in practice.
Secondly, Resolution No. 33 also clarifies the orientation toward promoting the social housing development of the Government. Accordingly, Government pays attention to removing the enormous difficulties and stuckness in the past time aiming to motivate social housing development, specifically (1) assigning land to invest and construct social housing; (2) planning and decorating the land fund to develop social housing; (3) choosing the investor for a social housing project; (4) rights and incentives for investors; (5) determining the sale price, renting price, price of renting-sale of social housing (6) subjects and conditions to enjoy social housing policy… Remarkably the target of endeavoring to 2023 shall finish at least 01 million social housing in order to increase the supply source in accordance with the needs and capacity of low-income earners having a high demand for affordable housing; supporting the capital source to develop social housing through the suggestion of implementing the credit program of approximately 120,000 billion Vietnamese dongs for investors and homebuyers of social housing projects, worker-housing to lend with interest lower than 1,5 – 2% compared with the interest of VND medium-long time lending of the state commercial banks.
In order to support the two (02) aforementioned goals, the Government shall continuously perfect legal regimes regarding construction investment, housing business, and real estate in order to ensure synchronization and feasibility by way of focusing on drafting and submitting for the National Assembly to pass the Land Law (amendment), Housing Law (amendment), Law on Real estate trading (amendment), Law on Auction (amendment), Law on Credit Institutions (amendment), along with finalize and release Decrees of instruction for implementing the law, Decrees of amendment and supplement to resolve the stuckness in the actual implementation.
It can be seen that the issuance of Resolution No. 33 reflects the attention of the Government on resolving difficulties and challenges that the Vietnamese real estate market has encountered recently, in particular the credit capital market difficulties aiming to motivate the enterprise to finish the pending projects, avoid project stalling and freezing. Besides that, paying attention to policies on social housing development of the Government also intends to contribute to the housing needs of low-income earners, providing adequate housing for the citizens.
II. THE DRAFT OF LAW ON CREDIT INSTITUTIONS (AMENDMENT)
The Draft of Law on Credit Institutions (“Draft”) primarily drafted by the State Bank is currently in the process of collecting comments and is expected to be submitted to the National Assembly for comments at the 5th Session.
Accordingly, the Draft has some notable amendments and supplements points as follows:
1. More permissive regulations in consideration and approval of granting of credit and inspection of loan use
Firstly, in respect of loans for small-value serving life needs, granting of credits through cards by commercial banks, foreign bank branches, or consumer loans, granting of credits through cards by financial institutions, or loans to serve the life needs of people’s credit funds, microfinance institutions that the Draft doesn’t stipulate requirements for credit institutions requiring customers to provide the feasibility capital use plans as per current regulations.
Secondly, the Draft has removed the regulation that credit institutions must require customers to implement loan security measures before deciding to grant credit. Instead, credit institutions and customers are entitled to agree on the application or non-application of security measures.
2. Amendment to some regulations regarding operations of commercial banks
Regarding the banking activities of commercial banks, compared with the forms of credit granting prescribed in the current Law, the Draft has added one (01) more form of credit granting, which is a “letter of credit” in order to properly reflect the nature of the such activity, and simultaneously removing the issuance of “promissory notes, treasury bills” in the forms of domestic and foreign capital mobilization due to its non-existence in actual implementation.
At the same time, the Draft concretizes and supplements regulations relating to activities between commercial banks and credit institutions, and foreign financial institutions; accordingly, instead of the current general regulations that commercial banks are allowed to borrow capital from credit institutions and foreign financial institutions, the Draft has added specific regulations allowing commercial banks to lending, borrowing, depositing, receiving deposits with the term of fewer than 12 months with credit institutions, foreign bank branches in accordance with regulations of the State Bank.
3. Supplementation of some regulations regarding the safety of credit institutions’ operations
The Draft has limited the total outstanding credit granted to a customer reducing from 15% to 10% of its own capital; and limited the total outstanding credit granted to a customer and its related persons reducing from 25% to 15% of its own capital.
In addition, the provisions on early intervention first introduced in Law No. 17/2021/QH14 Amending and supplementing some articles of the Law on Credit Institutions are continue retained in the Draft, however, there are some adjustments to the State Bank’s consideration of applying early intervention to credit institutions and foreign bank branches, specifically, according to current regulations, the consideration of applying early intervention to credit institutions is carried out at the stage when the credit institution has not been put under special control and falls into one of three cases: (i) fail to maintain the solvency ratio for 03 consecutive months; (ii) fail to maintain capital adequacy ratio for 06 consecutive months; (iii) ranked below the average according to the regulations of the State Bank. The Draft has revised and supplemented one (01) more case considered for early intervention, that is when the credit institution is considered to be placed under special control according to the provisions on special control and the State Bank decided not to put credit institutions under special control, then early intervention measures shall be applied.
After receiving the State Bank’s written application for early intervention, the credit institution must develop a remedial plan and report it to the State Bank. In the event that credit institutions fail to make or expire to carry out such a plan but cannot overcome the situation, then the State Bank shall take measures such as restricting large transactions; strengthening the hold of high liquidity accounts; limiting the dividend payment and profit distribution.
4. Supplement the regulations governing banking activities by electronic means
The Draft supplements regulations requiring credit institutions and foreign bank branches to ensure the safety and security of electronic transactions in banking activities, not only following the instructions of the State Bank but also the law on electronic transactions.
In addition, requiring the credit institution to build and issue internal regulations for the professional activities of the credit institution, including the implementation by electronic means is also one of the new provisions of this Draft.
In general, the Draft has overcome some obstacles and limitations of the current Law on Credit Institutions. With the provisions of the Draft, the management functions of the Government, the State Bank, and the competent authorities for credit activities will be strengthened in addition to the tightening of banking activities as well as the risks to credit institutions are excluded.
III. THE DRAFT OF LAND LAW (AMENDMENT)
The Draft of Land Law (Amendment) (“Draft”) issued for public comments from 03 January 2023 to 15 March 2023, has a number of notable new provisions as follows:
1. Revoking the jurisdiction of the People’s Committee to resolve land disputes and supplementing the jurisdiction of Commercial Arbitration
Pursuant to the provisions of the current Land Law, the jurisdiction to resolve land disputes is granted to two (02) authorities the Court and the People’s Committee. However, compared to the present, the Draft has made a major change upon it revoked the jurisdiction of the People’s Committee to resolve land disputes and supplementing the jurisdiction of the Commercial Arbitration to resolve land disputes, specifically as follows:
- For land disputes, both land disputes and land-attached properties will be resolved by the Court in accordance with the law on civil procedure, at that time, the People’s Committee at all levels is responsible for providing dossiers and documents related to the management and use of land as a basis for the Court to resolve according to its competence upon being requested;
- For disputes between parties arising from commercial activities relating to land, it may be resolved by either the Court or by the Commercial Arbitration.
Therefore, pursuant to the Draft, the People’s Committee no longer has jurisdiction to settle the dispute as previously, they are only responsible for providing relevant documents upon being requested, at the same time, the Draft also supplements the jurisdiction of the Commercial Arbitration to resolve disputes between the parties arising from commercial activities relating to land, if such new point in the Draft is adopted then will become a new step in the legal system of the land of our country.
2. Supplementing provisions on conditions for performing the rights of land users
For conditions of performing the rights to convert, transfer, lease, sublease, inherit, donate, or mortgage land use rights; capital contribution by land use rights, in addition to the existing general conditions such as having the certificate; not having any disputes related to land; land use rights are not distrained to secure judgment enforcement; within the land use term, this Draft has supplemented the condition that land use rights are not subject to emergency interim measures as prescribed by law. Which, the condition for obtaining the certificate is also revised compared to the provisions of the current Land Law, specifically as follows:
Firstly, pursuant to the current provisions, the conditions for having a certificate shall be excluded in 02 cases, (i) in the case that all heirs of land use rights, ownership of houses and other land-attached properties are foreigners or overseas Vietnamese who are not eligible to purchase houses attached to residential land use rights in Vietnam, then the heirs shall not be granted a certificate of land use rights, ownership of houses, and other land-attached properties, but they are entitled to transfer or donate the inherited land use rights; (ii) in the case of conversion of agricultural land use rights, the land users may perform their rights after a decision on land allocation or land lease is issued; or in the case of inheriting land use rights, land users may perform their rights when having full conditions for being granted a certificate of land use rights and ownership of houses and other land-attached properties without a certificate prior to perform the rights.
However, pursuant to the provisions of the Draft, the two (02) abovementioned cases of excluding the conditions of having a Certificate have been generalized and revised as (i) the case of inheritance of land use rights; and (ii) conversion of agricultural land upon consolidation or change of plots.
Moreover, the Draft also sets out new requirements for the economic organizations that are allowed to be transferred agricultural land, that the economic organizations need to have a plan for using agricultural land approved by the Provincial People’s Committee.
3. Amending and supplementing the provisions on households using land
For the provisions relating to households using land, besides the revisions regarding the definition of households using land and the certificate of land use rights of the household, which were specified in three (03) previous drafts, compared to the current provisions, the Draft supplementing a provision that if the land plot belongs to the household’s use right, a Certificate shall be issued with the full name of the members on the Certificate and given to the representative. Also, the identification of members who share the same land use rights of the household to write their names on the certificate of land use rights of the household shall be agreed upon by these members and are responsible before the laws.
4. Amending and supplementing some provisions on land price
This Draft has amended the principle of land price determination by varying the criteria “market price of land use rights under normal conditions” in the 3rd draft to “common land price on the land use rights market under normal conditions”, moreover, supplementing 02 principles are complying with the accurate method, order, and procedures for land valuation as prescribed by law, and ensuring the independence of professional expertise, honesty, and objectivity of land valuation results between the valuation agency, the appraisal agency and the deciding agency.
It hasn’t stopped there, the Draft also prescribes specifically the method of determining the common land price on the land use rights market under normal conditions is equal to the average of the actual transaction prices of the land with the same use purpose, which has been transferred on the market with the most frequency through statistics in a region for a certain period of time, not subject to the impact of sudden price increases or decreases, blood-related transactions or other incentives.
Furthermore, besides the additional cases of applying land price list as mentioned in the previous three (03) drafts of Land Law, including tax calculation for projects that are behind schedule or do not put the land into use; calculating income tax from land use rights transfer for households and individuals; calculating the increased land use levy for cases of delay in putting the land into use or not putting the land into use; calculating the starting price for the case of auction of land use rights for land allocation or land lease, this Draft also supplementing the case of applying the land price list when calculating the rental price of land for construction of underground works and construction of aerial works.
It can be seen that through the process of absorbing comments widely across the country, the Draft of Land Law has increasingly been amended and supplemented in accordance with the actual situation of implementation, aiming to further improve the provisions of the Land Law.
IV. DECREE 99/2022/ND-CP:
Supplementing the registration of security measures by securities.
Decree No. 99/2022/ND-CP (“Decree No. 99”) was issued on 30 November 2022 by the Government that promulgates on registration of security measures takes effect from 15 January 2023, replacing Decree 102/2017/ND-CP (“Decree No. 102”).
Compared to the previous regulations in Decree No. 102, Decree No. 99 has the following notable new points:
1. Supplementing the registration of security measures by securities in the scope of this Decree
In order to overcome the inadequacies in Decree No. 102 that there is no regulation on the registration of security measures by securities, Decree No. 99 has supplemented such registration of security measures by securities to its scope, accordingly, registration of security measures, providing information on security measures by securities registered with Vietnam Securities Depository and Clearing Corporation (VSDC) shall comply with the law on securities. As for matters not specified in the law on securities, the provisions relating to the registration of security measures by movable property other than aircraft or seagoing ships in Decree No. 99 shall be applied.
2. More comprehensive regulations on the registration of security measures
Whilst Decree No. 102 stipulates cases of registration of security measures in the form of a list, Decree No. 99 prescribes in accordance with the guidance referring to the provisions of the Civil Code and other relevant laws. Hence, new regulations are more synchronized, unified, and comprehensive, at the same time, ensuring flexible application in case of changes in the provisions of the law.
3. Specify the registered cases in respect of real estate belonging to joint uses rights and ownership between husbands and wives
The practice has shown some problems in the registration of security measures in respect of real estate belonging to joint uses rights and ownership between husbands and wives. Accordingly, when applying for a mortgage at a credit institution where the Certificate of right to use and ownership only contains information about wives or husbands, the credit institution requires the subject to enter into the contract must include both husband and wife. However, some land registration offices refused for the reason that the subject of the mortgage contract must be the subject stated on the Certificate, making it difficult to register the security measures.
Decree No. 99 has solved the abovementioned problem, accordingly, the security property is the land use rights, property on land belonging to the joint property of the husbands and wives but the Certificate only states the full name of the wife or husband who is the land user or the owner of the house, other property attached to land but information about the guarantor in the security contract includes both husband and wife then the registration requester declares information about the guarantor on the registration application form including both husband and wife, Decree No. 99 stipulates that the land registration office is required to carry out the registration for such case.
4. Promoting digital transformation in the registration of security measures activities
Decree No. 99 records the submission of an application for registration of security measures via the online registration system, the signature and seal can be replaced by an electronic signature or electronic seal. In addition, Decree No. 99 also supplements the form of the Register book, which can be a paper book, an electronic book, or a paper book and an electronic book at the same time. In general, Decree No. 99 has contributed to synchronizing the legal systems and overcoming the problems and limitations in Decree No. 102 as well as promoting the digitization of documents and procedures relating to registration of security measures.
