Minor hurdles remain

http://www.bangkokpost.net/011207_Business/01Dec2007_focus05.php

Despite the laws and regulations passed recently to tackle problems in the Vietnamese residential market, some issues have yet to be sorted out.

Nguyen Van Hiep, deputy director of Department of Construction, said in Ho Chi Minh City that a broad map of the real-estate business in Vietnam was taking shape after property-related legal documents, instructions and guidelines had been laid down since last year.

In mid-2006, the government issued a housing law and announced a five-year plan for housing development starting from 2006-10 while the real-estate business law was passed in July this year.

Mr Hiep said the laws required that a low-rise housing project could launch a pre-sale only after the construction of the project’s infrastructure had been completed.

Similarly, a condominium developer cannot start sales activities until after the completion of the foundation.

But not all developers have complied with the new rules.

“Some projects launch pre-sales before they have progressed to the required stages of the construction,” he said.

“Some break the law by starting the construction earlier than they should have so they can sell the units sooner.”

Other problems include changes being made in the details of the plans without informing the authorities in advance or providing customers with substandard, even unlawful, warranties.

Some developers also do not use the materials they advertise. Others lack funds or fail to submit monthly progress reports as required.

But worst of all are attempts by real-estate brokers and speculators to distort the market by creating a virtual fever or false demand.

But Mr Hiep promised that the market would improve in the future, as more developers turned to the equity market for funds. More transparency can be expected and the interests of all stakeholders taken into consideration.

Along with better enforcement including fines for violations, the government is also being encouraged to set up a real-estate information centre and encourage property associations to help steer the market in the right direction.

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