 New property rules an eyesore for developers
VIR - 9/6/2010 9:40:00 PM
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The mobilisation of capital to build residential projects via capital contribution contracts is raising questions from developers.
Article 9 of Decree 71/2010/ND-CP dated June 23, 2010 allows developers to mobilise capital from banks, non-banking institutions, investment funds and corporate bonds. The decree guides the implementation of the Law on Housing
Accordingly, primary developers can transfer parts of their projects to secondary developers in site-clearance projects. Developers can also raise upfront capital from individuals or groups, but for only 20 per cent of housing units without having to undertake transactions via a trading floor.
Personal information of individuals or groups signing capital contribution contracts with a developer must be sent to the municipal or provincial construction department 15 days before such contracts are signed. Also, capital raised via this channel cannot be over 20 per cent of the total investment capital of the residential project.
However, growing numbers of developers are questioning this article. Nguyen Thanh Trung, director of Archiland JSC, said: “At this time, I still wonder what the Ministry of Construction (MoC) based its figures on to set the 20 per cent ratio in Article 9.
“Why is it not higher or lower than 20 per cent?” he said. Dang Van Quang, senior manager of Jones Lang LaSelle Vietnam, gave an example of how difficult it was to quantify the number of units developers allowed to be pre-sold.
For instance, a real estate enterprise has a 1,000-unit residential project and it separates the construction into five phases with 200 units constructed in each phase.
“So, when it wants to pre-sell the units via a capital contribution contract, can it pre-sell all of the 200 units in the first phase or only pre-sell 40 units in each phase to adhere to the 20 per cent-cap rule?” asked Quang.
Quang said a capital contribution contract to build a project was only a civil agreement. He questioned why individuals signing the contracts had to supply personal details to the construction department. “Such a contract is based on the purchaser’s intent and not relevant to the real management responsibility of the construction department.”
“Peosple have the right to buy a product they want, and a company has the right to select its customers. Why are their rights controlled? What will the construction department of a city or province do with the list? Based on current laws, there is no regulation to punish developers by their faults of this kind,” said Quang.
Vuong Quoc Hai, deputy general director of Khang Linh Limited Company, said: “Developers do not want to reveal the list of people and most people signing capital construction contracts do not want their names to be sent to the construction department.”
Hai said that if both primary and secondary developers had the same rights to sign capital construction contracts and sell units in the same project, their business plans could affect each other. “What will happen when primary and secondary developers disagree with the plans to sell or mobilise capital of the other?”
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