Concerns about the proposal to tighten real estate transactions

The regulation that all real estate transactions must go through a state-managed floor will affect market development.

The Ministry of Construction is seeking comments from ministries and branches on the content of the draft Resolution of the Government on the mechanism to control and curb real estate prices. However, according to experts, the proposals need to be reconsidered to avoid the situation where hasty application will affect the real estate market and the economy.

Need to focus on people's interests

To contribute to reducing prices and tightening real estate speculation, the draft emphasizes three factors requiring real estate transactions to be regulated and transactions to be made public and transparent through the establishment of a State-established real estate transaction center.

Notably, the policy proposal to "tighten" loans for buying second and third homes by applying low loan rates, buyers can only borrow 50% when buying a second home and no more than 30% for a third home; instead of applying the current loan rate of 70%-80%. In addition, the Ministry of Construction proposed that the Government stipulate that the People's Committees of provinces and cities reserve at least 30% of the total number of commercial housing construction projects expected to develop in the period 2026 - 2030 to build affordable commercial housing.

C-Holdings Company hands over apartments to residents at The Maison project (Thu Dau Mot ward, Ho Chi Minh City). Photo: THAO NGUYEN

Faced with the above issues, financial and banking expert Nguyen Tri Hieu said that the proposal of the Ministry of Construction to limit commercial banks from lending to buyers of second and third homes is unreasonable, because lending activities always depend on the risk appetite of commercial banks and the repayment capacity of customers. The intervention of the Ministry of Construction in the credit policy of banks, which belongs to the field of monetary policy, can cause problems. Dr. Pham Viet Thuan, Director of the Institute of Natural Resources and Environment Economics of Ho Chi Minh City, said that the draft regulation that all real estate transactions must go through a floor managed by the State is not suitable for its function, affecting the development of the real estate market, because the order and procedures in transactions are limited. Dr. Pham Viet Thuan said that land is a means of production, not a normal transactional commodity, with the criterion that land users must be effective in the process of use. Therefore, there needs to be a specific policy to build a land price list in localities that tends to decrease over time to determine that people's interests are paramount.

Ms. Tran Thi Cam Tu, General Director of Exim Real Estate JSC (EximRS), said that limiting bank loans is quite sensitive for the real estate market. Too hasty implementation will put the real estate market at risk of "freezing". According to Ms. Tu, in fact, in the recent past, in the high-end real estate segment, there has been a clear decrease in transactions. Meanwhile, low-cost commercial housing projects have no supply. Therefore, if loan tightening is applied, investors will not be able to implement more projects. This will greatly affect the entire market, without a comprehensive supply, it will affect the demand for home purchases for generations in the family.

Need sustainable solutions

Mr. Nguyen Tri Hieu said that the proposal of the Ministry of Construction may be temporary, but to solve the problem long-term, more sustainable solutions are needed.

Specifically, high taxes are imposed on second, third or investment properties. This will reduce the incentive for speculation, thereby reducing real estate prices. However, tax alone is not enough. There needs to be a market mechanism, that is, ensuring that supply and demand meet. If real estate supply increases enough to meet demand, housing prices will decrease. Therefore, in addition to long-term policies, it is necessary to promote supply so that people have the opportunity to own houses, thereby contributing to reducing housing prices. The State needs to play a leading role in providing land funds, completing administrative procedures and policies related to land and credit. The problem in Vietnam today is that real estate supply is congested, while demand is very high. The imbalance between supply and demand has pushed housing prices to unreasonable levels.

Sharing the same view, Dr. Le Xuan Nghia, former Vice Chairman of the National Financial Supervision Committee, said that according to the provisions of the Law on Credit Institutions, the government is not allowed to interfere in the credit activities of commercial banks. Such intervention would violate the freedom of business of banks, affecting the independence and transparency in credit activities.

Furthermore, the distinction between a buyer's "first home" and "second home" is extremely complicated and difficult to implement. Commercial banks do not have the function or resources to perform this task, because this is not the core responsibility of banks to limit home loans and reduce housing prices.

According to Dr. Le Xuan Nghia, over the past decades, the State Bank has controlled real estate lending activities by applying high credit risk ratios, from 150% - 250%. For example, if a commercial bank lends 100 billion VND to real estate, the State Bank will calculate the corresponding risk from 150 - 250 billion VND. This forces banks to use their profits to set up risk reserves at the corresponding level, thereby indirectly limiting real estate lending. Dr. Le Xuan Nghia believes that the core issue of the Vietnamese real estate market is to develop housing products suitable for each demand segment. The State needs to focus on removing legal obstacles to increase the supply of low-cost housing, while implementing policies to support home buyers, especially those with low incomes. He cited the example of Singapore, where poor people are given home loans at a fixed interest rate of 2.5% and the government compensates banks for the interest rate above this level. Such solutions can be much more effective than directly intervening in banks' credit policies.

According to Dr. Pham Viet Thuan, limiting speculation by using tax rates based on transaction time when registering, instead of managing through online floors, will help manage real estate stably. Accordingly, to avoid speculation, Vietnam can apply the use of transaction tax tools, which is very effective. For example, real estate transactions within 12 months have a tax rate of 20% of the selling price, 36 months is 10% and 60 months is 5%. The rest will apply a tax of 2% as it is now... "Reducing speculation and reducing annual land prices will be an effective tool to regulate land prices, helping people have the opportunity to buy houses in the future, creating social security is something that must be calculated right now" - Dr. Thuan shared.

Not in accordance with international practice

According to Dr. Le Xuan Nghia, currently in the world, no country controls real estate prices by restricting loans for home buyers. Therefore, applying the measure of reducing loan limits for second or more homes is not in line with international practice and can cause negative impacts on the market.

Source: https://nld.com.vn/ban-khoan-de-xuat-siet-giao-dich-bat-dong-san-196251009213905073.htm