Deposit for house purchase on paper is maximum 5% of selling price

Investors are only allowed to collect deposits for buying houses on paper (real estate formed in the future) up to 5% of the selling price, lease-purchase price and eligible projects can only be opened for sale.

This content is stated in the Law on Real Estate Business (amended) passed by the National Assembly on the morning of November 28, with more than 94% of delegates in favor. This law takes effect from January 1, 2025.

Current law does not provide specific regulations on deposits for future real estate sales and leases. According to the new regulations passed by the National Assembly today, deposits for paper-based home sales and purchases are tightened.

Specifically, real estate project investors are only allowed to collect deposits of no more than 5% of the selling price, lease-purchase price of houses and future construction works when they meet the conditions to put into business.

The deposit agreement clearly states the selling price, lease-purchase price of the house, construction project, and the construction floor area of the project. A real estate project on paper can only be put into business when there is one of the documents on land use rights, such as a land allocation decision, a certificate of land use rights, house ownership and land use rights...

This, according to the National Assembly Standing Committee, ensures the true nature of the deposit, while limiting risks for the buyer and lessee, who are often the weaker party in real estate business activities. Because the deposit is the first step in the buying and selling process, carried out before signing the contract, it needs to be monitored to avoid collecting too large a deposit, which can lead to fraudulent behavior causing damage to the buyer.

Real estate in the East of Ho Chi Minh City, Thu Thiem peninsula area, Thu Duc City, July 2023. Photo: Quynh Tran — Real estate in the East of Ho Chi Minh City, Thu Thiem peninsula area, Thu Duc City, July 2023. Photo: *Quynh Tran*

However, real estate projects that are eligible for sale on paper but have not signed a sales or hire-purchase contract by the time the law comes into effect (January 1, 2025) will continue to carry out sales or hire-purchase procedures according to current regulations. Investors must publicly disclose information about real estate projects according to the new law before signing the contract.

Regarding payment for future housing transactions, Mr. Vu Hong Thanh, Chairman of the Economic Committee, said that after reviewing, the National Assembly Standing Committee finalized a plan for customers to pay 95% of the contract value, the remaining amount will be paid when they are granted a certificate of land use rights and home ownership.

Thus, the customer retains a part of the contract value while waiting for the Certificate to be issued.

Mr. Vu Hong Thanh, Chairman of the Economic Committee, presented a report explaining and accepting comments before the National Assembly voted to pass the Law on Real Estate Business (amended), on November 28. Photo: Hoang Phong — Mr. Vu Hong Thanh, Chairman of the Economic Committee, presented a report explaining and accepting comments before the National Assembly voted to pass the Law on Real Estate Business (amended), on November 28. Photo: *Hoang Phong*

The investor must fulfill financial obligations (land rent, taxes and fees related to land) before transferring all or part of the real estate project.

In addition, the investor must have a decision to assign, lease, or permit change of land use purpose, but is not required to have a land use rights certificate for the entire or part of the transferred project.

Chairman of the Committee Vu Hong Thanh said that this regulation aims to prevent the selection of unqualified investors to transfer projects and to ensure the principle of only selling and transferring what the seller or transferor has.

Real estate transactions between individuals and small-scale organizations will be agreed upon by the parties on the form of payment for the purchase and sale contract. However, investors and real estate businesses are required to make payments through banks. According to Mr. Thanh, this regulation is to ensure control of the cash flow of real estate transactions of project investors and real estate businesses.

Mr. Minh

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