Resolution No. 06/2004/NQ-CP dated May 19, 2004 of the Government on a number of solutions to healthy development of the real estate market

RESOLUTION

ON A NUMBER OF SOLUTIONS TO HEALTHY DEVELOPMENT OF THE REAL ESTATE MARKET

The Resolution of the ninth plenum of the Party Central Committee, the IXth Congress, has asserted that one of the major economic development objectives and tasks in the remaining half of the IXth Congress's tenure is to form all types of markets synchronously, and required "the expeditious provision of guidance on the implementation of the 2003 Land Law and other relevant legal documents in order to effectively develop and manage the real estate market; the application of vigorous and comprehensive measures to abolish land-related subsidies, to combat self-seeking speculation, stimulation of unreal demands, causing bogus scarcity and fevers' of houses and land, corruption, illegal appropriation and wasteful use of land, and to implement regulating policies to ensure the interests of the State in the capacity as the owner's representative and as the biggest investor in infrastructure development, thus increasing the value of land."

Over the past years, the real estate market of our country in general and the house and land market in urban centers and urban development areas in particular have seen positive changes, contributing to boosting the country's socio-economic growth at a relatively high rate; many projects in the production, business and service domains have tapped up various capital sources in the society, step by step raised production and business efficiency, people's living standards and improved the urban and rural appearances, contributing to the economic restructuring along the direction of industrialization and modernization. Given the actual operation of the real estate market in our country, the investment been established along the direction of development of a socialist-oriented market economy.

Besides positive aspects, the operation of the real estate market over the past time has revealed weaknesses: due to inadequate awareness of the real estate market's role and position in satisfying the socio-economic development requirements, the house and land assets have been inefficiently exploited and used, causing great wastes and losses; the State has not yet found out effective measures to manage and regulate the real estate market; house and land speculation and unreal demand stimulation in order to shoot up the real estate prices are rather common; illegal conversion of land use purposes, unregistered purchase and sale as well as unplanned construction' have adversely affected investment as well as construction management activities according to plannings, caused losses to budget revenues, exerted bad effects on the mentality and life of the population, especially low-income earners and households with their land plots recovered, and rendered urban development unsustainable.

In order to overcome the above-said problems with a view to attaining the objective of developing a healthy market of real estates, first of all houses and land in urban centers and urbanized areas, efforts should be concentrated on implementing the following solutions in the coming time:

I. OBJECTIVES OF DEVELOPING THE REAL ESTATE MARKET

1. To efficiently exploit and use all kinds of real estates, especially houses and land, to make the fullest use of resources from land, houses and construction works built on land for socio-economic development in service of national industrialization and modernization.

2. To attract the society's resources, encourage all economic sectors to invest in developing real estate commodities, particularly in building production and business works, technical and social infrastructure facilities.

3. To contribute to comprehensively forming markets of all types together with institutions suitable to the socialist-oriented market economy and international integration. The State shall actively orient, regulate and control in order to stabilize the real estate market, eliminating the problems of arbitrary construction and speculation of real estates.

II. SOLUTIONS TO DEVELOPMENT OF THE REAL ESTATE MARKET

A. GENERAL SOLUTIONS

1. To concentrate efforts on building and completing a legal system, appropriate mechanisms and policies which are comprehensive, uniform and adequately effective in order to create conditions for the real estate market to operate according to law provisions. The promulgation of policies must ensure the principles of comprehensiveness, consistency and minimum intervention of the State in economic relations with a view to promoting the potentials of real estates circulated on the market in service of socio-economic development. To enhance competitiveness, clear up hindrances to ensure the healthy operation and the effective management of the real estate market and at the same time create conditions for active international integration; to concentrate efforts on formulating a Law on Real Estate Business, a Law on Registration of Real Estates, a Law on Dwelling Houses, a Law on Land Use Tax and a Law on Property Tax according to the National Assembly's law- and ordinance-marking program; along with expeditiously drafting documents guiding the implementation of the Land Law and the Construction Law, to review, amend and supplement the current legal documents related to the real estate market in order to abolish overlapping, contradictory or inappropriate regulations which have limited the effectiveness of the real estate market.

2. To study, adjust and supplement a number of taxes and fees related to houses and land with a view to encouraging the efficient utilization of real estates, and at the same time vigorously developing official transactions on the market. The State shall regulate the real estate market by taxes, charges and fees, especially land rents of different rates applicable to those cases where the State has built infrastructures, encourage the efficient utilization of land resources, restrict speculation, and at the same time reduce taxes and charges for transactions conducted on the real estate market to reasonable levels in order to encourage official transactions, putting an end to under-the-counter transactions and acts of shirking financial obligations, causing losses to the State budget.

The Finance Ministry shall assume the prime responsibility for, and coordinate with the concerned ministries and branches in, studying, amending and supplementing various taxes and fees related to houses and land along the afore-said direction so that the Government can submit them to the National Assembly in 2005.

3. To complete credit policies to suit the real estate market development requirements, to study and complete mechanisms and policies on mortgage and mortgage release, guarantee as well as handling of mortgaged assets for loan recovery, create favorable conditions for enterprises and people to mortgage their houses and/or land to borrow capital for economic development; to put forward solutions to the provision of long-term loans with appropriate interest rates for building dwelling houses for lease or sale on deferred payment and houses of other kinds in order to support the development of commodities for the real estate market.

Vietnam State Bank shall assume the prime responsibility for, and coordinate with the Ministry of Finance and other concerned ministries and branches in, studying and submitting to the Government for promulgation in 2004 a policy on registration of security transactions and policies on mortgage, guarantee, registration of security transactions and handling of real estates mortgaged for borrowing capital; solutions to the provision of long-term loans with appropriate interest rates for the cases of purchasing houses on deferred payment and building houses for lease.

4. To raise the capability of supplying real estate commodities, especially land for production and business activities and dwelling houses in order to stabilize the market according to the supply-demand laws, and concurrently contribute to implementing social policies. In order to fruitfully implement this solution, apart from developing the land fund for regulating the market under the provisions of the 2003 Land Law, it is necessary to encourage all economic sectors to invest in developing real estates being dwelling houses as well as other types of commercial real estates, especially dwelling houses for lease, dwelling houses for sale on deferred payment through the policy of creating conditions for low-income earners and households being social policy beneficiaries and meeting with difficulties to improve their dwellings on the principle of abolition of subsidies, implementation of policies of supporting households and individuals in a way suitable to the socio-economic situation and the capability of the budgets of the State and each locality. To resolutely retrieve and auction land lots of the projects in which the secondary investors have not invested after 12 months without the permission of competent State bodies.

The Ministry of Construction shall assume the prime responsibility for, and coordinate with the Ministry of Labor, War Invalids and Social Affairs, the General Labor Confederation of Vietnam and the concerned ministries and branches in, drawing up a scheme on dwelling houses for low income earners and social policy beneficiaries, submit it to the Government in the 4th quarter of 2004; at the same time coordinate with the Ministry of Planning and Investment in guiding localities to examine the execution of housing and urban development projects, sum up and report it to the Prime Minister in the 2nd quarter of 2005.

The Ministry of Planning and Investment shall assume the prime responsibility for studying mechanisms and policies to attract resources from the population and domestic as well as foreign economic organizations for real estate investment and business activities; coordinate with Vietnam State Bank in seeking ODA sources from abroad and international credit institutions so as to supplement the source of loans for the real estate development investment field and propose solutions to developing a real estate market on par with the development level of other markets in the economy, submit them to the Government for promulgation in 2004.

5. To step by step complete the real estate market's structure and make healthy transactions on the market, with special attention being paid to establishing a "land use rights trading floor" in order to apply auctions, biddings or public postings to land plots of assorted categories put on the real estate market and "real estate trading centers" in order to facilitate the easy participation of all subjects in the market, ensuring that the market operates in a public and transparent manner and under the State management, contributing to restricting speculation and stabilizing the market. To prescribe that it is compulsory to make public the sale of houses and the transfer of land use rights at the projects which are assigned or leased land by the State so that all subjects can have access to information thereon at the real estate trading centers if they so wish; to complete and enhance the operating capability of real estate counseling, brokering, insurance and information organizations in order to create conditions for the real estate market to operate in a transparent and effective manner.

In 2004, the Ministry of Natural Resources and Environment shall guide key localities to experiment the organization and operation model of "land use right trading floors" where land is assigned or leased in such forms as public auctions or biddings with simple procedures in order to achieve high efficiency.

The Ministry of Construction shall finish in 2004 the guidance for localities to consolidate the organization and operation model of "real estate trading floors" along the socialization direction, aiming to create favorable conditions for the subjects to easily deal in real estates under their ownership on the market, raise the liquidity of commodities, ensure that the market operates in a public and transparent manner and under the State management.

The provincial/municipal People's Committees shall issue regulations permitting the investors of projects which have been assigned or leased land by the State to mobilize capital through holding auctions and publicizing the prices for all people to join if they so wish.

B. URGENT SOLUTIONS

In order to achieve the objectives of healthy development of the real estate market, for the immediate future to concentrate efforts on houses and land currently in stable use in urban centers; houses and land in urbanized areas and houses and land already assigned to agencies and units for management and use without collection of levies, with the following specific solutions:

1. For houses and land already put in stable use in urban centers:

a/ To focus on directing the grant of house and/or land certificates according to law provisions so as to ensure that all real estate commodities are eligible for lawful and public transactions on the real estate market.

The Ministry of Construction, the Ministry of Natural Resources and Environment shall direct the provincial/municipal People's Committees to complete the grant of house and/or land certificates with simplified procedures according to law provisions by 2005, thus creating conditions for the owners to exercise their rights and fulfill their obligations in the course of using their real estates as well as trading them on the real estate market according to law provisions.

To study and promulgate soon regulations on the grant of certificates of ownership of houses or works which need to be traded on the real estate market, first of all those in the areas with approved detailed plannings. The Ministry of Construction shall assume the prime responsibility for, and coordinate with the concerned ministries and branches in, studying and working out specific regulations on the grant of certificates of ownership of these types of real estates for promulgation according to its competence or for submission to the Government for promulgation in the 1st quarter of 2005 at the latest, serving as a basis for the provincial/municipal People's Committees to grant certificates.

b/ In order to well implement the undertaking on socialization of the issue of dwelling houses, create conditions for maintaining and upgrading the fund of dwelling houses under the entire-people ownership, the Ministry of Construction shall urge localities to simplify procedures in order to speed up the sale of dwelling houses to their current tenants under Decree No. 61/CP of May 7, 1994, and complete it by 2005 at the latest. The provincial/municipal People's Committees shall soon take appropriate measures to efficiently exploit this dwelling house fund, including the rebuilding under plannings of dwelling houses not for sale or for sale but whose tenants have no need to purchase.

a/ The provincial/municipal People's Committees must focus on directing the elaboration of 1/500-scale detailed plannings on construction of urban centers and plannings on construction of high-quality rural population quarters, serving as a basis for strict management of investment and construction activities. To make public such detailed plannings so that organizations and individuals can have easy access to necessary information if they so wish, to end the deceitful house and land purchase, sale and dealings, the stimulation of unreal demands, thereby raising the prices of real estates to unreal high levels;

b/ The Ministry of Natural Resources and Environment shall direct localities to strictly manage the land use, especially the conversion of land use purposes in urbanized areas; all projects must be included in the land use plannings and plans already approved by competent authorities;

c/ On the basis of the approved detailed plannings, it is necessary to apply the mode of auction or bidding or the form of public posting to land areas for real estate development for business purposes. For land areas in service of other requirements, land price policies compliant with the provisions of the 2003 Land Law shall apply;

d/ On the basis of the approved detailed plannings, the local People's Committees shall base themselves on the practical conditions to combine the building of roads with the retrieval of land alongside such roads in order to actively build roads and streets synchronously and completely and at the same time to efficiently use the revenues from the fund of road-side land;

e/ To abolish the subsidy mechanism for enterprises dealing in infrastructures in industrial parks and export-processing zones as well as preferential treatment policies for enterprises dealing in real estate being commercial dwelling houses in urban centers and urbanized areas;

III. ORGANIZATION OF IMPLEMENTATION

1. To renew the perception of the real estate market so as to create mechanisms and policies to boost the development of this market together with the capital market, the labor market, the science and technology market and other markets, generating a motive force for socio-economic development, making practical contributions to the sustainable urban and rural development process along the direction of national industrialization and modernization.

2. The ministries and branches shall base themselves on their assigned tasks to organize the study and formulation of mechanisms and policies to implement the solutions to step up the healthy development of the real estate market in the spirit of the Government's Resolution and promulgate them according to their competence or submit them to the Government for promulgation in the 4th quarter of 2005 at the latest.

3. The provincial/municipal People's Committees should immediately implement in 2004 measures to enhance the capacity and effect of management over the real estate market, first of all well implement solutions for the healthy development of the real estate market in their localities, and at the same time promote the examination and supervision and strictly handle violating organizations and individuals according to law provisions; comprehensively scrutinize all projects on construction of condominiums, which have been and are being executed in Hanoi and Ho Chi Minh city.

4. The Ministry of Construction and the Government Office shall have the tasks of overseeing, urging, examining, summing up and periodically reporting to the Prime Minister on the implementation of this Resolution. Any problems should be promptly reported to the Prime Minister for direction.

5. The ministers, the heads of the ministerial-level agencies, the heads of the Government-attached agencies, the presidents of the provincial/municipal People's Committees shall have to implement this Resolution.