Directive No. 01/2008/CT-TTg on certain solutions to promote development and management of the real estate market

DIRECTIVE

On Several Measures to Promote Development and Management of the Real Estate Market

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Although the real estate market in Vietnam has only recently been established, it has seen positive development with many housing projects, service facilities, commercial buildings, and production and business sites being invested in, constructed, and put into operation with high efficiency. Many new residential areas and urban zones with synchronized infrastructure have been developed, changing the face and landscape of cities. The real estate market has attracted considerable domestic and foreign capital, making significant contributions to economic growth and social stability in recent years. The system of regulatory legal documents governing the activities of the real estate market has gradually been improved, creating a more favorable investment environment for both domestic and foreign investors.

Alongside these positive aspects, the activities of the real estate market in recent times have also revealed weaknesses, with unstable and unsustainable development. Particularly, in recent months in Ho Chi Minh City and Hanoi, there has been a sudden increase in rental prices for office spaces, high-end apartments, and land transfer prices for individual house construction in some projects and specific areas. Meanwhile, the real estate market in other regions remains sluggish with few transactions. The fundamental cause of this situation is that the supply of land and houses in Hanoi and Ho Chi Minh City has recently been limited, compensation and land clearance work has faced many difficulties, input costs (materials, labor...) have increased significantly, and the impact of the financial and monetary markets has directly affected the rise in real estate prices. In areas where real estate prices have suddenly increased, there has been a phenomenon of investors holding inventory without putting them on the market to drive up prices; local authorities have lacked timely inspections, controls, and handling of speculative activities and price hikes within their jurisdictions. Additionally, an important reason is that many localities have not paid sufficient attention to investing in building social housing funds for low-income groups to rent or purchase according to the provisions of the Law on Housing. The speculative behavior of pushing real estate transaction prices excessively high compared to actual value has had negative impacts on investment activities, reduced government revenue, and adversely affected public psychology and social life. To address these issues, promote healthy real estate market operations, boost economic growth, and social welfare, the Prime Minister instructs:

1. Ministry of Construction:

a) To take the lead and coordinate with relevant ministries and sectors to study and amend the contents related to project planning, review, and approval for housing development in Decree No. 90/2006/ND-CP dated September 6, 2006, of the Government detailing and guiding the implementation of the Law on Housing towards decentralization, eliminating unreasonable regulations to shorten project implementation time, encouraging developers to construct diverse types of apartments suitable for low- and middle-income groups, and submitting to the Government in the first quarter of 2008;

b) To take the lead and coordinate with relevant ministries and sectors to study and draft a decree on administrative penalties for violations in real estate business activities, and submit to the Government in the second quarter of 2008;

c) To take the lead and coordinate with relevant ministries and sectors to issue guiding documents for implementing Decree No. 153/2007/ND-CP dated October 15, 2007, detailing and guiding the implementation of the Law on Real Estate Business in the first quarter of 2008;

d) To take the lead and coordinate with relevant ministries and sectors to issue or submit to competent authorities for issuance of the ceiling on housing ownership to serve as the basis for determining property tax according to the law on taxation immediately after the relevant laws on taxation concerning the real estate market are amended and supplemented;

đ) To direct and urge localities to accelerate investment in constructing social housing from central and local budgets and other sources, seek ODA funding to create state-owned housing funds to gradually regulate the housing market;

e) To strengthen inspection, detection, and handling of violations in real estate business activities within the scope of authority;

g) To urge ministries, sectors, and localities to implement Directive No. 11/2007/CT-TTg dated May 8, 2007, of the Prime Minister on the implementation of the Law on Real Estate Business;

2. The Ministry of Natural Resources and Environment:

a) To take the lead and coordinate with relevant ministries and sectors to study and amend the mechanism for designating developers for new housing and urban projects allocated land or leased land to ensure the selection of experienced and financially capable developers who meet progress requirements, while having specific sanctions for cases of delayed project implementation and failure to meet stipulated deadlines, and submitting to the Government in the first quarter of 2008;

b) To issue within the scope of authority a document guiding the permission for developers of new housing and urban projects to choose the form of land use payment as prescribed in Decree No. 84/2007/ND-CP dated May 25, 2007, of the Government supplementing the regulations on issuing land use certificates, land recovery, exercising land use rights, procedures and formalities for compensation, support, resettlement when the State recovers land, and resolving land disputes to facilitate developers in reducing land costs, contributing to lowering housing sale and rental prices in projects;

c) To take the lead and coordinate with relevant ministries and sectors to issue within the scope of authority or submit to competent authorities for issuance of the ceiling on land use to serve as the basis for determining property tax according to the law on taxation immediately after the relevant laws on taxation concerning the real estate market are amended and supplemented.

3. Ministry of Finance:

a) To lead and coordinate with relevant ministries and sectors to study amendments and supplements to the Ordinance on Land Tax towards imposing a progressive tax rate on cases where owners or users have multiple houses and lands exceeding the prescribed limit, or possess houses and lands but do not put them into exploitation for use, with the aim of curbing speculation and increasing revenue for the State budget, and submit to the Government in the first quarter of 2008;

b) To lead and coordinate with relevant ministries and sectors to study amendments and supplements to the Law on Land Transfer Tax dated June 22, 1994 and the Law Amending and Supplementing Certain Provisions of the Law on Land Transfer Tax No. 17/1999/QH10 dated December 21, 1999 towards reducing the tax rate for transactions and transfers of residential land and construction land, with the aim of encouraging organizations, households, and individuals to declare and register for payment of taxes when conducting such transactions and transfers of land use rights, and submit to the Government in the first quarter of 2008;

c) To lead and coordinate with relevant ministries and sectors to study amendments and supplements to Decree No. 176/1999/NĐ-CP dated December 21, 1999 of the Government on stamp duty and Decree No. 47/2003/NĐ-CP dated May 12, 2003 of the Government amending and supplementing Article 6 of Decree No. 176/1999/NĐ-CP dated December 21, 1999 of the Government on stamp duty towards reducing the percentage of stamp duty for cases registering ownership and use rights of real estate properties, and submit to the Government in the first quarter of 2008.

4. The Ministry of Industry and Trade shall be responsible for urging ministries, sectors, and localities to implement effectively Directive No. 18/2007/CT-TTg dated August 1, 2007 of the Prime Minister on urgent measures to control the rate of price increase in the market to contribute to stabilizing real estate prices.

5. Provincial People's Committees under the central government:

a) To review and check again the list and progress of implementation for all housing projects and new urban area projects within their jurisdiction; to carry out the recovery of land from project investors who have been allocated or leased land but have not commenced or have delayed commencement of the project according to the provisions of the Law on Land.

b) To take resolute measures against cases of speculation in real estate, buying and selling, transferring real estate assets in violation of the law, evading taxes, as well as other violations of the law on land, housing, and real estate business within their jurisdiction;

c) To report the situation of development and management of the real estate market in their locality to the Ministry of Construction before February 1, 2008 for consolidation and reporting to the Prime Minister.

6. Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of provincial People's Committees and municipal People's Committees directly under the Central Government shall be responsible for strictly organizing the implementation of this Directive within their respective functions and tasks assigned.

7. This Directive shall take effect fifteen days after its publication in the Official Gazette.

8. The Ministry of Construction shall lead and coordinate with the Office of the Government to organize, inspect, urge the implementation of this Directive, and periodically report to the Prime Minister.

                                                                                                           PRIME MINISTER

                                                                                                           (Signed)

Nguyen Tan Dung