In the process of investing in the construction of commercial housing projects, investors always want to mobilize capital from buyers as soon as possible to reduce the pressure of capital mobilization as well as the cost of implementing the investment project. Law on Real Estate Business 2023 (“Real Estate Business Law”) There have been some changes compared to previous regulations on procedures for applying for a license to sell future housing in housing projects that investors need to pay attention to.

Housing formed in the future is a house that is in the process of investment and construction or has not been accepted and put into use.[1] Putting future housing into business is one of the ways to mobilize capital that investors desire and prioritize to apply as soon as permitted. To publicly sell this type of product, investors must submit a dossier of notification of eligibility and must be determined by the Department of Construction to be eligible for sale as prescribed in Article 24 of the Law on Real Estate Business and Article 8 of Decree 96/2024/ND-CP (“Decree 96”). The application for a license shall include:

1. Land documents, including one of the following documents: Certificate of land use rights / Certificate of land use rights, house ownership rights and other assets attached to land / Land allocation decision / Land lease decision and land use rights lease contract / or Decision allowing change of land use purpose.
2. Construction documents, including 03 types of documents: (i) Construction permit and application for permit (if the house is subject to a building permit) or Notice of commencement of construction and design documents (if not required to apply for a building permit); and (ii) Documents on acceptance of completion of construction of technical infrastructure according to schedule.
3. Project documents, Although Article 24 does not explicitly mention this group of documents, in fact the Department of Construction also requires this group of documents during the appraisal process. Depending on the actual situation of the project, the required documents include:

(i) Documents proving payment of land-related obligations, Land handover minutes;

(ii) Certificate of Business Registration of the investor or project company;

(iii) Approval of investment policy / Investment Registration Certificate of the project;

(iv) Approval of 1/500 planning; Cadastral map of the project;

(v) Approval/agreement on connection of power supply, water supply, traffic, rainwater drainage, wastewater drainage systems; Fire prevention and fighting design appraisal certificate;

(vi) Notification of basic design appraisal results; Approval of house type design/architectural instructions;

(vii) Approval of environmental impact assessment; and

(viii) Framework guarantee agreement with the guarantor bank.

The investor should note that the framework guarantee agreement document mentioned above is a mandatory condition. Regarding the content of this guarantee condition, before opening for sale, the investor must be approved by a commercial bank to issue a guarantee for the investor’s financial obligations to customers. The financial obligations include the amount of money the investor has received in advance from customers, which according to the agreement, the investor must pay to the customer if the house is not delivered to the customer on time. The guarantee bank will send the investor a written commitment confirming that it will issue a letter of guarantee to all housing customers in the project. The investor must send a copy of this written commitment to the customer when signing the contract and will only receive payment after the customer has received the letter of guarantee.

After receiving a complete application for a sales license, within 15 days, the Department of Construction will review and respond to the investor in writing in the form of Notice of future real estate eligible for business. In case the Department of Construction does not have a written response within this time limit, the investor can file a complaint.[2] Information on licensing status is also published on the Housing and Real Estate Market Information Portal, investors can look it up at the link: https://batdongsan.xaydung.gov.vn/

The investor will be able to sign a sales contract with the customer after being granted a license, but must comply with the conditions on payment schedule.[3] that:

(i) Not more than 30% of contract valueg on first payment (including deposit);

(ii) Not more than 70% of contract value before handing over the house;

(iii) Not more than 95% of contract value before and after handing over the house and before granting the Certificate of land use rights, house ownership rights and other assets attached to the land to the customer; and

(Iv)         5% of contract value when the customer receives the above certificate.

Thus, compared to the old Law on Real Estate Business in 2014, the new law has more detailed regulations on the types of documents that investors need to provide. The old law only generally stipulates the documents in the dossier including “documents on land use rights” and “project dossier” without specifying the names of the included documents. Such broad regulations have caused both investors and the Department of Construction to spend a lot of time in preparing and examining the dossier. We believe that the amendment of the regulations will help investors save a lot of time in the process of accessing capital sources.

[1] Article 3.5 Law on Real Estate Business.

[2] January 8.4th January 96th

[3] Article 25 Law on Real Estate Business.