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Property market needs unfavorable policies removed   2012-04-30 - SGT

Credit supply at affordable lending rates is considered a necessary measure to stimulate the property market, but beyond capital supply, the market also needs a liberal environment with improper regulations removed, experts said.

While housing products being developed can easily change hands, trade of completed apartments is being restricted by current regulations.

Property developers have been complaining about Circular 16/2010/TT-BXD providing guidelines for Decree 71/2010/ND-CP, which allows buyers of unfinished housing products to freely transfer their properties to other parties, while those already receiving completed houses find it difficult to do so.

Once the properties were handed over to them, buyers need home ownership certificates so that their apartments can change hands. The point is it often takes a couple of years for homeowners to get such certificates.

“Homebuyers are not to blame for late home ownership certificate granting. The responsibility falls on property developers and the State agencies,” said Le Hoang Chau, chairman of the HCMC Real Estate Association (HoREA).

The fact that the property transfer is restricted goes against property rights of citizens, damaging the interests of homeowners and secondary investors in need of housing transfer, as well as affecting the market liquidity.

Sharing this view, Nguyen Phung Thieu, general director of Saigon-Gia Dinh Real Estate JSC, said such a policy is unreasonable and should be removed soon, in order to enable apartments to change hands with no need to have home ownership certificates.

Relieving burden on input

Housing prices are now too high compared to people’s incomes. Apart from speculation, difficulties in project development are also ascribed to exorbitant property prices.

Property product prices are dependent on many factors, especially site clearance cost, land use fee, capital cost, material expenses, and possibly high management cost caused by prolonged administrative procedures.

At a recent seminar held by HoREA, Nguyen Xuan Quang, general director of Nam Long Investment Corporation, shared his experience of being tortured by cumbersome procedures.

In 2008, Nam Long cooperated with a foreign partner to carry out a project. After signing the contract, the two parties conducted regulatory procedures such as seeking approval for project planning and applying for an investment certificate.

The procedures were expected to last one year, but in fact, it took three years for the project owners to complete all the procedures.

When the partner decided to join in the project, the local realty market was thriving. However, as the market worsens, the foreign investor has pulled out of the project, leaving his company with huge expenses and the possibility of project revocation due to slow deployment, Quang stressed.

Another headache is land use fee calculated on market prices under Decree 69. With this calculation, property developers have to pay both site clearance compensation and land use fee in accordance with the market prices, meaning double land purchase.

Therefore, many real estate enterprises are afraid of executing their projects. As a result, the market comes to a deadlock and tax agencies have difficulty collecting land use fee.

Property firms said land use fee would end up pushing up home prices, and homebuyers will suffer.

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