Ho Chi Minh City Real Estate Association (HOREA) has just submitted to the Prime Minister a proposal to removelogjams and challenges on policy mechanisms, providing resolutions for the real estate (RE) market to recover after the Covid-19 pandemic. HOREA believed that the 9 points proposed below will help remove congestion and obstacles in the mechanism of policies, create conditions for the real estate market to recover after Covid19.
For the Government:
(1) Amending and supplementing a numerous of articles of the Decrees regarding Land Law: proposing a mechanism for handling State-owned land lots interlaced in housing projects, to restart hundreds of Housing projects that are currently congested;
(2) Amend and supplement Clause 3 Article 8 of Decree 20/2017 / ND-CP at the proposal of the business community and concluded by the Prime Minister, to reduce financial pressure and not to pressure businesses, especially businesses operating under the parent-child model;
(3) Proposing not to "tighten" corporate bonds at the current sensitive time to create more channels for mobilizing social investment capital for real estate;
(4) Reviewing and approving for enterprises to delay the payment of land use levy for housing projects, similar to the mechanism for extending the payment of land rent, value added tax and corporate income tax , according to Decree 41/2020 / ND-CP of the Government;
(5) Considering and approving for individuals and households to also extend the payment of land use levies for 12 months, when carrying out procedures to legalize house ownership and residential land use rights.
As for and related to the Bank's policies:
(1) Introducing the mechanism of "first-house credit" for young people, with a reasonable interest rate by the method of trust, or mortgage with the house itself;
(2) Regarding credit policy: suggest that banks support real estate enterprises to restructure due debts;
(3) Consideration to reduce about 30-50% of loan interest within 12 months (at least in 2020), enterprises are allowed to extend the schedule of loan interest payment, repayment of principal, no automatic conversion to bad debt after the expiry date;
(4) Proposing commercial banks to support home owners to reduce 30-50% of interest rate for a period of 12 months (at least in 2020), to extend the schedule of loan interest and principal repayments to overcome difficulties.
HOREA’ recommendations are considered to represent businesses operating in the real estate sector in Ho Chi Minh City. In the time that the Government is "speeding up" reforms of policies and mechanisms, providing more favorable conditions for the economy to recover and continue to grow after COVID-19, it can be expected that some of the above proposals would be approved. However, regarding revision of the decrees, it would take some time due to the requirements of orders, procedures for submission, comments, adjustments and issuance. While banking solutions related to the policy of reducing interest rates are not necessarily feasible for all commercial banks, we hope that some solutions will help "defrost" more than 100 projects that are legally deadlocked.
Updated by: Skylar Bui
Image from: Purely Finance