New Law on Real Estate Business lowers minimum capital from $2.3 million to $920,000.
The amended Law on Real Estate Business to take effect on July 1 alters the provision stating that enterprises who seek to be involved in the property business must have legal capital of no less than VND50 billion ($2.3 million), after the drafting team took on board suggestions from authorities and enterprises.
According to Deputy Minister of Construction Pham Hong Ha the provision now states that legal capital must be no less than VND20 billion ($920,000).
The $2.3 million minimum had raised a great deal of controversy and many had called for it be even lower than the new minimum of $920,000.
Mr. Ha, however, believes that would be unreasonable.
In its review of projects the Ministry found that 306 projects were delayed and 460 projects required adjustments to their plans and size. Many of these problematic projects belong to the same investors. “Therefore, the provisions on legal capital being no less than $920,000 will restrict unqualified enterprises becoming involved in real estate," Mr. Ha was quoted as saying.
With the law to take effect from July 1, he said, contracts signed before this date will continue to be implemented as per the provisions of the law at the time the contracts were signed.
He added that five decrees will accompany the new law. The Ministry is now completing the final stages of preparation and the decrees will be issued in mid-July.