According to the Law on Real Estate Trading 2023, form of off-the-plan housing, construction projects trading, include: sale and lease purchase.

* Payment for off-the-plan housing, construction projects sale or lease purchase

For the sale of off-the-plan housing, construction projects, payments are made in multiple installments. The buyer's initial payment must not exceed 30% of the contract value, including the deposit, and subsequent payments shall be in accordance with the construction progress, with a total not exceeding 70% of the contract value before the handover of the house or construction project. Additionally, in cases where the seller is a foreign-invested economic organization required to meet specific conditions and follow the investment procedures set out for foreign investors according to the Investment Law 2020, the total payment received cannot exceed 50% of the contract value.

For the lease purchase of off-the-plan housing, construction projects, payments are also made in multiple installments. For the initial payment, the lessee must not pay more than 30% of the contract value, including the deposit. Subsequent payments shall be in accordance with the construction progress until the handover of the house or construction project to the lessee, but the total amount paid to the lessor before the handover cannot exceed 50% of the lease purchase contract value for the residential property or future construction project. The remaining amount is considered rent to be paid to the lessor over a certain period as agreed in the contract.

If the buyer or the lessee has been not granted the Certificate of land, ownership of land and property on land, the seller or the lessor shall not collect payment not exceeding 95% of the agreement value from the buyer or the lessee; the remaining value shall be paid when the buyer or the lessee is granted the Certificate of land, ownership of land and property on land by competent agencies.

In terms of payment regulations in off-the-plan housing, construction projects trading, the Law on Real Estate Trading 2023 has differences compared to the Law on Real Estate Trading 2014. Specifically, when regulating the value of the initial payment, Law on Real Estate Trading 2023 states that the initial payment made by the buyer or lessee to the seller or lessor includes the deposit. In contrast, the Law on Real Estate Trading 2014 only included the initial payment amount without including the deposit. 

* Guarantee on off-the-plan housing sale or lease purchase

The investor of a real estate project must obtain approval from a domestic commercial bank or a foreign bank branch legally operating in Vietnam to provide a guarantee for the financial obligations of the investor towards the buyer or lessee of the building before selling or leasing purchase off-the-plan housing. This guarantee applies when the investor fails to hand over the property as promised in the sale or lease purchase contract for the off-the-plan housing. The financial obligations include the amounts the investor has received in advance from the buyer or lessee and any other amounts (if any) as agreed in the sale or lease purchase contract for the off-the-plan housing. When the guaranteeing bank approves the issuance of a guarantee for the investor, a guarantee agreement will be signed between the guaranteeing bank and the investor regarding these contents. Based on the signed guarantee agreement, the guaranteeing bank will send the real estate project investor a commitment letter confirming that it will issue a guarantee letter for all buyers or lessees of the building within the project approved for the investor's guarantee. The investor is responsible for sending a copy of this commitment letter to the buyer or lessee when signing the sale or lease purchase contract for the off-the-plan housing.

When signing a contract for the purchase or lease purchase of off-the-plan housing, the buyer or lessee has the option to choose whether or not to have a guarantee for the financial obligations of the investor towards them. In cases where the buyer or lessee opts for a guarantee, the guaranteeing bank will issue a guarantee letter to the buyer or lessee based on the sale or lease purchase contract for the future residential property provided by the investor. This letter will then be sent to the investor, who will provide it to each buyer or lessee. The guarantee agreement signed between the guaranteeing bank and the project investor, as well as the guarantee letter issued by the guaranteeing bank to the buyer or lessee, must specify the validity period. The investor is required to provide the guarantee letter to the buyer or lessee within 10 working days from the date of signing the sale or lease purchase contract for the future residential property, or within another timeframe agreed upon by the parties in the contract. The investor can only receive payments from the buyer or lessee under the sale or lease purchase contract for off-the-plan housing after providing the guarantee letter to the buyer or lessee and after the buyer or lessee has received the guarantee letter from the guaranteeing bank. If the investor fails to hand over the building as promised in the contract and does not fulfill or partially fulfills their financial obligations to the buyer or lessee, the guaranteeing bank is responsible for fulfilling the financial obligations to the buyer or lessee on behalf of the investor according to the commitments in the guarantee letter.

The regulations on guarantees in the sale and lease purchase of off-the-plan housing do not apply to the sale and lease purchase of social housing.

This article is for reference only and is not intended to be used as advice. If you need advice, please contact us via email: info@barrso.com