The Ho Chi Minh City Real Estate Association (HoREA) has raised concerns about new regulations that will only allow banks to issue home loans on completed buildings, Tuoi Tre is reporting. These new regulations are outlined in Circular 22/2023/TT-NHNN.
The article does not offer specific details as to what these concerns are, however, in the past it has been common to buy apartments off-the-plan in Vietnam usually with a sizable deposit. These funds would then be used to build the property. These new regulations will mean construction and real estate firms will need to secure funding elsewhere first and then recoup that expense when the building is complete. Essentially the risk will shift from the buyer to the developer.
This is a result of a number of real estate firms in the past overextending themselves, using funds from pre-sold homes and apartments to buy more land or start new projects or in some instances investing in completely unrelated sectors. When the real estate market froze up at the end of 2022, many of these real estate firms were unable to attract new buyers and therefore had no money to complete the projects they were already working on. As a result, a lot of people in Vietnam have home mortgages but have no homes and no end date in sight.
Update 16/2/2024 – HOREA may have jumped the gun. See: Fears about regulatory changes to off-the plan loans in Vietnam unfounded.