Individual and institutional investors will be allowed to use their homes of the commercial projects that are under construction or will be developed as collateral to take out bank loans as stated in a recent joint circular, the Saigon Times Daily reported.
Circular 01/2014, issued by the central bank and the ministries of Construction, Justice, and Natural Resources and Environment, clarifies owners of apartments, villas and attached houses at the housing projects will be eligible for bank loans from June 16 this year.
A number of banks and property companies have expected that the circular, which was issued to provide guidelines for the Government’s Decree 71/2010/ND-CP featuring guidelines for Housing Law, will give a boost to credit growth in the real estate sector and accelerate disbursements of the 30-trillion-VND home loan programme.
The projects to benefit from the circular should have designs approved, foundation construction completed, contracts signed between the seller and the buyer, units handed over to the buyer although the ownership certificates have not been issued by authorities among others.
If housing projects have been used as collateral for bank loans, the investors must settle their payments with the lenders; otherwise, these projects and their customers are not subject to the benefits of the circular. This is considered a bottleneck as the investors cannot pay bank debts easily at a time when the country’s real estate market is not showing clear sign of recovery.
Speaking to the Daily, representatives of some banks said that the new circular would leave little impact on credit growth for the real estate sector.
Nguyen Dinh Tung, General Director of Orient Commercial Bank (OCB), said that banks had already allowed clients to take out loans when they used their future apartments as collateral as this already existed in a number of legal documents.
However, Tung acknowledged the new circular provide more details for banks to follow and transact more confidently with the clients who use their future property to take out bank loans.
Tung noted that risks still loomed large for banks if they were not strict with their lending procedures. Banks should disburse their loans depending on the construction pace of the projects used as collateral and business plans of the investors.
Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), was quoted by the Daily as saying that the content of the new circular was actually what the association had proposed to the Government in previous years.
Chau expected the circular would facilitate fast disbursements of the 30-trillion-VND home loan package, which is said to progress at a snail’s pace.
Nguyen Phuong Chi, board member of Binh Chanh Real Estate Commercial JSC, was concerned that if the legal document was not executed transparently, certain banks and their close property clients could benefit.
But Chau said banks had the right to chose projects for lending based on their business relationships with investors.-VNA
Circular 01/2014, issued by the central bank and the ministries of Construction, Justice, and Natural Resources and Environment, clarifies owners of apartments, villas and attached houses at the housing projects will be eligible for bank loans from June 16 this year.
A number of banks and property companies have expected that the circular, which was issued to provide guidelines for the Government’s Decree 71/2010/ND-CP featuring guidelines for Housing Law, will give a boost to credit growth in the real estate sector and accelerate disbursements of the 30-trillion-VND home loan programme.
The projects to benefit from the circular should have designs approved, foundation construction completed, contracts signed between the seller and the buyer, units handed over to the buyer although the ownership certificates have not been issued by authorities among others.
If housing projects have been used as collateral for bank loans, the investors must settle their payments with the lenders; otherwise, these projects and their customers are not subject to the benefits of the circular. This is considered a bottleneck as the investors cannot pay bank debts easily at a time when the country’s real estate market is not showing clear sign of recovery.
Speaking to the Daily, representatives of some banks said that the new circular would leave little impact on credit growth for the real estate sector.
Nguyen Dinh Tung, General Director of Orient Commercial Bank (OCB), said that banks had already allowed clients to take out loans when they used their future apartments as collateral as this already existed in a number of legal documents.
However, Tung acknowledged the new circular provide more details for banks to follow and transact more confidently with the clients who use their future property to take out bank loans.
Tung noted that risks still loomed large for banks if they were not strict with their lending procedures. Banks should disburse their loans depending on the construction pace of the projects used as collateral and business plans of the investors.
Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), was quoted by the Daily as saying that the content of the new circular was actually what the association had proposed to the Government in previous years.
Chau expected the circular would facilitate fast disbursements of the 30-trillion-VND home loan package, which is said to progress at a snail’s pace.
Nguyen Phuong Chi, board member of Binh Chanh Real Estate Commercial JSC, was concerned that if the legal document was not executed transparently, certain banks and their close property clients could benefit.
But Chau said banks had the right to chose projects for lending based on their business relationships with investors.-VNA
