Individual and institutional investors will be allowed to use theirhomes of the commercial projects that are under construction or will bedeveloped as collateral to take out bank loans as stated in a recentjoint circular, the Saigon Times Daily reported.
Circular01/2014, issued by the central bank and the ministries of Construction,Justice, and Natural Resources and Environment, clarifies owners ofapartments, villas and attached houses at the housing projects will beeligible for bank loans from June 16 this year.
A number ofbanks and property companies have expected that the circular, which wasissued to provide guidelines for the Government’s Decree 71/2010/ND-CPfeaturing guidelines for Housing Law, will give a boost to credit growthin the real estate sector and accelerate disbursements of the30-trillion-VND home loan programme.
The projects to benefit fromthe circular should have designs approved, foundation constructioncompleted, contracts signed between the seller and the buyer, unitshanded over to the buyer although the ownership certificates have notbeen issued by authorities among others.
If housing projects havebeen used as collateral for bank loans, the investors must settle theirpayments with the lenders; otherwise, these projects and theircustomers are not subject to the benefits of the circular. This isconsidered a bottleneck as the investors cannot pay bank debts easily ata time when the country’s real estate market is not showing clear signof recovery.
Speaking to the Daily, representatives of some bankssaid that the new circular would leave little impact on credit growthfor the real estate sector.
Nguyen Dinh Tung, General Director ofOrient Commercial Bank (OCB), said that banks had already allowedclients to take out loans when they used their future apartments ascollateral as this already existed in a number of legal documents.
However,Tung acknowledged the new circular provide more details for banks tofollow and transact more confidently with the clients who use theirfuture property to take out bank loans.
Tung noted that risksstill loomed large for banks if they were not strict with their lendingprocedures. Banks should disburse their loans depending on theconstruction pace of the projects used as collateral and business plansof the investors.
Le Hoang Chau, Chairman of the Ho Chi Minh CityReal Estate Association (HoREA), was quoted by the Daily as sayingthat the content of the new circular was actually what the associationhad proposed to the Government in previous years.
Chau expectedthe circular would facilitate fast disbursements of the 30-trillion-VNDhome loan package, which is said to progress at a snail’s pace.
NguyenPhuong Chi, board member of Binh Chanh Real Estate Commercial JSC, wasconcerned 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
Circular01/2014, issued by the central bank and the ministries of Construction,Justice, and Natural Resources and Environment, clarifies owners ofapartments, villas and attached houses at the housing projects will beeligible for bank loans from June 16 this year.
A number ofbanks and property companies have expected that the circular, which wasissued to provide guidelines for the Government’s Decree 71/2010/ND-CPfeaturing guidelines for Housing Law, will give a boost to credit growthin the real estate sector and accelerate disbursements of the30-trillion-VND home loan programme.
The projects to benefit fromthe circular should have designs approved, foundation constructioncompleted, contracts signed between the seller and the buyer, unitshanded over to the buyer although the ownership certificates have notbeen issued by authorities among others.
If housing projects havebeen used as collateral for bank loans, the investors must settle theirpayments with the lenders; otherwise, these projects and theircustomers are not subject to the benefits of the circular. This isconsidered a bottleneck as the investors cannot pay bank debts easily ata time when the country’s real estate market is not showing clear signof recovery.
Speaking to the Daily, representatives of some bankssaid that the new circular would leave little impact on credit growthfor the real estate sector.
Nguyen Dinh Tung, General Director ofOrient Commercial Bank (OCB), said that banks had already allowedclients to take out loans when they used their future apartments ascollateral as this already existed in a number of legal documents.
However,Tung acknowledged the new circular provide more details for banks tofollow and transact more confidently with the clients who use theirfuture property to take out bank loans.
Tung noted that risksstill loomed large for banks if they were not strict with their lendingprocedures. Banks should disburse their loans depending on theconstruction pace of the projects used as collateral and business plansof the investors.
Le Hoang Chau, Chairman of the Ho Chi Minh CityReal Estate Association (HoREA), was quoted by the Daily as sayingthat the content of the new circular was actually what the associationhad proposed to the Government in previous years.
Chau expectedthe circular would facilitate fast disbursements of the 30-trillion-VNDhome loan package, which is said to progress at a snail’s pace.
NguyenPhuong Chi, board member of Binh Chanh Real Estate Commercial JSC, wasconcerned 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
