Specifically, according to Le Hoang Chau, Chairman of HoREA, the Law on Real Estate Business does not have any regulation on home purchase deposit, while the Civil Law stipulates that value of the deposit is agreed by both parties. This encourages many property businesses to seek to circumvent the law for unlimited amount of capital mobilized from buyers.
Ho Chi Minh City Real Estate Association proposes limiting the amount of deposit on home purchases to prevent illegal capital mobilization.
“In most of the cases, the higher deposit is paid, the higher risk buyers bear with unreliable investors. In a typical real estate business contract, payment of the first installment does not exceed 30% of the contract value, so a deposit of not more than VND50 million is reasonable. The amount of deposit for off-plan homes not more than VND50 million will help buyers avoid being exploited by unreliable developers,” Chau said.
The head of HoREA proposed not signing real estate sales and purchase contract for off-plan homes, or making a record or agreement to place a deposit or contribute investment capital, as this is illegal capital mobilization, contrary to the provisions of the Law on Real Estate Business.
Mr Chau also believed the regulation of a deposit of no more than VND 50 million would help prevent some enterprises from taking advantage of the regulations on deposit and investment cooperation of the Civil Law to mobilize illegal capital for future real estate projects which are not eligible for capital mobilization.
However, the proposal now makes real estate companies disagree. They said the agreement to sell and purchase home is a civil agreement between businesses and customers. If the deposit amount is too high, customers will refuse it. In addition, it is not reasonable to propose a deposit of VND 50 million for high-value projects.
