Tiếng Việt
中文Quick answer: From 01/8/2024, conditions for real estate business apply under the Law on Real Estate Business No. 29/2023/QH15 (replacing the 2014 Law on Real Estate Business; Decree 96/2024/ND-CP guiding the implementation of the 2023 Law, effective from 01/8/2024, replacing Decree 02/2022/ND-CP). The most important change: the 2023 Law no longer requires VND 20 billion in legal capital. Instead, organizations and individuals must establish an enterprise (or cooperative) with real estate business lines, not be banned/suspended from operation, ensure credit debt and bond debt to equity ratios, and meet minimum equity requirements when trading through projects.
Current legal framework: the 2023 Law on Real Estate Business
Law on Real Estate Business No. 29/2023/QH15 was passed by the National Assembly on 28/11/2023, effective from 01/8/2024, replacing the 2014 Law on Real Estate Business. Conditions under the 2014 Law (such as the VND 20 billion legal capital requirement) no longer apply.
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Real Estate Project Legal Advisory
If you are preparing a property transaction, project transfer or land-related file review, ANT Legal can help identify legal risks and suitable next steps.
Conditions for organizations and individuals trading in real estate (Article 9)
1. Organizational form conditions
Organizations and individuals trading in real estate must establish an enterprise under enterprise law or establish a cooperative or cooperative union under cooperative law, with real estate business lines. Exception: individuals trading in real estate on a small scale are not required to establish an enterprise but must declare and pay taxes; cases of selling or leasing houses or construction works not for business purposes or below the small-scale threshold need not comply with this Law (but must still declare and pay taxes).
2. Conditions for real estate business enterprises
- Not being banned from real estate business, suspended or having operations suspended under court judgments/decisions or competent state authorities;
- Ensuring credit debt and corporate bond debt to equity ratios under Clause 1, Article 5 of Decree 96/2024/ND-CP: the total ratio of outstanding loans at credit institutions and outstanding corporate bonds for each project must not exceed 100% of the total investment capital of that project, must not exceed 4 times the equity for projects using less than 20 ha of land, and must not exceed 5.67 times the equity for projects of 20 ha or more;
- Enterprises trading in real estate through projects must have equity of not less than 20% of total investment capital for projects using less than 20 ha of land, not less than 15% for projects of 20 ha or more; when implementing multiple projects, equity must be sufficient to allocate the above ratios to each project.
3. Trading in real estate services
Organizations and individuals trading in real estate services (brokerage, trading floors, consultancy, real estate management…) follow separate rules in Clause 5, Article 9 of the 2023 Law on Real Estate Business, including practice certificate conditions for individual brokers.
Key notes
- The major difference from the 2014 Law: removal of the VND 20 billion legal capital requirement, replaced by a mechanism controlling financial leverage ratios (credit debt, bond debt to equity) and minimum equity by project scale.
- When assessing conditions, concurrently apply the implementing decrees of the 2023 Law on Real Estate Business in effect at the time of implementation.
How ANT Legal can help
ANT Legal advises on real estate business conditions, transaction structuring, contract drafting and legal compliance for real estate enterprises. For advice on your specific case, please contact our lawyers at 0966.475.966.
