Vietnam's food trade industry is one of the most dynamic sectors in the country. Fueled by an expanding middle class, rising disposable incomes, and shifting consumer preferences, the increasing demand for high-quality food products is undeniable. From bustling markets in Ho Chi Minh City to modern supermarkets in other major cities, the opportunity for both […]
Brokers are important in the real estate market. They can provide convenience and professional consulting services for customers. They help customers to quickly make wise and legal investment decisions.
However, with the rising rate of unqualified real estate brokers in recent years, the brokerage service is to blame for negative issues in the market. Unprofessional real estate brokers were the cause of land fever in major cities and provinces because they provided misleading information to customers and colluded with others to push prices up. Therefore, the Government has put continuous effort into standardizing real estate brokerage by issuing several important regulations in recent years.
The expiry of real estate licenses granted before 1/7/2015
The Government emphasized the importance of real estate licenses in the Vietnam Real Estate Trading Law 2014 which takes effect from July, 2015. To standardize real estate brokerage, they made licenses compulsory and tightened regulations regarding obtaining a broker license.
According to the Law, all real estate brokerage certificates granted before July, 2015 were effective for 5 years until 1/7/2020. Therefore, when the old certificates expire in 2020, brokers who want to get licenses again must meet all the conditions issued in the Law and register for a license examination.
However in 2021, because of the Covid-19 pandemic, many people couldn't register for the examination for a new license. They continued to do business with an invalid license. According to the Vietnam Association of Realtors, only 10 percent of real estate brokers had licenses. This means the majority of brokers were amateurs who were untrained and unregulated. They became brokers temporarily as the real estate market boomed. Therefore, the Government has taken immediate measures to tighten regulations related to real estate licenses.
Strict sanctions for conducting brokerage services without licenses
With the aim to tighten regulations on real estate licenses and strengthen management in construction activities, the Government has issued Decree 16/2022/ND-CP in January, 2022. The new decree stipulates sanctions for administrative violations in construction in general. It also includes strict regulations on sanctions for illegal brokerage activities.
Specifically, individuals or organizations who provide real estate brokerage service without a practicing certificate or with an expired certificate will be fined between VND40-60 million (US 1722-2584 dollar). It can be seen that the fine increased by 4 times, from VND 10-15 million in the previous law to VND40-60 million in 2022.
Importantly, the Decree adds a fine of between VND40-60 million also for three more acts as follows:
- The first one is falsifying the practice certificate’s content. The lawbreaker will have to return this certificate to the competent authority that issued it.
- The second act is lending, leasing, renting or borrowing practice certificates to carry out real estate brokerage services. Besides the fine of VND40-60 million, the lawbreaker can even be deprived from the right to carry out brokerage services in the future, as an additional sanction.
- The third illegal act is that organizations and individuals providing brokerage services are concurrently both a broker and a contract performer in a real estate business transaction. Individual fines for this act are 1/2 of the fine level for organizations.
Since the beginning of 2022, people have been seeking licenses due to the tightening of regulations. Real estate agents are trying to get their employees certified as quickly as possible to avoid sanctions. Getting a license is the basic requirement to ensure that their employees are adequately qualified. Hundreds of brokers in Ho Chi Minh City and the southern provinces have enrolled in training courses since the regulation took effect. The number is ten times greater than that of only a few months ago.
Requirements for individuals and organizations to conduct real estate brokerage
The Government understands how important real estate brokers are to market transparency. Therefore, they have established several conditions for individuals and organizations to carry out real estate brokerage services and obtain a brokerage license.
Firstly, the Vietnam Real Estate Trading Law 2014 stipulates comprehensive requirements for real estate brokerage service providers. According to the Law, providers must set up the enterprise where there are at least 2 employees obtaining real estate broker licenses. Moreover, providers can not be both a broker and a contracting party in a real estate transaction. Notably, individuals can provide real estate brokerage services independently providing that he or she obtains a broker license and pays taxes.
In addition, the Law also thoroughly stipulates regulations on issuance of real estate broker licenses. In terms of candidates’ eligibility, Vietnamese citizens, overseas Vietnamese and foreigners can all register for the license examination. The duration of the broker's license is 5 years. In this way, the Government aims to push up the standards of real estate brokers.
In conclusion
The Vietnam Government is well aware that unprofessional real estate brokers can significantly affect investors, customers and even other professional real estate brokers. Therefore, they find it crucial to come up with solutions and propose appropriate sanctions to push up the standards of real estate service providers and brokers. It can also be seen that the Government has provided comprehensive and favorable, yet strict, policies for individuals, domestic and foreign organizations to do business in the Vietnam real estate market.
Thanks to the fast growing economy, increasingly high urbanization rate and the growing middle class, Vietnam’s real estate is predicted to thrive in the near future. It has become a lucrative investment opportunity. However, Vietnam’s numerous regulations can pose a big challenge to investors. Viettonkin can provide our partners with comprehensive and updated information and knowledge about the legal framework of the real estate market. We are confident to be your resourceful partner!
