According to Article 9 Law on Real Estate Business – Conditions for Organizations and Individuals Conducting Real Estate Business
1. Organizations and individuals engaged in real estate business must establish an enterprise in accordance with the law on enterprises or establish a cooperative/union of cooperatives in accordance with the law on cooperatives, with real estate business as a registered business line (hereinafter collectively referred to as real estate business enterprises), except as provided in Clauses 3 and 4 of this Article.
Where organizations and individuals conduct real estate service business, such activities shall be carried out in accordance with Clause 5 of this Article.
2. Real estate business enterprises must satisfy the following conditions:
a) Not being under prohibition, suspension, or cessation of real estate business activities under a legally effective judgment, decision of a Court, or decision of a competent state authority;
b) Ensuring the ratio of credit debt and corporate bond debt to equity capital as prescribed;
c) A real estate business enterprise conducting business through real estate projects must have equity capital of not less than 20% of the total investment capital for projects with land use scale of less than 20 hectares, and not less than 15% of the total investment capital for projects with land use scale of 20 hectares or more, and must ensure the capacity to mobilize capital for project implementation. In cases where the enterprise concurrently implements multiple projects, it must have sufficient equity capital allocated to satisfy the above ratios for each project.
3. Individuals conducting small-scale real estate business are not required to establish a real estate business enterprise but must declare and pay taxes in accordance with the law.
4. Organizations and individuals selling houses, construction works, or floor areas within construction works not for business purposes, or selling, leasing, or lease-purchasing houses, construction works, or floor areas within construction works at small-scale levels, are not required to comply with this Law but must declare and pay taxes in accordance with the law. In cases where individuals sell or lease-purchase houses, construction works, or floor areas within construction works, such transactions must also be notarized or certified in accordance with Clause 5, Article 44 of this Law.
5. Organizations and individuals conducting real estate service business must establish an enterprise in accordance with the law on enterprises or establish a cooperative/union of cooperatives in accordance with the law on cooperatives (hereinafter collectively referred to as real estate service business enterprises), and must satisfy the conditions as provided by this Law.
6. The Government shall provide detailed regulations on Point b and Point c, Clause 2 of this Article, and regulations on determining small-scale real estate business as provided in Clauses 3 and 4 of this Article.
[This Article is guided by Articles 5 to 7 of Decree No. 96/2024/ND-CP, effective from August 1, 2024.
Relevant Guidance under Decree No. 96/2024/ND-CP
Article 5. Ratio of Credit Debt and Corporate Bond Debt to Equity of Real Estate Business Enterprises
1. Based on their equity, investment and business plans, real estate business enterprises shall decide on borrowing from credit institutions and issuing corporate bonds, provided that the ratios of credit debt and corporate bond debt to equity ensure:
a) Compliance with financial safety ratios of enterprises and compliance with laws on credit and corporate bonds;
b) Where an enterprise borrows from credit institutions or issues corporate bonds to implement a real estate project approved by competent authorities, the total outstanding loans, bond debts, and required equity for each project must not exceed 100% of the total investment capital of that project;
c) The total ratio of outstanding loans from credit institutions and bond debts for each real estate project shall not exceed four (04) times the enterprise’s equity for projects with land use scale under 20 hectares, and shall not exceed 5.67 times the enterprise’s equity for projects with land use scale of 20 hectares or more.
2. Equity of real estate business enterprises shall be determined as prescribed in Clause 1, Article 6 of this Decree.
Article 6. Equity and Total Investment Capital of Real Estate Projects
1. Equity of real estate business enterprises in cases where the enterprise is selected or recognized by competent authorities as an investor/developer of a real estate project under laws on investment, auction, bidding, housing, or urban development shall be determined on the basis of:
a) Results of audited financial statements or audited reports on equity items of the enterprise for the year. In cases where such reports are unavailable for the year, the most recent audited financial statements or audited equity reports of the preceding year shall be used, in accordance with laws on enterprises, auditing, and accounting;
b) For enterprises established and operating for less than 12 months, equity shall be determined on the basis of contributed charter capital in accordance with the law on enterprises.
2. Total investment capital of a real estate project shall be determined in accordance with the law on investment.
Article 7. Small-Scale Real Estate Business; Non-Business and Below Small-Scale Transactions
1. Individuals conducting small-scale real estate business must satisfy the following requirements:
a) Not subject to the requirement of preparing an investment project under the laws on construction and housing;
b) Not exceeding a value of VND 300 billion per contract and not conducting more than 10 transactions per year. In cases of only one transaction per year, the contract value shall not be counted.
2. Organizations and individuals selling houses, construction works, or floor areas within construction works not for business purposes, or selling, leasing, or lease-purchasing houses, construction works, or floor areas within construction works below small-scale levels, include:
a) Individuals not subject to the requirement of preparing an investment project under the laws on construction and housing;
b) Organizations not exceeding a value of VND 300 billion per contract and not conducting more than 10 transactions per year. In cases of only one transaction per year, the contract value shall not be counted.]
