The Real Estate Business Law 2023 will come into force on August 1, 2024, introducing new provisions that facilitate stricter management and sustainable development of the real estate market.

Deposit Limits for Future Housing Developments

According to Clause 5, Article 23 of the Real Estate Business Law 2023, real estate project investors are only allowed to collect a deposit of no more than 5% of the selling or leasing price for housing and construction works that meet business conditions. The deposit agreement must clearly specify the sale or lease price of the housing, construction works, and the floor area within the construction project.

Currently, the Real Estate Business Law 2014 does not specify a deposit limit, allowing the parties to decide based on mutual agreement. Therefore, the new 5% deposit limit set by the Real Estate Business Law 2023 is a welcomed regulation expected to protect buyers’ legal right and interest and mitigate certain legal risks associated with advance deposits, such as delays in fulfilling obligations by the investor.

New Regulations on Payment Schedules for Future Housing Developments

A new provision in The Real Estate Business Law 2023, anticipated to protect buyers’ interests, is the change in payment schedules for leasing or purchasing future housing.

Specifically, according to Clause 2, Article 25 of the Real Estate Business Law 2023, the first installment paymen limit for leasing or purchasing housing, construction works, or floor area in future projects is 30%, including the deposit.

For subsequent payments, they must be suitable for the construction progress until the product is handed over and must ensure that the total amount paid in advance to the lessor or seller does not exceed 50% of the contract value for leasing or purchasing housing, construction works, or floor area in the construction project. The remaining amount will be considered rental payments to be made to the lessor or seller over a specified period according to the contract terms.

Compared to The Real Estate Business Law 2014, the advance payment requirement for purchasing or leasing future housing has been adjusted, reducing from 70% to 50% of the contract value.

This new regulation is expected to provide better conditions for lessees and buyers, reducing financial and legal risks related to deposits and transactions for future housing developments.

The Real Estate Business Law 2023 will be effective from August 1, 2024.

This newsletter aims to inform about newly issued legal regulations and is not intended for specific advice or application to individual cases.

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