In the context of the continuously developing Vietnamese real estate market, the demand for capital mobilization for housing projects is increasing. Currently, the prevailing law allows investors to mobilize capital from a variety of different capital sources. However, clearly understanding the forms of capital increase as well as the types of housing allowed to use the corresponding form of capital mobilization will help businesses avoid potential legal risks.
In this article, BLawyers Vietnam presents an overview of 07 forms of capital mobilization for housing development and provides notes for mobilizers of capital.
1. 07 forms of capital mobilization for housing development
1.1. Mobilizing through capital contribution, investment cooperation, business cooperation, joint ventures, association of organizations and individuals
Types of housing are developed by mobilizing capital through capital contribution, investment cooperation, business cooperation, joint ventures, association of organizations and individuals, including:
- Commercial housing;
- Social housing;
- Housing for resettlement, renovation, and reconstruction of apartment buildings.
According to Decree No. 95/2024/ND-CP (“Decree No. 95”), when implementing housing construction investment projects specified in Article 30.1 of Law on Housing 2023 (except for investment projects to build housing infrastructure to transfer land use rights in the form of subdividing lots for individuals to build their own houses) through this form of capital mobilization to develop housing, businesses shall meet the conditions on land, permits and project investment capital.
1.2. Mobilization through the issuance of bonds, shares, and fund certificates in accordance with the law
Commercial housing is a type of housing that mobilizes capital for development through the issuance of bonds, shares, and fund certificates in accordance with the law.
According to Decree No. 95, mobilizing capital through bond issuance to implement housing construction investment projects shall meet the bond issuance conditions as stipulated by securities law, enterprises law; conditions for foreign investors; selection of investors, and conditions for project collateral release.
Mobilizing capital through the issuance of shares and fund certificates to implement housing construction investment projects shall meet the conditions for shares issuance; securities investment funds, real estate investment funds and other related laws.
1.3. Mobilizing through funding from state capital sources
Types of housing developed through capital mobilization via funding from state capital sources, including:
- Social housing;
- Housing for resettlement, renovation, and reconstruction of apartment buildings.
According to Decree No. 95, housing construction investment projects using public investment capital shall meet the conditions stipulated by the law on public investment. In cases where State capital is not public investment, the projects shall meet the conditions of having investment policy decisions, investor decisions from the competent authority and compliance with the conditions for state capital funding other than public investment according to regulations.
1.4. Mobilizing through loans from credit institutions and financial institutions operating in Vietnam
Types of housing developed by mobilizing capital through loans from credit institutions and financial institutions operating in Vietnam, including:
- Commercial housing;
- Social housing;
- Housing for resettlement, renovation, and reconstruction of apartment buildings;
- Individuals’ housing.
According to Decree No. 95, when mobilizing capital, the project investor shall meet the conditions on land, approval of the feasibility study report or the economic-technical report, and the loan conditions according to the corresponding legal regulations of the lending financial institution.
1.5. Mobilizing through loans from a Social Policy Bank
Social housing is a type of housing that is mobilized through loans from a Social Policy Bank, implemented in accordance with the law on the development and management of social housing.
A Social Policy Bank provides preferential loans with low interest rates and long-term repayment periods through the State budget funding to such Social Policy Bank to implement the construction of social housing according to the regulations of the Government and the Prime Minister during each period.
1.6. Mobilizing from foreign direct investment in Vietnam
Social housing is a type of housing that is mobilized through foreign direct investment in Vietnam.
In the case of establishing a new housing construction investment project in Vietnam, it shall meet the conditions for investment activities of foreign-invested economic organizations in Vietnam according to the provisions of investment law and relevant laws.
In the case of an existing housing construction investment project in Vietnam and establishment of a new legal entity to invest in the construction of another housing project in Vietnam, it shall meet the conditions of identifying the investor and having the feasibility study report or economic-technical report of the project approved.
In the case of receiving the transfer of an investment project for residential construction, it shall be carried out in accordance with the regulations of investment law and real estate business law.
1.7. Mobilizing from other legal sources
Types of housing developed through mobilizing capital using other legal sources of capital, including:
- Public-affair housing;
- Social housing;
- Housing for resettlement, renovation, and reconstruction of apartment buildings; and
- Individuals’ housing.
The conditions for mobilizing capital from other legal sources are implemented correspondingly according to each mobilized capital source and the relevant legal regulations.
2. Legal risks when violating the law in mobilizing capital for housing development
- First, the law strictly prohibits the act of signing capital mobilization documents and implementing capital mobilization for housing development without meeting the conditions specified in the Law on Housing 2023 and other relevant legal regulations; and misusing mobilized capital or advance payments for housing development.
- Accordingly, organizations and individuals that violate the aforementioned law, depending on the nature and severity of the violation, will be disciplined, administratively sanctioned or prosecuted for criminal liability. If causing damage, they shall compensate in accordance with the provisions of law.
- Second, real estate project investors may be fined from VND800,000,000 to VND1,000,000,000 (equivalent to USD31,595.5766 to USD39,494.4708) for improperly mobilizing capital.
The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at info@blawyersvn.com. BLawyers Vietnam would love to hear from you.
Date: 27 March 2025
Writer: Tuyen Duong
