The Ministry of Construction proposes plans to protect customers of unfinished projects who have been suffered losses because of incapable investors.
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| Many real estate projects are halted |
Dinh Si Hung bought an apartment four years ago, before it was complete. Because of the investors' weak financial ability, the project has been put on hold. "This project is a victim of serious lack of capital. In the end, the outcome will depend whether customers and investors can cooperate and come to an agreement." Hung said.
Chien, a home buyer of another stagnant project, said his apartment was 85% complete when his investors halted the work because of a lack of funding. They were in dispute for two years before the investors admitted their troubles.
According to the deputy minister of construction, Nguyen Tran Nam, there are many real estate investors who took customers' money, using it for other non-core business ventures. Nam said that this is one of the main reasons that the market is seeing so many abandoned projects, and customers are losing trust.
Another option being put on the table is making the money paid to contractors be put in a private account accessible to the customer only, who would disburse the funds only upon receiving status reports on the construction process.
Nam then asked for cooperation from banks, "We need commitment from investors, customers and the banks to realise this plan. We'll discuss how to solve the issue with all the related parties so as to ensure that banks won't use these funds to pay off shareholders or other debts."
The Ministry of Construction said they are also in the process of studying the option of making insurance policies a necessary part of contracts for the sales of apartments. The ministry said that people who make payments on apartments before construction is complete should be protected.
Real estate investors would be forced to purchase insurance, and if the investors go bankrupt, if the project becomes stagnant or the capital is put to other uses, customers will be compensated.