The Ministry of Construction is considering the implementation of property insurance contracts so customers who have made payment for unfinished homes would be compensated if investors go bankrupt.
The Ministry of Construction moves to protect customers
Real estate companies have encountered troubles stemming from high inventories as well as lack of customers and capital.
Another problem the sector has seen is investors who gather capital for housing projects but use the funds for other business ventures. In some cases the projects were discovered to be illegal and the investors fled, leaving customers with no apartment and no way to recoup their investment.
In the last three years lawsuits and accusations have increased across the country, with hundreds of strikes held, some outside the offices of the Ministry of Construction.
A representative of the Vietnam Real Estate Association said, "There are families that have fallen apart because the husband poured all the family's money into an incomplete apartment project that did not materialise."
At a conference addressing housing and real estate law in Hanoi, deputy minister of construction, Nguyen Tran Nam, said, "It seems like there is a misunderstanding of the difference between capital mobilisation and contract payment. Vietnamese people rarely consult lawyers and the court is ill-equipped in dealing with these matters, which leaves the government as the de facto arbitrator in many cases."
The Ministry of Construction said they are studying the ways in which South Korea applies insurance policies for 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 will 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." Nam said.