Under the Housing Law 2023, a developer of a commercial housing project could raise financing from the following sources:

• equity capital of the developer;

• capital raised from joint venture, business cooperation, and contribution from other organizations or individuals (BCC Capital);

• capital raised from issuance of corporate bonds, shares, and fund units;

• pre-sale proceeds raised from sale and purchase agreements or hire and purchase agreements with regards to future houses signed with customers;

• debt financing raised from credit institutions or finance organizations operating in Vietnam (bank loans).

In comparison with the Housing Law 2014, the Housing Law 2023 clearly includes capital raising from issuance of bonds and fund units but excludes pre-sale proceeds of leasing agreements for future houses. In this post, we will discuss each of the sources of financing for a commercial housing project. The Housing Law 2023 still does not allow a developer of a commercial housing project to raise debt financing from offshore lenders.

Equity

Under the Real Estate Business Law 2023, the developer of a commercial housing project must ensure that its owner equity must not be less than

·       20% of the total investment capital of the project for project using less than 20ha of land; or

·       15% of the total investment capital of the project for project using 20ha or more of land.

If the developer has multiple real estate projects at the same time, it must have its own capital amount sufficient to allocate for all on-going projects so that each project will satisfy the requirement above.

In addition, under Decree 96/2024, if the developer raises debt financing from issuance of bonds or borrowing from credit institutions then the amount of such debt financing will not exceed:

·       the difference between the total investment capital and the equity capital of the relevant project; or

·       four times of the equity capital for a project using less than 20 ha of land or 5.67 times equity capital for a project using 20 ha or more of land.

BCC Capital

Under Decree 95/2024, a developer of a commercial housing project could start raising BCC Capital when it has obtained (1) land allocation or land lease decision and (2) the investment policy approval for the project (if applicable). It appears that Decree 95/2024 allows a developer of a commercial housing project to raise BCC Capital sooner than under Decree 99/2015. Under Decree 99/2015, a developer of a commercial housing project could start raising BCC Capital when the construction of the project has been approved in accordance with law and the hand-over of the land of the project has been completed.

For the first time, Decree 94/2025 requires the developer to de-register any outstanding mortgage over the commercial housing project before signing an agreement to raise BCC Capital. This requirement seems to be intended to protect the counterparty in a BCC arrangement by not allowing other creditors to have higher priority over the BCC counterparty.

Similar to the restriction under the old Decree 99/2015, under the Housing Law 2023, if a developer of a commercial housing project obtains BCC Capital from a counterparty then the counterparty will only be permitted to share profit and losses of the project in form of cash or shares. The developer must not provide the counterparty with housing products or priority rights to purchase the housing products of the project. Before raising BCC Capital, the developer of a commercial housing project must also send a notice to the provincial Department of Construction.

If the developer also raises financing from bond capital, share capital, fund units, or bank loans then the total financing from BCC Capital, bond capital, share capital, fund units, or bank loans will not exceed the difference between the total investment capital and the equity capital.

Capital From Issuance Of Securities

Under Decree 95/2024, a developer of a commercial housing project could start raising bond capital when it has satisfied conditions for issuance of corporate bonds under bond regulations and it has been selected as investor of the project.

Similar to BCC Capital, Decree 94/2025 also requires the developer of a commercial housing project to de-register any outstanding mortgage over the commercial housing project before issuing bonds. This requirement seems to be intended to protect the bond holders by not allowing other creditors to have higher priority over the BCC counterparty. However, this requirement could make it difficult for the developer to raise financing both from bank loans and bond capital.

Pre-Sale Proceeds

Under the Real Estate Business Law 2023, a developer of a commercial housing project who sells future houses cannot collect more than

·       30% of the total contract price at the first installment including deposit;

·       70% (or 50% for foreign-invested developer) of the total contract price before hand over of the housing products; and

·       95% of the total contract price before delivering the land use right certificate for the relevant houses.

The developer of a commercial housing project who sells future houses must also offer the customers of its project the ability to purchase the future houses with a repayment guarantee by a commercial bank. Under the old regulations, the customers do not have an option to purchase a future house without a repayment guarantee.

Bank Loans

Under Decree 95/2024, a developer of a commercial housing project could start raising bank loans when it has obtained (1) land allocation or land lease decision and (2) the investment policy approval for the project (if applicable). It appears that Decree 95/2024 allows the banks to take mortgage over the project assets when providing bank loans to the developer. This could encourage developers of a commercial housing project to raise capital from banks instead of bond capital or BCC capital.

This post is written by Nguyen Quang Vu.