VietNamNet Bridge – Across cities in Vietnam, building high-rise apartments is gaining popularity as urban populations swell while ground space remains limited.

Apartment buildings in Hanoi. — VNA/VNS Photo

However, as cities’ residential areas expand upwards, so does the number of disputes between residents and investors of these buildings, thanks to what many have described as legal insufficiencies and regulation limitations, despite efforts to follow the Law on Housing 2014.

According to a recent report by the Ministry of Construction, 215 apartment building projects in 43 cities and provinces of Vietnam are currently embroiled in such disputes, with 108 of them occurring between investors and residents and the remaining having to do with land reclamation, land clearance and other civil matters.

The most common contentious issues the authorities have dealt with include disputes on the space assigned for different uses, complaints of building owners converting advertised public space into residential apartments and grievances concerning the lack of connectivity or of neglected necessities (convenient transport, fire safety equipment or water and electrical supplies).

Another major cause of apartment building rows has to do with maintenance fees.

According to the law, residents – before receiving their apartments – have to shell out 2 per cent of the apartment’s value as a maintenance fee, with the fund in temporary management of the apartment building projects’ investors. When the building’s management board is established via a vote by the residents, the investors have to hand over the fund to the board.

However, construction ministry’s report said that in many projects, residents have claimed the investors misappropriated this fund for other purposes.

Le Van Duc, Director of the Ha Noi Department of Construction, said there are 840 apartment buildings in operation in the city. This year, Hanoi has tried various measures – including refusing to grant licences to new projects by investors who allowed prolonged disputes – to alleviate and avoid such quarrels.

“In addition to inspections and rectification efforts by the dedicated agencies, local governments – from the district and commune level – need to step up to curb violations by the apartment buildings’ investors,” Duc said.

Fraudulent practices

Disputes also plague HCM City, with 105 of the existing 936 apartment building projects in the city suffering from quarrels.

In August, hundreds of customers of the Long Phung (Dragon and Phoenix) Residence in Binh Tan District brought their complaints to the HCM City People’s Committee and the municipal construction department.

After starting construction in 2010, the project – a 17-storey building comprising 105 apartments with floor space ranging of 75-105 sq.m – has remained at 80 per cent completion since 2015, four years after the deadline the investor promised to customers.

Prior to halting construction in 2015, the investor lowered the prices of their own apartments – from the original VND16 million per square metre down to VND11-13 million, and even to VND7 million at times – to attract customers as a final cash grab.

Soon after, it was discovered that the investor, Binh Tan Real Estate Co Ltd, had sold the same apartment to multiple customers.

The dispute reached a climax and the customers had to take it up with city authorities for help.

Tran Trong Tuan, director of the HCM City municipal construction department, said the issues were not limited to the fraught investor-resident relationship. Tensions became more complex with conflicts of interests that emerged after the residents had moved in.

Real estate analyst Nguyen The Diep stressed that disputes have adverse impacts on project value, citing his personal observation that prices for apartment buildings involved in disputes might dip 5-10 per cent or more depending on the severity of the disagreement.

Le Hoang Chau, Chairman of the HCM City Real Estate Association, said there is a discrepancy between the existing regulations on apartment building projects and reality, while no timely policies have been put in place to effectively douse the increasing number of disputes.

The expert also pointed out that prior to the Law on Housing 2014, investors had failed to pay attention to their post-purchase responsibilities. Local governments and concerned authorities in many areas neglected information campaigns and timely inspections, which explained the high rate of problematic projects built before the 2014 law came into effect – 65 per cent according to the ministry’s report.

To address these issues, Prime Minister Nguyen Xuan Phuc recently asked the construction ministry to work with all concerned agencies to review and amend all legal documents related to the authority and responsibilities of investors, management boards, building operators and apartment residents.

PM Phuc also ordered more relevant and stricter penalties for offenders.

The construction ministry said it is considering a separate bill to regulate apartment building projects.

Aside from legal enforcement, experts have said that in the case of a dispute, the optimal measure remains for customers and investors to have constructive dialogues in the spirit of co-operation and consideration for each other’s rights and benefits to reach a mutually agreeable solution. 

Source: VNS