Bottleneck in condotel apartment segment

(ĐTTCO) - Over the last three years, the supply of condotel (hotel apartments) has increased significantly, while the legal framework for this segment is still open, creating difficulties for investment, construction, operation and management of this market segment.
Since 2015, the Ministry of Construction has appraised 120 projects of condotel and officetel (office apartments) with total of 55,000 units. 
Previously, most people who bought condotel, officetel or resort villas would receive a certificate of land rights, for limited time period. However, recently only some projects can deliver clients a long term land rights certificate. It is not part of the current regulations.
Bottleneck in condotel apartment segment ảnh 1 The government will issue a legal framework for condotel in 2019.

Practically speaking, the current land regulations only govern the land rights period for commercial and service projects, not condotel, officetel and resort villas. Hence, there has been much confusion in using the land and issuing of land rights certificate for apartments of these projects.
It also lacks a penalty scheme and a legal framework for operating and managing the officetel buildings, except the buildings which have mixed both officetel and residential apartments.
 Pham Hong Ha, Minister of Construction: 
Ministry of Construction promises legal framework

In order to overcome the above constraints, the Ministry of Construction plans to build a legal framework for this segment in 2019. This is also the plan of the Prime Minister. This year, the Ministry of Construction will issue regulations related to rules and standards of construction of condotel, officetel and resort villas, and operation and management of the officetel. Currently, the Ministry of Construction has already drafted a version to govern the residential houses, including apartments in this new segment. 
Furthermore, the Ministry of Culture, Sports and Tourism will also issue regulations related to operations and management of condotel and resort villas. The Ministry of Natural Resources and Environment will build a legal framework on land rights certificate issuance for condotel, resort villas and officetel.

Le Hoang Chau, President of Ho Chi Minh Real Estate Association: 
Land rights certificate for limited period

The urgent issue now is to issue land rights certificate for people who plan to buy condotel. Clause 1c, Article 32 of Decree 43/2014/ND-CP dated 15 May 2014 of the government governs that the land rights certificate can be issued for non-residential houses or apartments when it has “sale agreement, donation notice, inheritance letter with legal notarization”.
According to Clause 22, Article 2 of Decree 01/2017/ND-CP dated 06 January 2017, which adds Clause 4 to Article 32 of Decree 43, the project which has many construction items can receive land rights certificate for each item or part of that project. 
Based on above regulations, the condotel developers firstly summit administrative documents to get land rights certificates for the condotel apartments. Then they continue processing to get the land rights certificates for secondary investors. People who buy condotel will get the land rights certificate for limited time period. When it matures, they can extend this period according to regulations.
Ho Chi Minh Real Estate Association suggests that the Ministry of Natural Resources and Environment should guide the provinces in the way to issue land rights certificates for limited time period for condotel. 
Ministry of Construction should require developers to announce all information about the projects, ownership and type of land rights certificate when they sell to secondary investors; ensure the delivery of committed profit; give the cost and expenses of renovation, management and operation of condotel; inform benefits of secondary investors; guide on usage and operation after the committed period expires.

Truong Anh Tu, Lawyer and Chairman of Truong Anh Tu Law Firm: 
Regulation on rent contract

In my opinion, government should issue a regulation to manage the condotel same as in renting contracts of hotels and not issue the land rights certificate. The developers and the investors can sign the regulated contract form to rent or sub-rent the condotel.
It is not because we don’t have a legal framework. It is because some people and institutions are intent on driving this issue out of context to create benefits for themselves. The government should delegate the Ministry of Culture, Sports and Tourism to build a regulated contract form to manage the condotel transactions, and should not task the Ministry of Construction.
If we legally agree that condotel is an asset or a real estate product, there will be many unforeseen consequences. Issuing the land rights certificate for condotel apartments will break down the development plan of provinces, impact the managing, planning, use of land and infrastructure projects in the future. The nature of condotel investment is improved tourism, hence, land to construct condotel is commercial and not residential land.
If the target is to encourage the demand, support the development of condotel segment and increase the confidence for buyers, the authorities should build a legal framework for condotel renting contracts to ensure investors’ legal rights, such as right to transfer, donate, inherit, same as regulations for renting contracts of state owned apartments previously.
It should not amend the regulation or law just to issue the land rights certificate for condotel. The regulations on renting contract or principals for transferring and using condotel are more important. 

Minh Tuan

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