July 22, 2018 17:26

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Difficulty in granting certificate for condotels due to lack of clear mechanism

13:10 | 26/03/2018

VCN - In 2017, condotel (apartment - hotel) segment quickly developed and became a bright spot of resort property. According to the Vietnam National Real Estate Association, 2017 witnessed a boom of the condotel segment in the real estate market. However, how to have a complete legal framework that facilitates a transparent and healthy market for new products such as condotel is the concern of project developers, investors, as well as regulatory authorities. Many ideas related to this issue were presented at the seminar "Condotel Investment: Practices, prospects and solutions" held on March 16.

difficulty in granting certificate for condotels due to lack of clear mechanism
Need to find solutions for the condotel segment, the bright spot of real estate in recent time.

23,000 units were sold out

The great potential of the product along with the committed profit from real estate developers when investing in condotel made this type of real estate attract great interest from investors.

Mr. Nguyen Manh Ha - Vice president of the Vietnam National Real Estate Association - said that by 2017 there were about 23,000 condotels and resorts being sold on the market. In 2017, the number of successful transactions accounted for 65 to 70% of the offering volume.

Explaining the investment attraction of resorts, Mr. Nguyen Manh Ha stated the main causes. Firstly, the demand for relaxing has been rising highly. The number of foreign tourists to Vietnam increase 30%/ year. Domestically, people's living standards are rising, leading the increase of the relaxing demand, around 60-70 million people traveling annually. Hotel reservation is difficult, so the demand for equipped accommodations will increase.

Secondly, due to the appropriate policies of the State from central to local level, especially some provinces have facilitated condotel development, because they recognize the benefits of investing in the growing segment.

Mr. Nguyen Van Sinh, Deputy Minister of Construction, said that from 2015 to now, coastal areas have allowed many businesses to invest in resort projects including condotel. Numbers of hotel, villas and apartments put into business effectively, are socially recognized and meet people’s demand.

According to Mr. Robert Merrigan, Director of Jones Lang LaSalle Asia Pacific, JLL Company, a testament to the development of this market is that investors are committed to profitability for buyers. This has contributed to orienting and attracting buyers into this market.

Legislation not yet recognized

However, Mr. Nguyen Van Sinh also said that this is a new type market, which has not been specifically recognized in the Law on Real Estate, Law on Investment, Housing Law,... Therefore, the implementation of condotel projects has not been very convenient in both areas of calling for investment and project investors in trading and selling products.

Discussing about some obstacles of the condotel model, the Deputy Minister of Construction stated that there have been many inadequacies involved in this model. Firstly, the application of calculation of technical criteria for construction works including condotel apartments is not clear.

The second issue is the population indicator for condotel projects. Currently, the population indicator is available for residential section only, not for condotel; so if there are no additional regulations, the local population indicator will be affected.

The third issue is the granting of certificates of land use rights, commercial land for a period of 50 years but currently there are no specific regulations relating to condotel, which is land for commercial services or residential land. Enterprises recommend that it should be granted as long-term residential land.

Fourthly, according to Mr. Nguyen Van Sinh, the regulations related to sale and transfer is unclear, with the condition of selling products formed in the future, guaranteeing the leasers/ buyers and especially selling property for foreigners ...

In addition, regarding condotel management, this type of property has a different operating mechanism from the condominium. The condominium has a management board, for the condotel, the owner can operate by themselves or lease their own operating unit. Last but not least, Minister Nguyen Van Sinh said that the land related to condotel has no regulations for use.

Need to issue a certificate of ownership

The condotel segment has appeared in 2015 without any legal documents. Because of lacking legal documents, the profits of investors are affected. Therefore, the regulations on this kind of goods should be finalized soon to ensure the project developers as well as investors of this segment.

Mr. Trinh Van Quyet, Chairman of FLC Group, said: "There are many different opinions about condotel but we should discuss solutions to help it develop in the context of no law for this model".

According to Mr. Trinh Van Quyet, in fact, condotel is existing and has good prospects. So it is necessary to find solutions for local leaders who are embarrassed. Local authorities should seek the opinions of ministries and branches for guidance to apply synchronously in the whole country.

Regarding the granting of land use right certificates and ownership of apartments/villas to customers, according to Mr. Nguyen Tran Nam, Chairman of Vietnam National Real Estate Association, in principle, the land use right certificates, ownership of houses and other assets attached to land will be granted to the buyers of houses, buildings, apartments, and complex by the State (Clause 3, Article 19 of the Law on Real estate business).

However, in fact, most condotel buyers are having trouble in getting the certificate because the law does not have a clear mechanism for this issue. Therefore, in order to ensure the legitimate rights and interests of property owners, and make it easier for apartment owners to have access to credit sources when investing in apartments as well as increasing liquidity of the product with the certificate, the owner of the apartment can mortgage the house – his legal property, to borrow capital from banks and credit institutions, Mr. Nguyen Tran Nam proposed the Ministry of Natural Resources and Environment will coordinate with concerned ministries and branches to issue specific guidance on the granting of certificates to this type of property so that individuals and organizations can buy condotel apartments (not in form of partly and wholly transfer) and they are granted the certificate, whether the condotel project was built on commercial service or residential land which does not form residential units.

By Hoai Anh/ Ha Thanh