HoREA proposes amending regulations on condotels
The HCMC Real Estate Association (HoREA) has proposed amending unreasonable regulations to close legal loopholes affecting the condotel segment in a bid to prevent losses for investors.
After Empire Group, the developer of Cocobay Danang condotel complex, informed its 1,700 buyers that it would stop paying the 12% annuity beginning next year, HoREA on December 2 wrote to the Government and the ministries of Construction and Natural Resources and Environment, proposing amending some regulations.
The association pointed out a loophole in the Law on the Real Estate Business, which creates conditions for the sale of houses to be constructed in the future but has no strict requirements on the sale of other property products, including condotels.
Therefore, HoREA suggested considering tourism land as non-agricultural land or adding regulations on tourism land into Article 153 of the 2013 Land Law to enhance the State management of this kind of land.
It is necessary to regulate that tourism land must be used for tourism development purposes only and must not be converted to residential land to prevent technical and social infrastructure overload, which may destroy the tourism plan and negatively affect the local investment environment.
In addition, tourism land, including tourism land for condotel development, should be used for a maximum of 50 years, or in special cases, 70 years. Buyers of condotel products will be granted periodic land use rights and condotel ownership certificates based on the duration of the projects.
HoREA proposed the Ministry of Natural Resources and Environment coordinate with the Ministry of Finance to send the Government a plan to calculate the land use fees and land rent for tourism property projects.
Regarding the sale of condotels, HoREA suggested adding new regulations on condotel projects that will be constructed in the future, such as those on cooperation and capital contribution in condotel projects and the sale of condotels. Specifically, a regulation that the deposit for condotels must not exceed 5%-10% of the contract value is needed.
The association also proposed the Ministry of Planning and Investment coordinate with the ministries of Construction; Natural Resources and Environment; and Culture, Sports and Tourism to seek the Government’s approval of the issuance of regulations on the management, operation and business of condotel projects to secure the interests of buyers.
In related news, Deputy Minister of Construction Le Quang Hung was cited by Nguoi Lao Dong news website as saying that the guaranteed profit of 12% for condotel projects was unreasonable.
Answering questions on condotel management at a Government press conference on December 2, Hung said the segment is facing legal issues.
Meanwhile, the laws on the Real Estate Business, Housing and Land have yet to include regulations on the ownership and granting of ownership certificates for investors or the management and operation of condotel projects.
The ministry has reported the mushrooming of condotel projects to the Government and proposed solutions to tighten control over them. The Government has also assigned the ministries of Construction; Culture, Sports and Tourism; and Natural Resources and Environment to issue regulations on condotel project management and operations.
In addition, banks must tighten control over credit for condotel projects. The ministry has also proposed issuing sample contracts between condotel investors and buyers.
The condotel market has developed since 2015 and there are some 30,000 condotel projects nationwide as of this year, the deputy minister noted.