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Enterprises investing in condotel have faced difficulties in site clearance. Photo: Internet

Wondering about "certificates"

Regarding the fact that the Ministry of Natural Resources and Environment issued the document 703/2020/BTNMT-TCQLDD guiding issuance of ownership certificates for non-residential construction works (such as condotels and tourist villas), many optimistic investors believe this is a positive signal to help the market prosper.

However, according to lawyer Nguyen Danh Hue, Chairman of Hung Dong Legal Firm, whether or not a condotel is certified, it is a business apartment, not a residential apartment. "The issuance of the red book according to the document 703/2020/BTNMT-TCQLDD will make many investors snatch, leading to ’breaking‘situation because of selling apartments to many people," said Hue.

Hue also stated secondary investors would bear risks due to the issuance of red books and ownership certificates to investors.

Besides, if property ownership is granted to secondary investors, it will be related to the property ownership of enterprises. It means land use rights are granted to businesses but property rights are granted to secondary investors. Therefore, property rights will be very difficult to handle after 50-70 years when land use rights are expired.

“This issue cannot be solved by the Ministry of Natural Resources and Environment and the Ministry of Culture, Sports and Tourism. Not to mention that when buying a project, secondary investors borrow from a bank, after the apartment is handed over, they continue to borrow from another bank, leading to the fact that there is only one apartment, but the investors borrow from many banks," said the lawyer.

Analysing document 703, former Deputy Minister of Natural Resources and Environment Dang Hung Vo said the document reorganised current regulations of the law on condotels. However, there is a need for further guidance to grant certificates for construction works, not just for land use rights.

The reason is that, according to Vo, if investors sell the land uses right, how will secondary investors handle it? This requires further guidance, when current legislation is insufficient for these cases.

In another aspect, Nguyen Chi Thanh, Vice Chairman of Vietnam Real Estate Brokers Association stated the reality that enterprises investing in condotels have faced difficulties in site clearance. Accordingly, most businesses have to negotiate land themselves with people and the State does not recover land in accordance with the law.

Remove "bottlenecks"

According to Dang Hung Vo, in order for condotels to develop, we need to remove two main bottlenecks. The first is to link the development of condotels with the land development policy because businesses investing in condotels have been facing a number of obstacles. Specifically, when investing in condotels, businesses are committed to leasing land by the Government for a long time. However, when they finished investment, there are many legal issues that make them afraid.

In addition, in terms of real estate investment thinking, many secondary investors are exploiting real estate by waiting for prices to increase over time. This is a bad mindset formed from Vietnam's unstable land policies.

To remove these two bottlenecks, Dang Hung Vo said management agencies should associate land policies with tax policies. When businesses want to lease land for a long time, the management agencies still accept, but the land tax will be higher. In contrast, if businesses want to rent land for a short time, the land tax is lower. Such policies will change businesses' perception of real estate.

“In particular, we must pay attention to condotel business methods. Why do we keep taking profit commitment as the condotel business criteria? I think we can do the condotel business in many other ways, not just on profit commitments,” said Vo.

Besides, according to lawyer Nguyen Danh Hue, we have strived to achieve high tourism growth, but we do not have data on condotel development in general so far. Therefore, it is necessary to overcome this situation in the future so enterprises can make decisions on investment, and localities can decide on licensing for condotel projects.

On the business side, according to Bui Xuan Hien, General Director of Phuong Nam Housing Joint Stock Company Vietnam, condotel is one of the new products, so there are many problems to be solved. When removing difficulties for the condotel market, businesses must work together, not the Department of Culture, Sports and Tourism, or the Ministry of Natural Resources and Environment only.

“In terms of financial investment, economic and social development, condotel is a type that needs to be encouraged for development. Therefore, management agencies need to facilitate to promote it, and support investors," said Hien.