The Government is considering applying fixed-term ownership of apartments and time-limit allocation of land for apartment buildings.
Impacts of proposed regulation are unclear
This came after a proposal to the Government from the Ministry of Construction (MoC) on fixed-term ownership of apartments, as well as another proposal by MoC to the Ministry of Natural Resources and Environment (MoNRE) on time-limit allocation of land for apartment building.
The moves are expected to foster upgrades of old and neglected apartment buildings in order to create a better urban environment.This ownership model has been applied in many countries in the world, the ministry noted.
If the proposal is approved, it could also help to lower the price of housing, MoC said.
In the meantime, Dao Trung Chinh, Deputy Director of the General Department of Land Administration worried that the model may not work in Vietnam.
He explained that term-limit ownership would discourage people from buying apartments, adding that lax regulations could lead to ineffective management over such apartments.
Chinh added that this type of regulation could lead potential buyers to be hesitant. "Nobody would want to spend a great deal of money on an apartment that they would eventually have to hand back over," he said.
If potential buyers are only allowed to keep their apartments for 50 years, this will diminish demand, according to Nguyen Quoc Khanh, General Director of DTJ Distribution and Investment Joint Stock Company.
Khanh noted that only low prices might drive up the demand, but the huge investments needed to implement the model would make it impossible.
He added that the proposed regulation could be used as a way to raise land prices in the years to come.