Fee designed to cool hot tempers

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Hanoi authorities have set a VND4,000 ($0.19) per square metre, per month cap on management fees on apartments in a bid to end conflicts between residents and investors.

The fees, which came into force this month, apply to all apartments and will range from VND2,100 to VND4,000 per square metre per month. This will cover cleaning, operating technical facilities, security, fire exercises and green space services.

It is unclear, however, whether the new regulations will actually make life cheaper for building residents whacked by high management fees.

The new regulations would not be applied to those buildings where developers and residents have their own agreement on the management fees.

Nguyen Phuong Hoa, a resident at Vimeco building, was doubtful about the new fees as so-called special projects were exempt.

“This is a loophole for buildings’ developers to abuse and [will let them] apply fees as high as they want,” Hoa said.

The reality is that many high-end apartment building developers say their high fees are the result of the ‘luxury quality’ of that building.

“You cannot compare the quality of a mid-end building to [that of a] high-end [building], since the developers must pay more for maintenance, advanced equipment and more human resources for services,” said one developer who asked not to be named.

Nguyen Manh Ha, director of the Ministry of Construction’s Housing Management Bureau, said this regulation was applied for buildings where the developers and residents had not stated the fees in their contracts.

“I suggest residents to make clear the level of fees whenever they sign a contract to buy an apartment,’ Ha said.

In theory, he added, all developers must operate under those regulations, however with luxury high-rise buildings which are equipped high-tech facilities such as camera, lighting even the insurance of the ground floor in flooding should have been negotiated between the developers and tenants.

Dang Hung Vo, former deputy minister of Natural Resources and Environment, said: “Everyone knows that if you want to enjoy good services when you live in a building, you have to pay some kind of fee to developers. The management fee is used to pay for the operation of equipment in the building, for cleaning and for maintenance of public equipment.”

“Households agreed that the fee is justified because of many benefits from the public construction as well as the safety and convenience provided by the building. However, recently, the service charges were increased by the developers in many different ways,” Vo said.

Recently, there have been numerous complaints from residents living in Keangnam, 93 Lo Duc and Sky City Towers, claiming that the fees they pay developers are too high.

For instance, Keangnam’s investor originally charged a monthly fee of VND21,000 per square, metre but the developer was later forced to reduce this figure to VND18,600 after mounting pressure from residents.

The residents of five upscale apartment buildings in Hanoi have even formed a “representative board” of those buildings to prevent service fees from being hiked unreasonably by developers.

In 93 Lo Duc building, a resident said that in 2007, the developer of the building started to charge residents with a monthly service fee of VND300,000 ($14.49) for each small apartment and VND400,000 ($19.32) for the larger units. Last July, the fees were doubled.

“The developer merely decided to increase the monthly service charges without any discussion with homeowners. In its announcement of the increase, the management company just gave reasons such as compensating for losses of exceptional service costs of the building and forced us to follow,” said the resident.