Foreign developer cries foul as dispute heats up

Disputes between residents and developers have meant many dream
addresses have turned into houses of pain

Keangnam Vina stopped 10 out of 20 lifts in the two 48-storey buildings and provided less security and cleaning services after it had lowered management fees from VND18,843 ($0.89) per square metre per month to only VND4,000 ($0.19) as requested by the residents.

The move has triggered strong protest from the residents who later called on local authorities to help resolve the conflict. Representatives from Hanoi Construction Department asked Keangnam Vina to operate all lifts and provide full services to the residents, who later proposed a monthly management fee of VND10,000 per sqm ($0.47). However, Keangnam has not immediately responded to the request.

Keangnam Vina chairman Ha Jong Suk told VIR that he proposed two options for the residents. Those who agreed to pay the management fee of VND18,843 per sqm a month would be served with full services, while the others who wanted to pay only VND4,000 will be served with limited services.

Ha claimed that the city-fixed ceiling of VND4,000 per square metre was barely enough to operate 10 elevators, let alone other facilities. The operator’s principle is “what you give is what you get”, so it is impossible for the residents to get the high-class services without having to pay more.

Keangnam Vina told the residents that the management company, Chesnut Vina, had incurred a loss of VND10 billion ($500,000) since it operated the two residential towers with 920 apartments mid last year.

The case underlined disputes over apartment management fees in Vietnam have not abated as foreign developers and management companies are scratching their heads over how to operate high-class residential buildings.

Although many other high-rise buildings in Ho Chi Minh City are charging VND14,000-18,000 per square metre per month for service charge, residents in Hanoi have been referring to the ceiling prices of VND4,000 regulated by the municipal authorities.

Developers and management companies will incur losses if they provide full services at low fee levels regulated by Hanoi authorities. If they provide full services at high fees, or limited services at low fees, they will further upset their residents and local authorities.

Nguyen Hong Minh, director of Property Management Company - a management services supplier, said he was not surprised to see increasing disputes. Minh said differences between culture, living habits and people’s thinking were mostly behind the disputes.

Minh said disputes were also caused by the lack of a synchronous legal system relating to high-rise apartment buildings.

“In other countries, they have so called “Building Code” and ‘Public Orders” which can regulate all related activities to high-rise apartment buildings and we in Vietnam really need it,” Minh said.
He said he was essential developers and residents listened to each other’s point of view and had an open posture when it came to negotiating.

He said management fees were essential to maintain the quality of buildings and would benefit residents in the long run. Ha agreed better communication between the parties was needed.

A management board of representative of Keangnam Vina, Chestnut Vina and residents will be established in March to deal with issues.