Management fees irking homebuyers

Apartment style living is becoming more popular in Vietnam

The latest incident saw 10 Daewon Hoan Cau homebuyers rush to project developer Daewon Hoan Cau Housing Development’s office in Ho Chi Minh City questioning management, maintenance and parking fees. 

The company faced claims of inconsistencies  in collecting maintenance fees, which used to be at $10 per square metre, but now stand at 2 per cent of each apartment’s pre-taxed total value. The developer was also questioned about the status of the fund because according to the governmental Decree 90/2006/ND-CP issued in 2006, as such amount must be put into a commercial bank and managed by a community board voted by homebuyers.

Yunam Howang, executive director of Korean Daewon Company Limited in Vietnam, told VIR: “We [the developer] had complaints from homebuyers and that is completely a matter of understanding Vietnam’s related laws in making the fees.”

He said: “It is true that we have increased the maintenance fees from $10 per square metre to 2 per cent of each unit’s value, which is just to comply with the law, especially the newly-effective governmental Decree 71/2010/ ND-CP. Also, we have been in the process to establish a community board because in accordance with the decree, we can do that within 12 months after handing the first unit to homebuyers.”

The Cantavil Daewon-Hoan Cau project launched its sales programme in 2007 and its first unit out of 189 was transferred to homebuyers in early 2010. There are currently more than two-thirds of the project’s units sold with the most homebuyers paying a $10 per square metre maintenance fee.

“We now have enough homebuyers moving into the site to strongly vote for a community board, which is expected to be formed in September, 2010. We will then transfer all the collected maintenance fees, which are currently kept in a bank, to the new community board with total interest once it is established,” added Howang.

Daewon Hoan Cau recently collected 79 cents per square metre per month from homebuyers for management fees, while VND50,000 ($2.63) and VND500,000 ($26.3) were for parking fees required for first motorbike and car respectively owned by each homebuyer.

“I am pretty sure that Cantavil Hoan Cau is one of the very few luxury apartment projects in Ho Chi Minh City that can apply such a very low level of management and parking fees. The fees are not our revenues, but we will use them to pay for monthly management expenses, which can be checked by the community board then,” said Howang.

The management and accompanied fees have been the hot issue raised by homebuyers towards a series of high-end apartment projects in the country.

Tran Duy Canh, lawyer from Vietlaw Limited Company, said: “It is legal for the developers to collect 2 per cent of the unit’s total value for maintenance funds, which will be managed by the community board. This is an uncompromised amount of money because it is stated in the Housing Law, but the management and parking fees can be decided by the community board, which is established within 12 months after the project’s launching day.”

The board after being established would have the right to ask the developers to report the balance sheets of all income and expenses of public facilities and public services in the project, Canh added.

Recently Hong Kong-backed Ha Viet Tung Shing Limited Company, owner of the Golden WestLake residential project in Hanoi, was accused of imposing high parking fees and unreasonable payment terms on the project’s homebuyers.

The conflict between the company and their customers started in March this year when Ha Viet Tung Shing published parking fees of each car ranging from $41,105 to $105,264 for 38 years or $158 per month and $2.2 per hour for a visiting car. The money for owning a parking place in the project was considered irrational and attracted attention of Vietnamese media as each unit in the Golden West Lake was priced from $3,300-$4,000 per square metre. As a result, the car parking fees for 38 years were about one-third or even a half of total value of a unit.

Ha Viet Tung Shing has finally arrived at a compromise and forced to agree to the claims of its customers by adjusting the fees and refunding the violated amount of money to the homebuyers. The same conflicts among developers and homebuyers about such fees also happened at the Manor high-end residential project developed by Bitexco in Hanoi and Phu My Hung new township project by Phu My Hung Corporation in Ho Chi Minh City.

Nguyen Van Hiep, deputy director of Ho Chi Minh City Department of Construction said: “Developers can definitely avoid conflicts and arguments with their customers by always clearly and concretely stating all the fees and related terms in the contracts.”