Regarding the issuance of the certificates of land use rights, ownership of tourist apartments, tourist villas, and condotels that have drawn public attention during the past time, as of 14/02/2020, the Ministry of Natural Resources and Environment issued Official Letter No. 703/BTNMT-TCQLĐĐ (“Official Letter 703“) to the Departments of Natural Resources and Environment providing guidance on the land use and issuance of the certificate of ownership of construction works (“Certificate“) for the said real estate products. Accordingly, Official Letter No. 703/BTNMT-TCQLĐĐ features some notable contents as follows:
1. Regarding the land use regime and land use term
- According to Article 48 of the Tourism Law 2017, tourist apartments and tourist villas are tourist accommodation establishments and the business of accommodation services at tourist apartments and tourist villas falls into the type of tourism services business and the group of accommodation and catering services specified in the List of Vietnam’s economic systems, issued together with Decision No. 27/2018 / QD-TTg.
- Pursuant to Article 10.2.đ of the Land Law 2013 and Appendix No. 01 issued together with Circular No. 27/2018 / TT-BTNMT, the land used for business and service purposes is classified as commercial and serviceable land. At the same time, the regime of commercial and serviceable land use complies with Article 153 of the Land Law 2013.
- The duration of land lease to organizations for commercial and service use is considered and decided on the basis of investment projects or applications for land lease and will not exceed 50 years.
- For largely invested projects with slow capital recovery, investment projects in geographical areas with difficult socio-economic conditions and areas with exceptionally difficult socio-economic conditions, the land lease term will be longer, but not exceeding 70 years.
- At the expiry of the said period, if the land user wishes to continue using the land, the State will consider extending the land use.
2. Regarding the granting of a certificate
- In cases where projects with tourist apartments and tourist villas are eligible for transfer under the Real Estate Business Law, the certification of construction work ownership to the assignee complies with Article 32 of Decree No. 43/2014/ND-CP and Article 2.22 of Decree No. 01/2017/ND-CP.
- The sequence, procedures and application for issuance of the Certificate are specified in Articles 70 and 79 of Decree No. 43/2014/ND-CP, Article 8, Article 9 of Circular No. 24/2014/TT-BTNMT and Article 6.8 of Circular No. 33/2017/ TT-BTNMT.
3. Effective market promotion solution?
Official Letter 703 refers to legal provisions from previous decrees and circulars to clearly guide the issuance of Certificate to the Condotel which has long been a concern for buyers of this type of real estate. Given the consideration for issuance of a pink certificate, Condotel buyers will be more reassured when the ownership is recognized by a legal certificate issued by the State instead of just holding a Condotel sale contract.
However, unlike the apartment land use rights of condominium buyers perceived as sustainably stable, the land use rights of Condotel buyers are still characterized as a common lease for the duration of the project. Therefore, there will still be questions about Condotel ownership, land use rights at the expiry of the project if it is not extended.
In other words, Official Letter 703 provides guidance on the procedures for issuing a certificate, but whether this really push up an incentive to release inventories, increase demand for the Condotel market depend on the upcoming business losses and profits on the market.
