FROM “TRAGIC INFERNO” TO THE UNLEGISLATED POLICY OF MINI APARTMENTS
Than Trong Ly
Partner at DIMAC Law Firm ? Investment, Private Equity, Corporate, M&A & Real Estate
Atty. Than Trong Ly – Tran Thi Nhu Quy – Le Thi An
DIMAC Law Firm
After the recent “mini apartment fire” incident that caused severe damage to life and property in Khuong Ha Street, Thanh Xuan District, Hanoi, at the working session on September 20, 2023 of the Standing Committee of the National Assembly, National Assembly Chairman Vuong Dinh Hue directed and affirmed not to “legalize” the mini apartment in the amended Law on Housing, expected to be considered and passed by the National Assembly in the year-end session of 2023.
To further clarify this matter, the author will analyze legal aspects related to the legal nature of the mini apartment, the current situation, as well as explaining why this type of property should not be legalized in the draft of the amended Law on Housing.
Mini apartment is an individual house or an apartment building?
The Housing Law 2005 and previous legal regulations make no reference to mini apartment type. It was not until the government issued Decree No. 71/2010/ND-CP on June 23, 2010 (Decree 71) that regulations regarding this type of property were initiated. However, these regulations classified it as an individual house for households and individuals as prescribed in Article 43 of Decree 71[1].
In 2012, the term “mini apartment” was first introduced and categorized under the group of condominiums in Appendix A of the National Technical Regulation QCVN 03:2012/BXD for the classification and grading of construction works, which was released by the Ministry of Construction in conjunction with Circular No. 12/2012/TT-BXD on December 28, 2012 (Circular 12). Accordingly, mini apartment is one of the five types of housing within the condominium group, which comprises (i) high-rise apartment buildings; (ii) multi-storey apartment buildings; (iii) low-rise apartment buildings; (iv) mini apartment buildings and (v) mixed-use apartment buildings. However, the Housing Law 2005 and Circular 12 did not provide a specific definition or detailed explanation of the mini apartment; they only offered a general definition of apartment building[2].
Currently, the Housing Law 2014 and other legal documents do not contain the terminology of mini apartment nor provide further regulations regarding this type of housing. However, Article 46 of the Housing Law 2014 states: “In case the household or individual is permitted to build a multi-storey house with each storey having two self-contained apartments or more, satisfying minimum floor area standards, private areas and common areas in the apartment building as prescribed in this Law, the homeownership for each apartment unit shall be recognized”. Therefore, the Housing Law 2014 has inherited and legalized the provisions found in Article 43 of Decree No. 71, but only mentions this as housing of households and individuals, removing the phrase “individual”. Similarly, Article 57 of the 3rd draft of the amended Law on Housing, open for public consultation in August 2023, also contains regulations on the development of multi-storey and multi-household housing for households and individuals, but it does not use the term ‘individual housing’ in the relevant regulations. This may lead people to believe that the type of multi-storey, multi-household housing for households or individuals is essentially referred to as mini apartments. As stated in a meeting on the afternoon of September 21, 2023, Mr. Vu Ngoc Anh, the Head of the Department of Science, Technology, and Environment at the Ministry of Construction, suggested that this housing type fundamentally remains a form of apartment buildings. Therefore, mini apartments should adhere to fire safety standards, obtain construction permits, design approval and undergo project inspection and acceptance just like regular apartment building.
However, the author believes that, given the absence of specific regulations in ?the current legislations mentioning the type of mini apartment (except for QCVN 03:2012/BXD, which did ?mention this concept but had expired since June 1, 2023), applying regulations for individual housing or apartment building to conduct transactions and administrative procedures related to mini apartment remains a grey area. As a result, it becomes crucial to provide a clear definition that the term “mini apartment” (or multi-household, multi-storey housing) is still considered as an individual housing for households and individuals, as previously stipulated in Decree 71. It is necessary to amend the draft (amended) Law on Housing in a way that does not legitimize and issue ownership certificates for each household unit of mini apartments.
Impacts of recognizing homeownership right for each household unit of mini apartment
Following the instructions of the Chairman of National Assembly Vuong Dinh Hue, as mentioned above, the latest draft of the amended Law on Housing has introduced fundamental changes compared to its 3rd draft. Specifically, Article 57 which pertains to multi-storey, multi-household housing for households and individuals (mini-apartments) has undergone remarkable revisions. While the 3rd draft allows the “investor” to choose to issue a separate “pink book” for each household unit when certain conditions are met, the latest draft version does not permit property transactions, purchases, or lease purchase agreement involved mini apartments. Additionally, it removes the provision allowing for the issuance of certificates for individual household units.
The author holds the view that these changes are reasonable when considering the following aspects:
(i)???? Firstly, if such changes are upheld, and the amended Law on Housing is passed, it could help deter the practice of individual investors or households attempting to circumvent the law by building mini apartments to maximize personal benefits. This would prevent them from avoiding strict statutory conditions that apply to developers of residential apartments, including requirements for investment project, construction, environmental protection, and fire safety approval.
(ii)??? Secondly, it would help avoid confusion in the management of local authorities over this type of housing. The subjective or lenient management by local authorities (if present) ?in case of illegally constructed mini apartments that do not comply with construction and fire safety standards is ?one of the factors contributing to serious consequences such as the “tragic inferno” as mentioned above. Presently, the investor responsible for this mini apartment has been arrested and detained for an investigation into his wrongdoings. However, the question arises regarding how relevant individuals or state management organizations should be held accountable while the legal regulations on this matter are not entirely clear.
(iii)? Thirdly, if mini apartments are legalized and the Government allows the issuance of ownership certificates for each household unit of mini apartments, people will continue to have the demand for transactions and purchases such type of housing due to the scarcity of affordable social housing projects. This approach contradicts the instruction outlined in the National Housing Development Strategy (approved by the Prime Minister in Decision No. 2161/QD-TTg on December 22, 2021), which encourages the development of project-based, modern housing that ensures connectivity and the synchronization of infrastructure systems. Therefore, it is not advisable to recognize property transactions for mini apartments and issue ownership certificates for each household unit of mini apartments, in order to prevent the proliferation of this housing type, potential unsafety, and prevent the urban infrastructure system from becoming overloaded.
Furthermore, there is currently no established legal framework for the management and issuance of 'pink books' for mini apartment buildings. While regulations for issuing ownership certificates for mini apartments have recently emerged in housing-related legal documents, they have not been specified in land-related laws. The existing Decree No. 43/2014/ND-CP, which provides guidance on the 2013 Land Law, outlines procedural steps for issuing certificates for individual housing and construction works within residential development projects, but it does not address procedures for issuing certificates for mini apartment units. Additionally, there is no clear regulation designating the competent authority responsible for managing and issuing certificates for this type of housing[3].
Reference to developed countries
The challenge of natural and mechanical population growth is not limited to a single country; it has become a global concern. In some developed countries, micro-apartments have gained popularity. However, in most nations, the development of micro-housing types is not encouraged, and there are stringent regulations for managing and developing social housing to meet the housing needs of their populations
In Hong Kong[4]
On December 30, 2021, Mr. Michael Wong, Secretary for the Hong Kong Development announced a minimum flat size restriction for all apartments to be built in the first quarter of 2022. The saleable area of each flat in a planned residential project in Tuen Mun must have at least 26 m2, while currently in Vietnam the minimum area of each household unit in a mini apartment? is 30 m2 or more. [5]
These "nano-apartment" projects are all government-developed projects such as the Tuen Mun residential area project (including 2020 apartments), two projects in To Kwa Wan of Urban Renewal Authority (including 890 apartments) or belong to investment projects such as the Pak Shing Kok Ventilation Building project of MTR Group (including 550 apartments).
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In Singapore
According to Singapore's Housing Development Board (HDB), currently about 80% of Singaporeans live in public housing administered? by HDB, a state authority? in charge of research, development, distribution and maintenance of public? housing, of which 90% own their apartments, only 10% rent apartments[6]
The development of public housing towns is based on master plan, long-term consideration, and attention to the living environment. The housing areas are planned to be associated with infrastructure including road systems, bus stations, trains, schools... with full amenities such as supermarkets, local markets, food areas, entertainment areas, shopping...[7] HDB has very strict regulations to ensure that each type of social housing reaches the right target customers[8].
In the UK
The UK is also facing a housing crisis, more than a quarter of a million people are homeless[9]. In the current controversial trends in this country, there are perspectives to believe that instead of fostering private home ownership which is difficult, the UK should invest in building more public housing projects, this viewpoint is currently supported by the British Government[10].
In conclusion, the current legal framework, along with the guiding documents of the Ministry of Construction, lacks a clear definition of mini-apartments and specific regulations governing this housing type. This ambiguity has created uncertainty when applying legal regulations to transactions and administrative procedures related to mini-apartments, as the existing regulations for individual houses or apartment buildings do not directly align with this emerging housing category. Therefore, it is imperative to establish a clear definition of mini-apartments as a distinct category of individual housing for households and individuals. This clarification will prevent confusion when applying legal regulations and supports the decision not to recognize ownership rights for each unit in mini-apartments, as indicated in the recent draft version of the amended Housing Law.
However, the policymakers' current stance on not widely permitting the construction of mini-apartments can only be effective when the government addresses housing planning and develops social housing projects based on the experiences of developed countries while considering the unique context of Vietnam. This approach aligns with the overarching goal of the Investment Project, which aims to construct a minimum of 1 million social housing apartments for low-income individuals and industrial workers between 2021 and 2030, as approved by the Prime Minister.
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[1] Article 43 of Decree No. 71/2010/ND-CP: Quality Management of Individual Houses of Households and Individuals: “In case a household or an individual builds a house in an urban area with 2 or more stories, each story having 2 or more self-contained apartments (with separate living rooms, kitchens and toilets), each apartment must have a minimum floor area of 30 m2 and comply with Article 70 of the Law on Housing regarding condominiums. For eligible housing, as specified by relevant state authorities, households or individuals may request and obtain a certificate of ownership for each individual unit within the housing”
[2] Article 70 of the Housing Law 2005, Section 1.5.8 QCVN 03:2012/BXD issued together with Circular 12
[3] Article 72 of Decree 43/2014
[5] Article 6.2 Decree 99/2015/N?-CP
[7]https://cafebiz.vn/bai-hoc-tu-sieu-pham-nha-o-xa-hoi-cua-singapore-gan-ga-tau-trung-tam-thuong-mai-80-nguoi-dan-duoc-an-cu-lac-nghiep-du-co-can-gia-toi-1-trieu-usd-176230629105243237.chn