The degraded Kim Lien apartment complex in Ha Noi, which is urgently needed to be rebuilt. A decree allowing local administrations to decide the height of new apartment buildings built to replace rundown structures might speed up the upgrade process. — VNS Photo Doan Tung

HCM CITY (Biz Hub) — A decree allowing local administrations to decide the height of new apartment buildings built to replace rundown structures could considerably speed up the planned upgrades.

A draft of the much-awaited legislation was the topic of a conference held in HCM City last Friday.

Until now, the height of all new buildings to be rebuilt in HCM City and Ha Noi, cities with the highest number of rundown apartment buildings built decades ago, needed to be approved by the Prime Minister.

Since the heights approved by the Prime Minister tended to be insufficient, developers were not showing interest in the project to rebuild the old buildings.

Since the developers would have to return many apartments to the old owners (old-new swap), they would look at how many extra apartments could be built (and sold) before making a decision.

Nguyen Trong Ninh, deputy head of the Department for Housing Management and Real Estate Market under the Ministry of Construction, admitted that the current requirement was a hindrance.

He told the conference that over the last 10 years, very little progress has been made on upgrading old apartment buildings.

With Ha Noi and HCM City having the "most complicated" problems in upgrading their old residential apartments, the new decree's success remains to be seen, he added.

After the Housing Law was ratified in 2005, a Government Decree (Decree 34 issued on 2007) rolled out a number of measures to expedite the upgrade, but the legislation failed to make a real difference.

The draft decree also demands greater transparency. It says that when dismantling or upgrading an old apartment building, developers will have to talk directly to its inhabitants. Until now, local authorities were choosing the developer, and residents were often dissatisfied with the choice.

The right to negotiate direct with the developer was one that residents had been demanding, but the draft decree still caps the time limit for such negotiations at one year.

While it gives local authorities the right to fix the height of new buildings, the decree requires that it (the height) matches the surrounding space.

Another positive aspect of the draft decree that it requires local authorities to publicise results of surveys on the status of old apartment buildings in the neighbourhood. The public can now see for themselves if a building in question is really dilapidated and whether an upgrade is required.

The local authority will also be required to develop a roadmap for upgrading old apartment buildings in their area and to reform administrative procedures to facilitate paperwork for developers.

What's missing

Le Hoang Chau, chairman of the HCM City Real Estate Association (HoREA), said the decree should add some more provisions.

He said it should be able to deal with apartments where several members of a family reside. Beside the one-for-one swap format, such families should be allowed to buy additional apartments at preferential prices, he said.

According to the HCM City Construction Department, there are 1,244 old apartment buildings in the city, including 533 built before 1975.

The process of upgrading them, either by renovating or dismantling and building a new building, has been very slow. Between 2006 and 2010, just 16 were dismantled and in the next five-year period from 2011 to 2015, only 15 were pulled down for rebuilding. — VNS