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Solutions to tender for renovation of an old apartment that Ho Chi Minh City has come up with the expectation that a good solution will help solve the difficult problem that both Ho Chi Minh City and Ha Noi are facing.

Nowadays, big obstacles make the renovation program of an old congested apartment is the agreement, compensation for the investor. Previously, the standard housing area of 6sqm per person, the apartment is designed for 4 people, so the area is usually 24sqm/apartment.

However, at present, almost every apartment is expanded. Compensation for 1,3 times the area of the book, people think that will not be enough money to find new accommodation with the current real estate prices. As a result, they often demand compensation for real and higher rents, especially in first-floor apartments, or apartment buildings with “golden land”.

However, investors who participate in a renovation of the old apartment, in addition to social goals, also have profit targets. If they compensate for the high price, while the old condominium projects are usually in the urban area, the height and population are limited, which will affect the investment efficiency of the business. Therefore, many businesses are not keen on renovating the old apartment.

However, this problem is likely to be resolved with the new solution that Ho Chi Minh City has just launched.

Specifically, the City People’s Committee of Ho Chi Minh assigned Department of Planning and Investment propose a bidding plan to select investors to implement the project of embellishing urban residential area – Le Van Sy Commercial Center (Ward 13, District 3) and  replacing 9 old, dangerous, damaged condominiums was built before 1975 in District 3.

With this solution, the complaints about compensation rates will be transparent through bidding. Thereby, the owner of the old apartment will benefit when choosing the highest bidder and the company does not spend time agreement with each household.

Lawyer Tran Duc Phuong, Ho Chi Minh City Bar Association said that the method of bidding for investors to renovate old apartment buildings is not included in Decree 101/2015/ND-CP on renovating old apartment buildings. (Decree 101/2015 only regulates choose investor by administration style), but is a key and essential solution to remove the bottleneck of the old apartment renovation program.

According to Mr. Phuong, in essence, the apartment is the same as the individual townhouse, the other is the common property of many people. If the townhouse is degraded and the landlord is unable or unable to organize the new building, they will sell it to someone else to buy a new home.

In the apartment buildings, due to common ownership, the State will assist to complete the bidding procedures and the proceeds from the bidding will be divided equally to the owners, irrespective of their location. This is true of the nature of the Civil Code.

“I think that the bidding solution will solve all the problems of balance between the parties when households and enterprises are clear about the compensation level at the beginning through the bidding price. At the same time, through bidding, it is also a recruitment consideration which is reputable and capable of well-implementing investment projects, to build new existing apartment buildings” Phuong stressed.

The reporter, the leader of a large enterprise in Ho Chi Minh City has participated in renovating and building two new apartment buildings in District 1 said, it is unclear how bidding, but in general, this is a good option for investors. Because they will guess the ability to recover capital, as well as calculate the benefit of the problem when they invest in renovating old apartment from the beginning.

However, it is important to set a reasonable starting price, because if the bidding is too high, there are certainly no businesses involved.

Not to mention, the bidding process for implementing old condominiums is not the same as bidding to buy a project.  Therefore, it should be clear to avoid the involvement of enterprises involved in the law, affecting not only the progress of the project, but also the brand of the whole business.

If the solutions offered by Ho Chi Minh City are implemented smoothly, they will likely be replicated, helping not only Ho Chi Minh City but Hanoi also solved the difficult problem to renovate the old apartment, which is still stuck after decades of deployment.

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