On July 25, 2024, the Government issued Decree No. 98/2024/ND-CP ("Decree 98") detailing certain provisions of the Housing Law concerning the renovation and reconstruction of apartment buildings, replacing Decree No. 69/2021/ND-CP ("Decree 69") on the same matter. Below are some noteworthy points of Decree 98:
1. Projects for Renovation and Reconstruction of Apartment Buildings as Resettlement Projects Combined with Housing and Commercial Services Business
To attract investment, the Housing Law and now Decree 98 specify that renovation and reconstruction projects for apartment buildings are considered resettlement projects combined with housing and commercial services business.
Accordingly, with the inclusion of new categories, such renovation and reconstruction projects are regarded as new real estate investment projects and must undergo steps similar to other real estate projects, such as preparing feasibility study reports and obtaining investment policy approval.
2. Separate Planning for Each Renovation and Reconstruction Project
Unlike previous regulations, Decree 98 mandates that planning for the renovation and reconstruction of apartment buildings must be done separately for each project. The planning is organized by the provincial People's Committee based on the list of apartment buildings and complexes that need to be demolished and rebuilt according to inspection conclusions, detailed project planning, and provincial housing development programs.
After drafting the renovation and reconstruction plan for each project, the provincial housing management agency reports to the provincial People's Committee for review and feedback before publicly posting the plan for public comments.
This individualized planning helps identify and manage the unique risks associated with each project, minimizing issues during implementation.
3. Expanded Methods for Selecting Investors for Renovation and Reconstruction Projects
Compared to previous regulations, Decree 98 expands the methods for selecting investors for renovation and reconstruction projects. Besides selecting investors through bidding and agreements between apartment owners and real estate businesses at the apartment building meetings, the new regulation allows for investor selection through land use rights transfer agreements. Specifically:
- Investors can negotiate with apartment owners to transfer land use rights for implementing the renovation and reconstruction project, provided the project meets the requirements of the Housing Law and the apartment buildings associated with the transferred land do not have any commercial apartments or commercial service areas as public property.
If the apartment buildings associated with the transferred land have common areas (corridors, staircases) as public property, the investor must compensate the state with money.
- The agreement on transferring land use rights must be in writing, signed by all apartment owners or their legal heirs and the chosen real estate business. If a representative of the owners is appointed to negotiate, a notarized or certified authorization document is required.
Expanding the methods for selecting investors facilitates resource mobilization, enhances project quality, and contributes to improving living conditions for residents and promoting sustainable urban development.
4. Detailed Regulations on Relocation of Apartment Owners and Users
Compared to Decree 69, Decree 98 provides detailed regulations on the relocation of apartment owners and users as follows:
(1) Emergency relocation cases include:
- Apartment buildings damaged by fire or explosion, rendering them unsafe for continued use;
- Apartment buildings damaged by natural disasters or war, rendering them unsafe for continued use.
(2) Relocation cases according to compensation and resettlement plans include:
- Apartment buildings with main structural components in a dangerous condition, at risk of collapse, and unsuitable for continued use, requiring emergency relocation;
- Apartment buildings severely damaged, with partially dangerous main structural components and one of the following factors: technical infrastructure systems (fire protection, water supply, drainage, wastewater treatment, electricity supply, internal traffic) not meeting current technical standards or posing safety risks during operation, needing demolition for safety and urban renovation;
- Apartment buildings with one of the main structural components (foundation, columns, walls, beams, trusses) not meeting normal use requirements but not subject to demolition, located in areas needing synchronous renovation and construction with apartment buildings subject to demolition according to approved construction planning.
These regulations aim to ensure the safety of apartment owners and users while effectively managing urban renovation.
5. Incentives for Investors in Consolidated Renovation and Reconstruction Projects
Decree 98 introduces new incentives for investors in consolidated renovation and reconstruction projects:
(1) If the site for rebuilding the apartment building, after resettling owners and users, still has space for business ensuring a minimum profit margin of 10% and a maximum of 15% of the total project investment proposed by the investor or managed by the housing authority, the investor will not be allocated additional land for the remaining consolidated apartment buildings.
(2) If the site does not provide the minimum profit margin or has no space for business after resettlement, the investor will be allocated additional land from one or more consolidated apartment buildings for business according to approved planning, ensuring the minimum profit margin.
(3) The provincial People's Committee allocates or leases land and exempts land compensation, land use fees, and land rent for the area allocated to the investor for the renovation and reconstruction project according to regulations.
(4) If the project's profit exceeds the stipulated margin after finalizing, the investor must return the excess profit to the state budget; if the excess profit arises from adjusted investment policies, the investor only needs to pay taxes according to regulations.
These incentives play a crucial role in promoting renovation and reconstruction projects, improving residents' quality of life, and ensuring sustainable urban development.
6. Incentive Mechanism for Business of Apartments, Service, and Commercial Areas in Renovation and Reconstruction Projects
Decree 98 specifies an incentive mechanism for the business of apartments, service, and commercial areas in renovation and reconstruction projects:
(1) The investor can sell newly constructed apartments at commercial prices without paying land use fees to the state and without converting their use to commercial housing for the following:
- Additional apartments built for business according to approved planning, excluding those reserved for resettlement;
- Apartments reserved for resettlement where owners receive monetary compensation according to approved resettlement plans;
- Resettlement apartments not purchased by owners or when owners are resettled elsewhere.
(2) The investor can operate service and commercial areas and other constructions (if any) within the project, exempt from land compensation, land use fees, and land rent.
This incentive mechanism helps attract investors to renovation and reconstruction projects, reducing financial burdens and risks, and encouraging their participation.
Decree No. 98/2024/ND-CP takes effect from August 1, 2024, replacing Decree No. 69/2021/ND-CP dated July 15, 2021./.
Comment: