Comparison of the Housing Law 2023 and 2014 with Its Impacts on Building Operations

Housing Law No. 27/2023/QH15 took effect on 1 August 2024, including changes that positively impact the real estate market and building operations. Mr Tran Ngoc Duy, Associate Director, Property Management of Savills Ha Noi shared that the Housing Law 2023 clarifies certain aspects compared to the Housing Law 2014, helping resolve common disputes between customers and the management agent, as well as regulating more specifically on the rights and responsibilities of stakeholders. However, its effective date was pushed forward compared to the initial January 2025 plan, putting pressure on projects to prepare and adjust operational management methods. 

The article below will analyse significant changes in the Housing Law 2023 compared to the Housing Law 2014, focusing on 3 main aspects that have a major impact on operational management to support developers in accelerating the process of adjusting and applying the amended law, as well as maintaining effective operations: service fee definition, common area revenue and building operational management service contract term.  

AMENDMENT TO SERVICE FEES

The Housing Law 2023 introduces a new definition of operational management service fees, requiring developers to separate fees such as fire insurance premiums and wages for Building Owner's Committees from service fees. This not only ensures budget transparency, but also helps residents understand the composition and purpose of each fee. Although there are changes in payment methods, the total cost that residents need to pay monthly is almost unchanged, except when service fees are adjusted according to the amended Law. 

AMENDMENT TO REVENUE GENERATED FROM COMMON AREAS 

As the common area revenue such as profits from elevator advertisements, television, two-wheeled parking lots, etc., must be paid into maintenance funds managed by the Building Owner’s Committee instead of being used as the compensation for operational funds, it will facilitate the creation and supplementation of maintenance funds for buildings that lack or have not been handed over maintenance funds. 

However, because most of the costs of maintaining operations at common areas were previously deducted from the building’s operational funds, the amended Law presents challenges in balancing cost allocation to ensure stable operations during the adjustment stage or re-define service fees, as well as fees that residents must contribute following the current regulations. 

AMENDMENT IN THE TERM OF OPERATIONAL MANAGEMENT SERVICE CONTRACT 

Shortening the term of the operational management service contract requires management agent to focus on improving operational efficiency to ensure the long-term competitiveness of the agent and the project. Therefore, developers need to choose a reputable property management company and coordinate closely in operations to ensure benefits for both parties. 

KEY CONSIDERATIONS FOR DEVELOPERS IN IMPLEMENTING THE AMENDED HOUSING LAW 2023 

• Remove revenue generated from common areas from budgets to constitute service fees according to the new regulations.   
• Calculate and adjust operational budgets in response to changes in the project’s service fees structure and revenue-expenditure. 
• Timely and fully notify residents. 
• In case of increasing service fees, developers need to determine unit prices, develop plans and organise Owners’ Committee Meeting to announce/get residents’ opinion before implementation. 

Developers need to continue to update subsequent documents and instructions of the Housing Law 2023 to make decisions according to the Law and the project’s financial situation. 

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Read more:   

• Common budgeting challenges in operational management - Part 1 
• Common budgeting challenges in operational management - Part 2  
• How to Calculate and Build Property Management Budgets