The Housing Law 2023: Significant Changes In Operational Management And Residents’ Entitlements

• The Housing Law 2023 took effect, bringing significant changes that positively impacted the real estate market in general, as well as residents’ entitlements.
• These changes require management agents to thoroughly study and take proactive measures to address them.

On 1 August 2024, Housing Law 2023, comprising 13 chapters and 198 articles, officially came into effect. The law introduced several new provisions on housing development, the renovation and construction of old apartment buildings, social housing, and the management and use of condominiums. Mr Trần Ngọc Duy, Associate Director of the Property Management Department at Savills Ha Noi, shared his insights on how the Housing Law impacted the market and operational management. 

Question 1: How will the enforcement of the Housing Law impact the real estate market?

The Housing Law 2023 will bring more structure and consistency to the market, positively impacting its recovery. It addresses limitations in the previous law by clarifying project timelines, construction quality, and housing ownership rights. Specifically, in housing project management, the law aims to resolve common disputes between customers and management units by providing clearer guidelines on the rights and responsibilities of the parties involved.

However, the law is expected to have a long-term impact since it was implemented five months earlier than originally planned. When the National Assembly approved the law’s effective date, detailed guidelines were still scarce. For instance, Decree 95/2024/ND-CP, which outlines specific provisions of the Housing Law, was only issued on 24 July 2024, followed by Circular 05/2024/TT-BXD on 31 July 2024.

Question 2: Could you share more specific details about the adjustments in the Housing Law 2023 compared to the 2014 law, particularly regarding aspects that affect operational management?  

The Housing Law 2023 emphasises both the quality of construction and the services provided during the operational phase. For construction quality, instead of setting a fixed 50-year usage period as before, the new law assesses the usage period of a building based on its actual quality. This change allows for timely maintenance and repairs of degraded projects. 

In terms of service quality, the new law introduces changes in property management, including more detailed guidelines for revenues and expenses and specifying competency requirements for management agencies. Additionally, the fire insurance fund and remuneration for the building owner’s committee are now separated from the service fees and categorised as independent costs. Management agents need to collaborate with the building owner’s committee to promptly develop new service fee calculations in compliance with the new law’s regulations. 

The Housing Law 2023 also mandates that all revenue generated from common areas, such as advertising in lobbies, elevators, motorcycle parking areas, and other shared amenities, be directed into the maintenance fund. Previously, these revenues were added to the operating fund to offset operating costs. This change impacts the income of the management fund, requiring management agents to adjust their budgets and operational plans to comply with the new regulations, ensuring stable operations without affecting residents.

The maximum term for service contracts is set at three years, aligning with the building owner’s committee term. Management agents must ensure and maintain quality and competence throughout this period, encouraging them to focus more on work efficiency not only to meet immediate requirements but also to ensure competitiveness for contract renewals after the term ends. 

Savills informed its clients about the roadmap for researching and applying the Housing Law 2023 on 1 August, the date the law officially took effect. Plans for adjusting budget structures and staffing allocations have been made to ensure a smooth and effective transition. Additionally, Savills continuously updates its guidance documents on the law to make necessary adjustments in management operations. 

Question 3: How do the adjustments in the Housing Law 2023 impact residents?

The Housing Law 2023 introduces several important changes compared to the 2014 regulations, enhancing the legal framework, ensuring transparency in management, and protecting residents' entitlements. 

The new law includes provisions for clarifying common and private ownership in cases where contract information is unclear, thereby protecting homebuyers' interests. It also establishes criteria for defining common ownership of equipment and components attached to balconies and loggias.  

The clear separation of fire insurance and building owner’s committee remuneration from service fees helps residents better understand the allocation of these costs. Additionally, the law stipulates that revenues from common area services must be directed into the maintenance fund rather than supplementing the operational fund. This change facilitates the maintenance of common areas and improves infrastructure quality. 

Moreover, the new regulation requires the disclosure of professional training plans for the building owner’s committee at meetings. Members of the committee must undergo training and obtain certification within three months of recognition to ensure they are proficient in operational management.

Decree 95/2024/ND-CP, which implements the Housing Law, requires investors to publicly disclose essential legal documents related to their projects to buyers and lessees. These documents include completion acceptance records, fire safety certificates, construction approval notices, and parking area layout plans. While this requirement may affect project timelines and market supply, it aims to enhance transparency, ensure safety, and reduce risks for homebuyers. 

Additionally, the new classification system for residential buildings is more detailed and specific, helping buyers accurately assess project quality and prevent price inflation. Instead of categories A, B, and C, projects are now classified as 1, 2, or 3 based on eight mandatory criteria: location, amenities, parking, hallways, elevators, electricity, apartment quality, and compliance with construction standards. Five supplementary criteria include management services, environment, security and safety, green buildings, energy efficiency, and smart housing.