Home ownership: for life or forever?

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A proposal by the Ministry of Construction to limit apartment ownership to fixed terms has divided officials and experts.

Some say term ownership will help bring down home prices in Vietnam and help spur housing upgrades and the building refurbishment. Others remain skeptical about whether the ownership model will work here.

Nguyen Manh Ha, director of the Construction Ministry's Housing and Real Estate Market Management Department, said even though the term ownership model requires more study before it can be implemented in Vietnam, Ha said he believes it's worth trying.

Eligible foreigners in Vietnam can now apply for 50-year ownership rights to apartments.

For local citizens, ownership is permanent.

Ha believes that more ownership options should be introduced. "When there are more choices for home buyers, prices will fall and people in need of accommodation will find it easier to buy a home," he said.

Dang Hung Vo, former deputy minister of Natural Resources and Environment, said it has been really difficult to upgrade or reconstruct old apartment buildings in Vietnam due to permanent ownership. Apartment owners often disagree with the compensation plan proposed by new investors and refuse to leave deteriorating homes.

A fixed ownership term equal to the anticipated lifespan of an apartment would help solve this problem, he said.

"Permanent ownership leads to the view of apartments as everlasting properties. This has inflated prices and restricted access to housing," Vo said. "When there is a time limit on ownership, prices decline. Speculators would lose interest in this segment because the longer they keep an apartment, the less money it's worth."

Vo contends that an apartment market based on term ownership would solely serve the actual needs of the nation's homebuyers.

But not everyone thinks term ownership is the answer.

Some developers and industry insiders said that, even if a term is imposed on home ownership, it is still unlikely that prices will fall, given that land prices and construction costs are high in Vietnam.

Dao Trung Chinh, deputy director of the General Department of Land Administration, worried that the model simply would not work.

The government is now having a hard time taking back leased properties; so, nobody can claim that it will successfully convince families to move out of their apartments after 50 or 70 years, Chinh said.

Deputy Chairman of the Vietnam Construction Federation, Pham Sy Liem, worried that putting a time limit on home ownership could violate the constitution, which protects the right of every citizen to build and own a house. The constitution does not feature any provision limiting home ownership to a certain period of time, he added.

Properties tend to rise in value over the years, and home owners will have their accumulated wealth taken away if a term of 50 or 70 years is imposed, Liem said.

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