RESOLUTION

ON A NUMBER OF SOLUTIONS TO THE AMELIORATION AND RECONSTRUCTION OF DAMAGED OR DEGRADED CONDOMINIUMS

At present, there are ill urban centers nationwide many condominiums built prior to the 1990s, which are being so seriously damaged or degraded that they need to be ameliorated or reconstructed.

At its May 3 and 4, 2007session, the Government resolved the following issues:

I. OBJECTIVES AND REQUIREMENTS

1. To reach unanimity in undertaking to ameliorate or reconstruct damaged or degraded condominiums so as to create new housing quarters of better quality, contribute to improving and raising peoples living conditions, renovating urban architecture towards civilization and modernization.

2. The amelioration and reconstruction of old condominiums must be carried out on the principle of socialization, exploiting interests from projects for financial self-balance and adequate housing fund to serve the on-spot resettlement demand, restricting investment from state budget, harmonizing the interests of house users and investors. The State takes the common interests of population communities with social objectives as the guideline, ensuring better domiciles for resettling households in terms of flooring space, quality as well as living environment. The demolition for amelioration and reconstruction of old condominiums shall comply with the provisions of Section 4, Chapter IV of the Housing Law.

3. Local administrations should elaborate specific roadmaps and plans for amelioration and reconstruction of old condominiums in their respective localities on the principle of prioritizing seriously damaged condominiums first, where the living environment is not secured. To strive to complete the amelioration and reconstruction of old condominiums in urban centers throughout the country, which are damaged, degraded or of which the use duration has expired.

4. The amelioration and reconstruction of old condominiums should be carried out synchronously under master projects, with rational planning-architectural schemes, with comprehensive technical and social infrastructure systems for the entire areas to be ameliorated, which are suitable to modern construction norms and standards, in order-to satisfy the demands of present and future urban life; to avoid scattered, sectorial and small-scale amelioration and reconstruction; attach importance to the exploitation of ground floors for public services (parking lots, trade centers,..).

5. For old condominiums which are heavily damaged, have dangerously sunk or cracked, localities should draw up plans for urgent relocation of households living therein in order to carry out the demolition and reconstruction. For cases of compulsory demolition and reconstruction where investment by different economic sectors cannot be mobilized, provincial/municipal Peoples Committees should direct their functional bodies to formulate projects and specific plans for reconstruction with the state budget.

6. To promote the roles and responsibilities of local administrations and people in reconstruction of old condominiums. To well carry out the work of propagation and mobilization in combination with resolute and timely handling measures in accordance with law in order to ensure the execution of projects according to schedules for the common interests of communities, maintaining social stability and order.

II. SPECIFIC SOLUTIONS, MECHANISMS AND POLICIES

1. Solutions to the attraction of investors:

a/ Peoples Committees of provinces or centrally run cities where exist damaged or degraded condominiums (below collectively referred to as provincial-level Peoples Committees) shall direct their functional bodies to organize surveys, assessment and publicization of lists of old condominiums to be ameliorated or reconstructed in their respective localities to attract domestic and foreign investors. For projects not yet participated by investors, provincial-level Peoples Committees are allowed to select investors. If two or more investors register for participation in a project, they will be selected by mode of bidding. The selection of project investors complies with the principle of prioritizing investors having experience, financial capabilities and most rational temporary settlement and resettlement schemes;

b/ Provincial-level Peoples Committees shall direct the scrutiny of projects on amelioration or reconstruction of damaged, degraded condominiums, which have been assigned to investors but slowly executed according to the prescribed schedules, particularly attaching importance to reconsidering the investors experience, financial capabilities and abilities to arrange temporary settlement or resettlement. If investors fail to satisfy the requirements, they must be replaced with capable ones to undertake the investment. The replaced investors will be refunded reasonable expenses they have paid. Foreign investors having capabilities and experience are encouraged to invest in projects on amelioration or reconstruction of old damaged or degraded condominiums;

c/ Project investors are allowed to decide on the selection of consultancy units, construction contractors or to conduct designing, construction and installation by themselves (if having full capabilities prescribed by law on construction) with regard to project works or work items built with investors investment capital (for works or work items built with state budget investment capital, bidding must be organized);

d/ Provincial-level Peoples Committees are allowed to promulgate mechanisms and policies according to competence in order to encourage various economic sectors to invest in the amelioration or reconstruction of old condominiums in accordance with legal provisions on investment and the specific situation of each locality.

2. Planning-architectural solutions:

a/ Peoples Committees at all levels shall, according to their competence, organize the formulation (or adjustment) and approval of detailed construction plannings (1/2,000 scale) of areas where exist old damaged or degraded condominiums or those with their use duration having expired in their respective localities. In the course of formulating (or adjusting) detailed construction plannings, opinions of the concerned organizations and individuals must be gathered and the approved plannings must be widely publicized within the administrative boundaries under their management so that organizations and individuals in the detailed planning areas know, inspect and implement according to provisions of law on construction;

b/ In the course of formulating (or adjusting) and approving detailed construction plannings, provincial-level Peoples Committees are allowed to consider and adjust the planning norms (construction density, land use coefficient, population size, floor height) for areas covered by projects on amelioration or reconstruction of old condominiums with a view to ensuring financial balancing, socio- economic efficiency of each project and suitability to the specific conditions of each locality;

c/ Upon amelioration and reconstruction of old condominiums, priority must be given to putting aside certain land areas in service of public demands; attaching importance to diversifying the designs of new apartments with different floor spaces to satisfy the demands of each kind of subjects. The minimum floor space of condominium apartments used for compensation to resettling households must be compatible with the standards on minimum floor spaces of social houses under the provisions of the Housing Law (the floor space of each apartment is not smaller than 30m2). The minimum floor space of condominium apartments for business must be compatible with the standards on the minimum floor space of commercial houses (the floor space of each apartment is not smaller than 45 m2).

3. Land-related solutions:

a/ Provincial-level Peoples Committees shall consider and permit project investors to change the purpose of using a land portion in the projects to satisfy business and service demands with a view to ensuring financial efficiency of each project on the basis of ensuring the compatibility with the detailed construction plannings approved by competent bodies;

b/ Project investors are exempt from land use levies or rents for the entire assigned (or rented) land areas for project execution (including areas permitted for land use purpose change within projects under plannings approved by competent bodies).

4. Financial solutions:

a/ Depending on the specific conditions of each locality, provincial-level Peoples Committees consider and decide to permit project investors to borrow a portion of investment capital (not exceeding 70% of the projects construction, installation and equipment value) from the Development Assistance Fund or local Housing Development Funds (if any); decide to provide investment capital supports for construction of technical infrastructures outside the projects premises and a number of essential social infrastructures within the projects;

b/ Project investors are entitled to the enterprise income tax rate of 10% for 15 years after commencing their business activities, to tax exemption for 4 years after the taxable incomes are generated and 50% reduction of payable tax amounts for 9 subsequent years; the housing areas in service of on-spot resettlement are not liable to value added tax;

c/ Organizations, households and individuals that are entitled to on-spot resettlement need not pay registration fees upon the grant of house ownership certificates;

d/ For cases where house owners have no demand for on-spot resettlement and sell their old apartments to investors for movement to new places, they are exempt from taxes related to the apartment sale and purchase as well as personal income tax (if any);

dd/ Project investors are allowed to deal in under provisions of law the floor spaces of the remaining apartments and the floor spaces of business and service facilities within the projects (if any) after the completion of on-spot resettlement.

5. Compensation, temporary residence and resettlement solutions:

a/ Project investors must formulate schemes on compensation, temporary residence or resettlement arrangement for current lawful owners or users of apartments in old condominiums and submit them to competent agencies for consideration and approval before conducting the demolition of old condominiums;

b/ The compensation, temporary residence or resettlement arrangement are carried out in the form of payment in cash or in apartment within the projects premises (after the amelioration and reconstruction) or in residential houses at other places;

c/ Where apartment owners have no demand for on-spot resettlement after the project completion, they are allowed to sell their apartments to investors at the agreed prices before conducting the demolition of old condominiums;

d/ The current lessees of state-owned condominiums (not yet purchased under Decree No. 61/CP of July 5, 1994 of the Government), if having the demand to own new apartments, are entitled to purchase those apartments at prices set by provincial-level Peoples Committees; if wishing to continue renting houses, they are entitled to rent new apartments at the rent rates applicable to social houses, promulgated by provincial-level Peoples Committees;

dd/ For cases of expansion or construction of works on occupied land in the project areas without permission and not entitled to land compensation (excluding cases where certificates of residential house ownership and residential land use rights were already granted under provisions of law), they are given priority only in the purchase of apartments within the project areas at commercial prices (if having demands) and provided with monetary supports equal to 10% of the costs of construction of those works in order to conduct the demolition and relocation;

e/ For existing social infrastructures (kindergartens, schools, health stations,..) in the old condominium areas, which must be demolished, project investors shall pay compensation in cash or new works to their owners with areas equivalent to their recovered areas before conducting the demolition;

g/ Project investors are allowed to apply some following mechanisms:

- Providing additional supports in floor space or compensation in cash to organizations, households and individuals subject to resettlement (including cases of owning or renting residential houses) for quick attainment of the target of ground clearance and acceleration of project progress on the basis of ensuring the investment efficiency);

- If people are living on lower floors and have to move to higher floors, they are considered and supported with additional floor spaces (or with money), depending on the specific conditions of each project;

- Apart from the compensation floor spaces, including additional support spaces (if any), the excessive floor spaces of the resettlement apartments (if any) will be paid for at commercial prices;

- In case of large resettling households, that wish to be split up into separate households, the subject persons should register such soon with project investors so that they know and have the responsibility to prioritize the additional sale or lease of other apartments within the same projects at commercial prices;

- Households owning spaces on the first (ground) floors of old condominiums, that have to move to higher floors after the project completion will be given priority to rent one housing area unit or business facility within the project areas (if any) for a duration and at prices agreed upon.

6. Post-investment management of projects:

a/ Project investors shall manage and operate condominiums after the amelioration or reconstruction according to the Regulation on Management of the Use of Condominiums, promulgated by the Ministry of Construction;

b/ Technical infrastructures built with state budget investment capital (if any) shall be transferred to local specialized management units;

c/ Social infrastructures built for non-commercial purposes (if any) shall be handed over to specialized management bodies or exploited and operate on the principle of socialization;

d/ Depending on the specific conditions of each project, investors are allowed to arrange and exploit a portion of the floor spaces of condominiums (after the amelioration and reconstruction) to serve the business and service demands with a view to covering the condominium management expenses, thus contributing to reduction of expenses to be paid by people when the condominiums are put into exploitation and operation.

III. ORGANIZATION OF IMPLEMENTATION

1. Responsibilities of ministries

a/ The Ministry of Construction:

- To expeditiously study and promulgate construction planning standards, which should specify norms related to the amelioration and reconstruction of old condominiums for uniform application nationwide;

- To guide the methods of assessment and quality standards of old condominiums subject to demolition for amelioration and reconstruction;

- To monitor, urge, inspect and sum up for periodical reports to the Prime Minister the implementation of this Resolution. If problems arise, to promptly report them to the Prime Minister for direction.

b/ The ministries of Planning and Investment; Natural Resources and Environment, and Finance shall study and promulgate according to competence or submit to competent authorities for promulgation amendments and supplements to mechanisms and policies related to the amelioration and reconstruction of old damaged or degraded condominiums, ensuring their compliance with the provisions of this Resolution for uniform application nationwide.

2. The Peoples Committees of provinces or centrally run cities where exist old condominiums subject to amelioration and reconstruction shall base themselves on the provisions of this Resolution to promulgate specific mechanisms and policies for reconstruction of old condominiums in their localities in suitability to their local conditions; formulate roadmaps, programs and plans for amelioration and reconstruction of old damaged or degraded condominiums in their localities till 2010 and subsequent years; promptly report on difficulties and problems and periodically report on implementation results to the Ministry of Construction for sum-up report to the Prime Minister.

For heavily damaged or seriously degraded condominiums, there must be measures to immediately relocate households living therein for the demolition and reconstruction with a view to ensuring life and property safety for people.

3. Implementation effect

This Resolution takes effect 15 days after its publication in CONG BAO.

Ministers, heads of ministerial-level agencies, heads of government-attached agencies, and presidents of provincial/municipal Peoples Committees shall implement this Resolution.