Be careful when buying and selling mini apartments

From the beginning of December 2023 until now, in Da Nang , there has been a lot of information about selling mini apartments, even selling many mini apartment buildings in an unusual way. This move is considered by some real estate experts to be that many investors are taking advantage of the regulations on being granted a certificate of right to use for each apartment (pink book) from January 1, 2025 to "get rid of goods", transferring difficulties to apartment buyers and secondary investors.

Through the current developments in the real estate market, authorities need to strengthen management, inspection, and warnings related to the purchase and sale of apartments and mini-condominiums and prevent the situation of anticipating new housing policies. Photo: HOANG HIEP

Apartment tenants pay once for 50 years

Recently, due to the "tightening" of management by the authorities, many mini-apartment investors have not been able to sell their apartments and have limited the posting of information about selling their apartments for fear of being inspected and punished for violations. However, after the National Assembly passed the Housing Law (amended) with a number of regulations on the development of multi-storey housing and many individual apartments (mini-apartments), including the issuance of certificates of right to use (pink books) for each apartment according to the provisions of the law on land, there has been a lot of information about illegal mini-apartments for sale with the invitation to "own a cheap apartment". This information "hits" the psychology of many people with little money who have a high demand for housing or investors who want to own apartments in the city center to anticipate the above regulation of being granted pink books.

In particular, there is a lot of information about illegal mini apartments for sale on Truong Thi 5 Street (Hoa Thuan Tay Ward, Hai Chau District) for only 468 million VND for a 1-bedroom apartment with an area of ^35m2 . They even invite investment cooperation with a "pie in the sky" profit of 36% in the first 2 years and support to buy back the apartment with a profit of 110% after 24 months. In fact, this mini apartment has not been built yet, there is only an empty lot and 2 boards with a perspective of the building without any information about the project or investment.

The mini apartment building at alley 308 Hoang Dieu Street (Binh Hien Ward, Hai Chau District) with two alleys with road clearances of 2m and 3.5m is also having a lot of information about illegal apartments for sale. Vice Chairman of Hai Chau District People's Committee Nguyen Van Duy said that after receiving the information, the district assigned the functional forces to check and prevent the sale of apartments in this mini apartment building and that there are currently no apartments for sale. However, when someone asked to buy an apartment, a person claiming to be the investor of the mini apartment building at alley 308 Hoang Dieu said that it was not for sale, only for rent and the tenant had to pay a one-time fee for the entire rental period of 50 years. Specifically, for a two-bedroom apartment with an area of ^46-48m2 , the total rent to be paid is from 1.2-1.25 billion VND at the time of signing the contract.

Apartments in the mini apartment building in lane 308 Hoang Dieu are being advertised for sale on many websites and social networking sites. Photo: NAM TRAN

Selling land to give away mini apartment buildings is booming

According to research for nearly a month now, on many websites and social networking sites, there has been a "blooming" of information about selling mini apartments along with the income from renting out the apartments. For example, a mini apartment in an alley on Le Duan Street (Thanh Khe District) with 4 floors, 5 apartments located on a plot of land only ^50m2 wide with a income of 18-19 million VND/month is being sold for 3.55 billion VND. A mini apartment on Le Thanh Nghi Street (Hai Chau District) with 6 floors, 22 apartments, a land area ^{of 204m2} , an income of 100-150 million VND/month is being sold for 25.9 billion VND. A mini apartment building on Trung Nu Vuong Street (Hai Chau District) has 5 floors, 28 apartments, and a land area of 200 square ^meters with an income of 150 million VND/month, and is being advertised for sale at 25 billion VND... In one case, a real estate company even posted information about "selling high-income apartment buildings" with 14 other mini apartments in Hai Chau, Son Tra, and Ngu Hanh Son districts.

The "blooming" of information about selling mini apartments at this time has surprised and confused many real estate brokers and traders. A real estate broker (who requested anonymity in Hai Chau district) analyzed that currently, the interest rate on bank deposits fluctuates from 5-5.5%/year. If the cash flow from renting out apartments is as advertised, then clearly, the annual interest rate is much higher than the interest rate on bank deposits. For example, a mini apartment is advertised for sale at 9 billion VND but generates an income of 55 million VND/month, corresponding to an interest rate of 7.3%/year; a mini apartment is advertised for sale at 14 billion VND but generates an income of 95 million VND/month, with an interest rate of 8.2%/year... Therefore, many mini apartments are being sold en masse, which is unusual.

It is likely that many investors are under pressure from bank loans to invest in mini apartments because they have not been able to sell their apartments in the past due to "tightening" and frequent inspections by state agencies. On the other hand, meeting the conditions for granting pink books, being investors in mini apartment construction, fire prevention and fighting, requirements on construction standards... in accordance with the provisions of the new Housing Law just passed by the National Assembly is also very difficult.

Therefore, anticipating that it will be difficult to get a pink book, many investors take advantage of this time, taking advantage of the psychology of many buyers who mistakenly think that they will be granted a pink book for each apartment, to "get rid of the goods". If this is true, then those who buy apartments to live in or investors who buy mini apartments at this time to anticipate the new policy, will easily "taste bitter fruit" later.

Director of the Institute of Real Estate Research and Training (Da Nang) Nguyen Duc Lap commented that there is a big shift from boarding houses and rental houses to social housing in the coming years because the new Housing Law has policies to encourage and promote the strong development of social housing in both supply and demand. Real estate brokers and experts also suggested that the authorities strengthen management, inspection, and warnings... against the above new and unusual developments and to anticipate new regulations and policies of the Housing Law.

NAM TRAN

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