Dispute at HCM City’s model residential area

  Experts are calling for central ministry intervention following a dispute between residents of Phu My Hung and the developers over land use fee.
 

Apartment blocks in Phu My Hung residential area.

The conflict broke out on October 9 when hundreds of families signed a complaint against the request for land use fees worth between 500-700 million dong for each apartment. This sum of money is equivalent to the value of a normal house in HCM City.

The owner of an apartment in Phu My Hung said: “I bought a 100sq.m apartment at the price of 3.2 billion dong ($210,000) in October 2008. This September, I was very surprised to receive the local taxation bureau’s announcement, asking me to pay 480 million dong ($28,200) of land use fees”.

She explained that the local taxation bureau said apartment owners have to pay the fee within 30 days after the day they receive the announcement, otherwise they will have to pay fines worth 0.05% of the total fee per day.

Another apartment owner said his family has had to come up with 600 million to pay land use fee, otherwise they will lose ownership.

According to Phu My Hung’s residents, the fee is very high, ranging from several hundreds to 1.6 billion dong (nearly $90,000) per apartment.

Phu My Hung’s residents met on October and are asking the investor – the Phu My Hung Joint Venture Company – to pay the fee.

The company’s vice general director Bui Thanh Son said his company obeyed the rules and contracts signed with apartment buyers.

Son said his company is a foreign-invested firm so it is allowed to hire land only. Collecting land use fees is the cost of transferring ownership to the apartment buyers so they have to pay the fee.

According to Son, since 2004, all Phu My Hung residents had to pay land use fees to receive ownership of their apartments. However, the fee was low before 2008 so nobody complained. Since 2008, it suddenly rose sharply while real estate prices fell.

According to local tax officials, local investors have to pay land use fees before implementing their construction project. Normally, investors add the fee to the cost of apartments when they sell to users and apartment buyers.

Meanwhile, Phu My Hung Joint Venture Company is a foreign-invested firm so they are allowed to hire land instead of being allocated land like local firms. They then have to pay land hiring fees only. After it sells apartments to users, they transfer apartment buyers files to the tax bureau. The apartment buyers then have to pay the land use fee. Moreover, contracts signed between Phu My Hung JV Company and buyers clearly showed users had to pay this fee.

Phu My Hung’s residents said that most of them don’t know that Phu My Hung JV Company only hires the land for 50 years, instead of being allocated land.

A representative for Phu My Hung’s residents, Nguyen Hong Hai, said: “I’ve researched six contracts and I see that they are different from each other. The only one similar point is at the first page, the investor confirmed that they have the land use right”.

A meeting between Phu My Hung’s residents and the investor.

“It is problematic that Phu My Hung didn’t make clear this point with buyers at the beginning,” she said.

Quoting the Law on Real Estate Business, which said that before selling apartments or houses, investors have to pay land use rights fee, Hai said that Phu My Hung is a foreign-invested firm but it cannot violate the above article.

Phu My Hung JV Company’s vice general director Son explained that residents are failing to understand the contract.

He said Phu My Hung pursued a totally different business policy from local investor. The firm turned a swamp area into an example residential area. While local investors only build apartments on land with available facilities, his company had to build all facilities like roads and bridges.

“The price for land in District 7 has increased continuously in the past two years thanks to our project. However, both residents and us – the investor – suffers from the state’s raising of land prices,” Son complained.

Around 4,000-,5000 apartments in Phu My Hung residential areas were granted ownership certificates after the owners paid the land use fee. The remaining 5,000 apartments are waiting for this certificate.

“If the city doesn’t solve our petition, we will face many difficulties in selling apartments in the future,” Son worried.

Lawyer Nguyen Sa Linh from HCM City-based Gia Linh Law Office said that according to contracts between buyers and investors, buyers will have to pay this fee. It would be disadvantageous for users to sue against the investor in this case.

Estate experts say speculators traded apartments but left the eventual dwellers to stump up for the high land use fee.

Phu My Hung JV Company asked HCM City to reconsider the time open to pay for the land use fees.

Meanwhile, Phu My Hung’s residents have gathered at the investor’s office to ask again who should pay the land use fees. They have threatened to bring the case to the court, the government inspectorate and the National Assembly.

On October 31, they went to the investor’s office  but instead of meeting them an announcement was stuck to the gate. Signed by the vice general director Bui Thanh Son, said that following three meetings, the residents and the investor still have very different takes on the situation.

However, according to the investor, buyers will have to pay the fee based on

contracts signed between them and the investors and agreements between investors and HCM City. Meanwhile, buyers quoted Land Law and newly-issued decrees to say that the investor has to pay the fee.

The investor’s announcement said that as the three previous meetings failed, the one on October 31 would fail again so they asked customers to wait for HCM City’s decision.

This case is reported to have hit HCM City’s real estate market. 

Lawyer Pham Van Phat from An Phat Pham law office said that it is wrong to collect the fee from apartment buyers. According to a government’s decree in 2004, investors have to pay the fee. He emphasized that even the latest decrees said that those who buy apartments built by foreign investors don’t have to pay the land use fee.

Experts and lawyers said that to solve this case, perhaps the HCM City Department of Natural Resources and Environment will recommend HCM City authorities ask the Ministry of Finance and Ministry of Natural Resources and Environment to get involved. 

VietNamNet/VNE