Last week, developers of Hanoi’s Keangnam Landmark Tower threatened residents who had failed to cough up for management fees with a suspension of services, including cuts to power and water supply and removal of access to the building’s lifts.
And while residents say the management company Chestnut Vina – under contract to Keangnam Enterprises to manage its residential buildings – was charging much higher service fees than those stipulated by the Hanoi People’s Committee, the developers alleged residents hadn’t paid service fees for many months.
Keangnam only resumed services to residents following the interference of local authorities.
Keangnam is accused of applying service fees four times higher than regulated by the Hanoi People’s Committee.
But Keangnam’s representatives said the developer had to collect enough cash to lease the management company (Chestnut Vina) and this was a high-end development so the management company also need more fund to operate.
“We want to offer the highest service for our residents and I think the price will be equal with the service. The fee which Hanoi People’s Committee stated was applied for normal domestically- invested buildings, while our project is the high-end one which was developed and invested by a foreign company,” said Ha Jong Suk, president of Keangnam Vina.
The latest ruckus at Keangnam is one of many similar conflicts in high-rise buildings nationwide and these cases have given rise to heated discussions about the business ethics of today’s property developers.
In another example, a dispute flared between the developer of Quoc Cuong Gia Lai 1 apartment project when homebuyers complained about housing quality, unreasonable management fees and slow payment of fines due to late delivery of housing products.
The residents of this project even filed a lawsuit to People Court in District 3 of Ho Chi Minh City to sue the developer for the problems mentioned above. Similarly, homebuyers of European Overseas Vietnamese Village project and the developer in Hanoi also have conflicts because of slow home delivery.
And many more cases have been reported. The main reason for those conflicts, according to experts, was because following contracts of developers and customers, when a project was in operation, all activities such as leasing or trading in common areas needed agreement from both parties. However, this was rarely obeyed.
And this was understandable because developers always wanted to recover their investment but residents never wanted to pay more.
Nguyen Thi Bich Ngoc, a real estate speculator in Hanoi said that those problems had a negative impact on people’s views of future property projects. “This gives rise to a very bad reputation and I think there will be not many investors or speculators think about buying an apartment in those troublesome projects,” Ngoc said.
“They [buyers] would hesitate before purchasing housing and this hinders the recovery the struggling real estate market,” she added. Ngoc said the solution was for developers to build up their reputation and ethics in business while provincial governments needed to tightly control developers and apply heavy fines on those which did not follow their contractual obligations.
“The same situation will also happen in other high-rise buildings if there are no efficient enough measures to manage this issue,” Ngoc said.