GOVERNMENT PROPOSES FINANCIAL MECHANISM FOR APARTMENT BUILDING RECONSTRUCTION

Proposed regulations link service life to building conditions

One of the notable proposals is to determine the service life of an apartment building based on its design documents, expected lifespan and actual inspection results.

Once a building reaches the end of its prescribed service life, competent authorities would rely on inspection findings to determine whether it can continue to be used or needs to be renovated or rebuilt.

The Government believes that clearer regulations on owners' rights and responsibilities when an apartment building is demolished would provide a stronger legal framework for reconstruction while protecting residents' property rights.

Apartment owners could have several reconstruction options

For older apartment buildings constructed before 1994, the draft proposes expanding the compensation and resettlement options available to owners.

In addition to receiving a resettlement apartment or monetary compensation under current regulations, owners could potentially choose social housing or land-use rights with a value equivalent to the approved resettlement housing option, depending on the specific case and approved plan.

For apartment buildings outside the pre-1994 category, the draft would allow owners to continue using the land associated with the building to renovate or rebuild the property, subject to contributing to the required construction costs.

How reconstruction costs could be calculated

Under the proposed mechanism, the financial contribution from each apartment owner would be calculated based on the apartment's usable floor area and the investment cost per square meter for constructing a new building at the time of demolition.

The proposed formula can be summarized as:

Required contribution = Apartment usable area × New construction investment cost per m²

The specific amount would be stated in the approved compensation, support and resettlement plan.

Owners could make the payment either in a lump sum or according to the construction schedule, depending on the approved plan and relevant agreements.

If an apartment owner does not wish to contribute toward rebuilding the property, the draft proposes compensation for the land-use rights associated with the apartment building. The compensation would be determined based on the owner's proportional share of land-use rights at the time the building is demolished.

Definition of "time-limited apartments" needs clarification

The National Assembly's Law and Justice Committee broadly agreed with the six groups of policies proposed by the Government.

However, the committee noted that the draft introduces the term "time-limited apartment buildings", while other provisions mainly refer to the "service life of apartment buildings."

According to the reviewing body, inconsistent terminology could lead to different interpretations concerning apartment ownership rights and the service life of the building itself.

The committee therefore recommended that the drafting agency further review and clarify the terminology and wording in the bill to avoid confusion between the service life of a building and the property ownership rights of apartment owners.

The draft amended Housing Law is expected to be further considered and potentially passed by the National Assembly at its October 2026 session.