Thursday, September 21, 2017

Condominium by-laws delayed with govt targeting completion by year’s end

A shortage of technical expertise has delayed the issuance of by-laws that would allow sales under the Condominium Law passed last January, industry sources say.

With the implementation of the condo law foreigners can buy units in projects such as the Diamond Inya Palace Condominium in Yangon. Photo: Zarni Phyo / The Myanmar TimesWith the implementation of the condo law foreigners can buy units in projects such as the Diamond Inya Palace Condominium in Yangon. Photo: Zarni Phyo / The Myanmar Times

Expectations that the law, which was finally passed after considerable debate and delay, would usher in a spate of foreign purchases of Myanmar real estate have so far proved unfounded.

U Min Htein, director general of the Department of Urban and Housing Development of the Ministry of Construction, told The Myanmar Times on October 10 that discussions were still proceeding with experts in an effort to complete and release the by-laws in December, setting out detailed regulations and procedures.

“The delay in releasing the by-laws results from the scarcity of experts in Myanmar. We have to coordinate with the relevant ministries and organisations as well. We will put the draft to the Attorney General’s Office before reporting back to the cabinet. We are trying to release the by-laws in December,” he said.

The construction ministry first started work on the draft condo law in 2013, under the previous government. The draft shuttled back and forth between the upper and the lower houses as amendments were introduced and debated before it was passed in the last week of January.

However, the absence so far of the necessary by-laws required for implementation has prevented the law from entering fully into force.

Potential would-be buyers, whether in Myanmar or from overseas, have adopted a wait-and-see attitude as they await the issuance of the by-laws.

Daw Moh Moh Aung, general secretary of the Myanmar Real Estate Services Association (Central), said the exact position had to be clearly set out in detail before the market could warm up again.

“Although people are now allowed to buy condominiums above the sixth floor, few have actually bought a condo so far. They’re waiting for clarity on whether foreign buyers can buy in collaboration with the banks,” she said. “Banks may offer mortgages for condos built on private land if they have a specific land area and comply with other stipulations in the Condominium Law.”

But banks have said they will not offer a mortgage in the case of condos built under the build-operate-transfer (BOT) system, Daw Moh Moh Aung said.

“That’s probably why sales are lagging. Foreigners will probably buy BOT condos if they can get a bank loan. The by-laws should make it very clear what kind of visa a foreign buyer needs in order to purchase a condo.”

Restrictions in the law include the need for the building to occupy at least 20,000 square feet of land. Foreigners can buy apartments only above the sixth floor, in buildings where no more than 40 percent is foreign-owned.

Chapter 5 of the law, on registration and building, says buildings constructed on collectively owned land registered with the Documents Registration Office have been defined as condominiums.

According to that chapter, a developer wishing to register a building as a condominium should register with the DRO and then transfer the land to people permitted to own land collectively.

“Banks cannot offer mortgages until the by-laws have been passed,” said U Win Zaw, managing director of the Construction and Housing Development Bank. “The main hold-up is the question of ownership. The condo by-laws will allow people to own land. According to the condo law, if the land has not been registered, there is no owner and no work can be done on unregistered land. It’s not true that banks don’t offer mortgages on BOT condominiums. This should be clear once the by-laws have been issued.”


Translation by Win Thaw Tar