Condominium Law rules open market to foreign buyers

By THOMAS KEAN and MRATT KYAW THU | FRONTIER

YANGON — After a near two-year wait, the Ministry of Construction has issued rules for the Condominium Law that will open the property market to foreign buyers.

Under the rules, foreign buyers will be able to own up to 40 percent of the total floor area of registered condominiums – a prospect that local developers hope will spur market activity.

The introduction of the rules also means all buyers of registered condominiums will be eligible for strata title and thus support the development of a mortgage market.

The Condominium Law was enacted in January 2016 but could not come into effect until the rules were introduced. Although Minister for Construction U Win Khaing signed the rules on December 7, they were only posted on the ministry website today.

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The Ministry of Construction held a launch event in Nay Pyi Taw yesterday but did not distribute the rules to journalists.

Analysts said the rules would support growth in the property market, which has struggled since prior to the 2015 election and features an oversupply of luxury and high-end units.

“Already the market is returning to strength, albeit at lower price points than in the past,” said Ko Aung Thaw Zin, a researcher at Myanmar Real Estate and Construction Monitor.

“We don’t expect a stampede of foreign buyers as forecasted by some, though we do see gradually increasing interest in the market.

“It is also positive that it appears to allow existing buildings meeting specific criteria to register a condo. This will help revitalise some projects where sales have dwindled.”

The rules clarify important criteria for condominiums such as ownership ratios and registration requirements, Aung Thaw Zin said, and are more liberal than earlier drafts.

“They will make both local and foreign buyers more confident they are buying and selling genuine condo units,” he said. “It is also encouraging to see provisions on the condo management fee, as this has been a source of complaints for residents as current ‘condominium’ buildings.”

Legal advisory firm VDB Loi said in an update that the foreign ownership provisions in the enacted rules differed from earlier versions, which had specified that foreign buyers could hold up to 40 percent of total units.

Individuals – including the project developer – will be able to hold up to 25 percent of all units. There are also restrictions on the practice of pre-selling and on the collection of condominium management fees.

Fees for the transfer of title will be on a sliding scale, where previous drafts had proposed a straight percentage of the sale price.

Construction and Housing Development Bank deputy managing director Daw Myint Myint Mu told Frontier that she hadn’t received a copy of the rules yet.

“We’ve heard they have been released,” she said. “But I’ll believe it when I see it signed by the minister.”

The rules will encourage the development of a mortgage market because apartments buyers will now have proper title, she said.

“But we have to wait and see how they will implement the registration system,” she said.

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