Property maintenance funds may need more stringent oversight

Current regulations put forward by the Ministry of Construction stipulate that apartment buyers must pay two per cent of the unit’s value to contribute to a property maintenance fund.

The need for such fund have become more apparent in Vietnam as modern property developments have equipment that need to be maintained regularly, including elevators, water pumps and air conditioners, among other amenities.

However, there are concerns these funds are not being used properly. While homebuyers expect the funds will be used for building maintenance, developers may be tempted to use those funds to bankroll other projects.

Legal provisions requiring developer to maintain their building do exist, but experts say there are no enforcement measures regarding the use of maintenance funds.

According to regulations, within seven days of being established, the developer must hand over the fund to the property management board. In practice, however, many do not follow suit.

Analysts say it may be necessary to have more stringent enforcement measures followed by existing regulations. Bank facilitating property transactions could play a role by separating the maintenance fees as collateral for home purchases. This could prevent the funds from being used for other purposes.