Lack of clarity on foreign ownership, land use and building management committees in the Condominium Law are holding back growth in the property market.
When the Condominium Law was enacted in early 2016, many hoped it would provide a framework that could spur development in the sector, not least by permitting foreign ownership. But the law has not helped the dormant condominium market; instead, it has only fuelled uncertainty, prolonging the torpor.
A heavy-handed – albeit well-intentioned – approach to regulation of condominium development in Yangon has not helped. In 2016 over 200 high-rise projects were frozen pending inspection and approval. Some developers were facing the uninviting prospect of removing already-built floors from their projects, before such orders were retracted.
The law has a range of gaps and ambiguities, some of which are minor and others fundamental. It is hoped that the forthcoming by-laws will provide clarity. These by-laws are reportedly in the drafting stage, but there has been little concrete information about their contents.
Moving forward, three things need to happen to make this law implementable and effective. The first is that the by-laws need to clarify land ownership requirements in the law. Second, the by-laws should make condominium and strata schemes workable, preferably using laws and regulations from abroad as a model. Third, some external factors inhibiting the market need to be addressed.
Land ownership: a vexed issue
The Condominium Law requires that all projects be constructed on land that is collectively owned by the owners of units in the building. It does not, however, specify which types of land are capable of collective ownership. Mr Alexander Bohusch, a partner at Luther Law Firm, identified this as one of the biggest question marks surrounding the law, and an issue that needs to be clarified in its by-laws. “If only specific types of land, such as grant land and freehold land, can be used for the construction of condominiums then the limited availability of suitable land may limit the registration of properties under the new law,” he said.
This issue stems from the fact that a large proportion of projects are built on leased land under build-operate-transfer arrangements. This means developers cannot procure strata title of the land for property purchasers, because the land remains owned by the entity leasing it – typically the government.
The pragmatic approach is for the by-laws to integrate this kind of land. This requires providing an expanded definition of “collectively owned land” that includes long-term leasehold interests. It would also be beneficial if such interests could be continually renewed, but that is a matter for broader reform.
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