The Myanmar Consumers Protection Association requested the company to provide clear guarantees and information to buyers at a press conference at My Garden restaurant in Yangon on May 28.
The company is developing first ever condominium project via a build, operate and transfer (BOT) agreement on army-owned land which means the buildings will have to be handed back to the government after the 70-year lease expires.
“It is not exactly known whether the consumers will have to solve this matter either with the army or with the government. Flats are different from hotels and the shopping centres. It is better only when owners can hand down their apartments from generation to generation. The developers should give a clear message to their consumers,” said association chair Ba Oak Khaing.
Golden City Company is jointly owned by entrepreneurs from Sichuan province in China and a Myanmar entrepreneur based in Singapore.
Currently, the law says that foreigners cannot own land in Myanmar and can only hire plots to develop projects.This is the first example of a foreign developer building residential apartments via a BOT agreement. This, however, has left many in doubt over the security of purchasing an apartment.
“Who will take responsibility to rebuild this building if it is damaged by a natural disaster? Renting hotels is no problem but renting housing can cause problems in the future. That’s why customers should be given a clear message from the beginning,” said Myint Swe, a retired deputy director of the Department of Human Settlement and Housing Development.
Land rentals under build-operate-transfer systems have become popular this year with the arrival of foreign investment in Myanmar. Some companies receive between 30 to 70 years lease agreements after which they must return the buildings back to the government.
“In their contract, I saw that they don’t have the right to sell the apartments if they are operating under a BOT system. They can only sell apartments if the land is a land grant or free hold. Have they even received their permit yet? There’s also the land rental fee. For some land, companies have to pay US$2 million a year to the government. They need to pay the fees regularly. If not, the military or the government will take back the land,” said Myint Swe.
The condominium law is still being drafted and there have been rumours that foreign ownership will be allowed after the law has been passed, but no one knows the details.
In the shifting political and economic climate, foreign investors often have to deal with old laws under the premise that new ones will soon be enacted that will protect their investment.
However, for consumers there is often little guarantee if they buy into a project that will be taken back by the government after a specified amount of time.
One prospective buyer went to enquire about buying an apartment under the Golden City condominium project and was told that his only guarantee is that they will modify the agreement with the changing circumstances.
“They told me that the building is being constructed under a BOT system and the rental lease is for 70 years. When I asked them what guarantee they could give me, they told me that there are now political changes and they plan to increase the guarantee based on the changing circumstances. But it is not a strong guarantee, we will need to speak to the government,” said the customer.
Source: Eleven Myanmar