Instances of apartments being used for illegal activities are on the increase. Ms. Vu Kieu Hanh, Savills Hanoi Head of Property Management, offers guidance on safe, cost effective rental unit management as residential real estate growth continues.
Local police units are reporting more cases of drug use in rental apartments and villas. In most cases, landlords have little information about tenants or control over the rental process. It is almost impossible to control anyone motivated to commit crimes as most, by moving regularly, do not declare temporary residence. With so many rentals being handled by brokers, landlords are often removed from the process, apart from handing over access cards and keys to tenants. Tenant management, however complicated, is becoming one of the most important issues for building management boards.
Ms. Vu Kieu Hanh, Savills Hanoi Head of Property Management, commented: “Rental housing is very popular in urban areas as it provides regular, passive income. The main reason owners have trouble managing tenants is down to a lack of appropriate management methods. Effective property management helps landlords save significant time and maintenance costs. There are two key points owners should pay attention to prior to renting out:
First, thoroughly research any prospective tenant. Usually, landlords will be less concerned if tenant has a family, stable job and good background. What the tenant uses the unit for needs to be made clear to avoid social disturbance, security issues and any violations of the law. At the same time, landlords need to work closely with building management and local authorities for demographic management. This requires the management board knowing their tenants strictly comply with the Residence Law, meaning all tenants having to register Temporary Residence at local police posts.
Second, the landlord needs rental purpose clearly stated in the contract. Failure to do so, or not clarifying rental terms, only disadvantages the landlord. Tenants may accidentally or intentionally take advantage of this by, for example, sub-dividing to then sub-lease for their own profit. There are even cases where tenants operate a dormitory model by installing multiple bunk beds. Consequently, landlords do not know exactly who, or how many these sub-tenants are, which inevitably comprises unit safety and building security," Ms. Kieu Hanh said.
Many landlords and developers avoid these issues by engaging professional management firms. Doing this ensures rental properties remain in good condition, building services are optimized for the overall ideal living space, while budgets are accurately managed. This total approach also ensures the asset value and reputation is protected and continuously enhanced.
Ms. Kieu Hanh affirmed: "Programs dedicated to assisting landlords are very popular. Many developers use international management brands for their understanding and long-term value. Professional real estate management has become increasingly vital while shopping centres, office buildings, luxury apartment projects, etc. are being rapidly developed in Vietnam ".
Discussing the Serviced Apartment sector, Ms. Do Thi Thu Hang, Savills Hanoi Director of Advisory Services, commented: “Serviced Apartment is likely to see increasingly fierce competition after over 30,000 Grade A and B apartments become handed over. A proportion of which will be competitive rentals in the US$10-15 m2 month range. However, Serviced Apartment benefits from some timely government support. Resolution No. 84/NQ-CP covers new and renewed work permits for foreign experts. Land rent is reduced by -15% for any enterprises, organizations, households and individuals that lease from the Government. Now Law No. 51/2019 / QH14 allows foreign professionals to change visa purpose without the need for re-entering Vietnam. These changes will help maintain and develop this key demand source”.
From now to end 2020, the market will likely have an additional 770 units from seven projects. Hanoi districts Gia Lam and Dong Anh districts will see their first serviced apartment projects come into operation.