On 19 January 2016, the highly anticipated “Condominium Law” (the “Law”) had been passed by the outgoing Pyidaungsu Hluttaw after publicised deliberations which spanned more than three years. The Law is expected to boost the country’s stagnating real estate market and generate foreign currency by allowing foreigners to purchase up to 40 per cent of a condominium’s housing units using only foreign currency remitted from offshore.

More importantly, the Law has finally shed light on what is considered a “condominium” and who may be qualified owners of “housing units” comprising a condominium.

A condominium is defined under the Law as a high-rise building with six floors and higher built as a collectively-owned building on collectively-owned land registered under the Law, and includes common property and housing units provided for use of collective owners. Such housing units are basically apartments constructed and partitioned as individual units which may be utilised for living, or for other specifically approved purposes. The intent is for the owner of a housing unit to have an undivided interest not only in the land on which the condominium is built, but also on the common areas of such condominium.

Under the Law, each condominium is required to be developed by an entity (the “Developer”) which must have secured the business license from the relevant region or state management committee and complied with the prescribed minimum capital. It is unclear, however, from the provisions of the Law whether a Developer is required to be a Myanmar citizen or may be a foreigner.

Notably, the Law specifically requires that the land on which a condominium is to be built should be collectively-owned and registered as such with the Office of the Registry of Deeds and Assurances under the Ministry of Agriculture and Irrigation. Land intended to be registered as collectively-owned should be: (i) of a type which may be utilised for housing development under prevailing laws; (ii) capable of being transferred; and (iii) in accord with specifications prescribed by relevant authorities for urban planing. Such land must further be at least 20,000 square feet in area. A condominium may, however, with the permission of the Union Government, also be built on state-owned land or on land permitted for management by a state department, a government organisation, a city development committee, or a city development organisation on behalf of the state.

Apart from registering the collectively-owned land, the Developer is also required under the Law to register the condominium with the relevant condominium registration officer appointed by the Ministry of Construction (the “Registrar”) by registering the documents and instruments for the development of such condominium.

Developers of condominiums constructed before the passage of the Law or which are currently under construction are required to apply to the relevant management committee for registration of the land (as collectively-owned) and the condominium. Depending on the application, the relevant management committee may require modifications to be made to the condominium in accord with regulations. Incidentally, the Ministry of Construction has yet to specify other requirements for a condominium including the prescribed number of floors, number of housing units, and parking space, amongst others.

It is worth noting that the Law has set in place a legal framework for the transfer of titles over the housing units in a condominium by requiring registration of the transfer documents with the Registrar within 30 days from the date of transfer. A transferee will then be issued a housing registration certificate following compliance with the registration procedure and payment of appropriate stamp duty. As a holder of legal title to a housing unit, a transferee has the right to sell, exchange, gift, renounce, lease, mortgage, inherit, and allow for occupation (with permission of the condominium’s executive board) the housing unit to Myanmar citizens. Transactions relating to the housing unit with foreigners are, however, limited to leases, mortgages, and allowance for occupation (also with permission of the condominium’s executive board).

Nonetheless, as earlier mentioned, foreigners are allowed to purchase from the Developer up to 40 per cent of the housing units in a condominium. Interestingly, the Law dropped the requirement in the draft version only allowing foreigners to purchase units from the sixth level and above of a condominium, and foreigners are thus free to purchase housing units at whichever level of the condominium they wish within the prescribed ownership threshold.

It is worth noting that the Law appears to have culled an exception to the current prohibition for foreigners to own immoveable property under the Transfer of Immoveable Property Restriction Law (“TIPRL”), considering that all owners of housing units in a condominium (which include foreigners to the extent of 40 per cent of the total units) are considered collective owners of the land on which a condominium is built. To an extent then, foreigners are effectively able to hold ownership rights over immoveable property (albeit, undivided) notwithstanding the restriction under the TIPRL. It is, however, uncertain from the provisions of the Law whether leases of housing units to foreigners will be limited to a period of one year as set forth under the TIPRL.

While the Law is likely to create uncertainties owing to its current lack of details, it is certainly a signal of anticipated positive changes to the legal landscape of Myanmar and is expected to contribute to the country’s economic growth. It is hoped that such lacunae will be filled by the timely issuance of supplementary regulations for further guidance.

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