Neighbours reported hearing explosions “like firecrackers” and screams from people inside and those living close by.
“The fire grew strongly, destroying many motorbikes, electric bicycles, and bicycles in the yard area,” Hanoi police said in a statement.
“By 1:26am, the fire was completely extinguished. Rescue forces discovered 14 people dead.”
Three survivors are receiving emergency treatment in hospital.
The building’s corrugated metal roof caved in as the blaze reduced the complex to a charred shell open to the sky, strewn with blackened belongings and bike parts.
It was not clear how many people were inside at the time the fire broke out.
The building comprised two interconnected blocks, one with two storeys and the other with three, situated down a two-metre-wide alley, with 12 rooms for rent.
The courtyard was reportedly used for selling and fixing electric bicycles.
A neighbour, who declined to give her name, said she heard an “explosion like firecrackers”.
“I thought there was a fight, or something hitting the window. I ran down and saw the fire.
“Many of the neighbours had run out of the alley, crossing through other neighbours’ houses. We were so, so scared.”
She said the building’s landlord rescued his daughter-in-law and a grandchild from the flames.
Another neighbour, Ngo Thi Thuy, said she saw bright flames rising up through the cracks of the building’s corrugated metal roof.
“Fire particles kept flying, the smoke was so thick that it was impossible to see anything,” Thuy, 40, told state news site VNExpress.
“There was the sound of explosions and some screams. The screams were coming from inside the burning house and surrounding houses.”
Along with her other neighbours, she poured buckets of water onto the roof – but said the smoke only rise higher.
Authorities are still investigating the cause of the fire, the latest deadly blaze to hit the communist country.
Fatal fires are common in Vietnam, where safety features such as smoke detectors and fire extinguishers are haphazardly installed.
In Vietnam’s deadliest fire in two decades, 56 people died – three of them children – in a Hanoi block of flats last September.
The country has experienced several other deadly fires in recent years, often at entertainment venues.
A year ago, a karaoke bar blaze near commercial hub Ho Chi Minh City killed 32 people and injured 17. The owner was later arrested on charges related to breaching fire prevention regulations.
In the aftermath, the prime minister ordered an inspection of all high-risk venues.
Fire safety equipment and instructions have been installed in many streets and buildings across the city.
Additional reporting by dpa