Foreign Property Ownership: What You Need to Know

Real Estate - Saigon/HCMC: May 16, 2017
By: CBRE

What are the rules on foreign property ownership in Vietnam? Taking effect from July 2015, the revised Law on Housing has brought about many positive changes in terms of foreign property ownership. This opened a new chapter for Vietnam’s residential sector, where local and foreign developers alike are working aggressively to tap into this new pool of buyers.

foreign property ownershipImage source: sbcinterlaw

Vietnam’s economy has been thriving in recent years. FDI into the country has been on an upward trend, and its real estate market has been booming since 2014 along with a great deal of infrastructure investments. It is evident that there is an increase in the number of foreigners looking to invest in Vietnamese properties.

The biggest change with this new policy is that now all foreign individuals who are granted entry into Vietnam and all foreign investment funds, banks, Vietnamese branches and representative offices of overseas companies are able to buy properties here.

In addition, they are allowed to buy not only apartments but also landed property (villas and townhouses), and their home ownership rights have been significantly relaxed. The previous law only allowed foreign home ownership to be strictly for owner-occupied purposes, while the revised one has allowed these properties to be sub-leased, traded, inherited and collateralised. The catch is that the total number of units owned by foreigners must not exceed 30 percent of the total units in one condominium complex, or 250 landed property units in one particular administrative ward or its equivalent.

  Current Laws (Effective July 1, 2015) Previous pilot scheme (Resolution No.19, effective 2009 - 2013)
 Eligibility

YES for all foreigners who are granted a visa to the country and not entitled to privileges and diplomatic immunity

YES with restrictions such as:

  • Individual investors who make a direct investment in Vietnam;
  • Expatriates who are hired by enterprises formed under the Enterprise Law for managerial positions;
  • Individuals who possess special skills that are needed in Vietnam;
  • Individuals who are married to Vietnamese citizens;
Product

Apartments + landed property (villas and townhouses)

Apartments only

Volume

The total number of dwelling units owned by foreigners must not exceed:

  • 30% of the total units in one condominium building;
  • 10% of the total landed property units in one residential compound;

250 landed property units in one particular administrative ward or its equivalent

 One apartment unit only
Purpose

The properties owned by foreigners can be sub-leased, traded, inherited and collateralised

Only for owner-occupied purposes
Tenure

50-year leasehold with renewal possibility;

Foreign individuals married to Vietnamese citizens are entitled to freehold tenure.

 50 years

Source: CBRE Vietnam, Q1 2017.

From whom can foreigners buy houses?

On the primary market: from developers of residential projects.

On the secondary market: only from foreign individual/entity owners (not from local owners) with the remaining ownership tenure (renewal possibility available upon expiry).

foreign property ownershipImage source: Phumyhung

Sub-leasing the house

Foreigners are allowed to sub-lease their houses, but they must report this activity to the district-level housing authority. Rental income is taxable, with the tax rate varying in accordance with the rental income.

Inward/outward remittances

Payment for the purchase of houses in Vietnam must be processed through a licensed credit institution in Vietnam (e.g. a bank). Sending money into Vietnam is relatively easy, though inflows should be properly documented to avoid any issues with the repatriation of profits later.

foreign property ownership

However, remitting money out of Vietnam is still a challenge for foreign home owners, who are expected to produce the necessary documents evidencing their source of income such as proof of income in Vietnam (if applicable), proof of inward remittances to Vietnam, a Sales & Purchase Agreement, etc.

Renewal of ownership

For a foreign individual who owns a house in Vietnam, the procedure for extending the ownership tenure is as follows:

1. Three months before the expiration of the tenure for house ownership, if the owner wishes to have the tenure extended, he/she must file an application for extension which specifies the extension length and includes a certified true copy of the certificate of the house, then send it to the People’s Committee of the province in which the house is located;

2. Within 30 days from the receipt of the owner’s application, the People’s Committee of the province shall consider and issue a written permission for one extension of the ownership tenure at the request of the owner. Such extension must not exceed 50 years from the original expiration date written on the certificate.

3. According to the written permission given by the People’s Committee of the province, the Certificate issuing body will write the extension on the Certificate, and send a copy of the Certificate to the Department of Construction of the same province for monitoring.

Looking forward

Vietnam’s property market may not be as transparent as its more developed counterparts, but it does present great opportunities. Some projects that have seen huge interest from foreigners include The Nassi m in the Thao Dien area or Empire City in the Thu Thiem area of District 2.

foreign property ownershipImage source: Thenassim

Going forward, as the market further develops and quality standards further improve, we believe there will be a growing presence of foreigners investing in Vietnamese properties after some time studying the market.

These buyers are more likely to look at projects from well-known developers with good track records, and/or those in good locations with capital growth and leasing potential, even though selling prices of these projects can be a lot higher than average.

Some governing laws and regulations

Name of regulation Code Relevant Chapter Effective Date
Law on Housing 65/2014/QH13 Chapter IX Jul 01, 2015
Decree on guidelines for the Law on Housing 99/2015/ND-CP Chapter II & VII Dec 10, 2015
Circular on guidelines for the Law on Housing and the Decree no. 99/2015/ND-CP 19/2016/TT-BXD Chapter IV Aug 15, 2016

Banner photo from Getty image