Vietnam: Frequently asked questions relating to Land/House Ownership in Vietnam

In Vietnam, land cannot be owned either by individuals or by entities, whether they are Vietnamese or foreign. The Constitution provides that land is owned by the entire people of Vietnam and that the State administers the land for the people. In its exercise of the people's ownership rights, the State allocates1 or leases a piece of land to individuals, households or entities to use in accordance with the Land Law and its implementing regulations.

Land and land related issues are complicated in Vietnam. The first Land Law was enacted in 1993 and was repealed by the new Land Law 2004, which was passed by the National Assembly on November 26, 2003 and took effect on July 1, 2004. Issues regarding land and land related matters are also governed by a number of implementing Decrees and Circulars.

Any individual, household or entity to which a piece of land is allocated or leased must use the land for the purposes stipulated in the land allocation decision or in the land lease. After being allocated or leased a parcel of land, or after a land user receives a piece of land transferred from others, the land user is entitled to receive a land use rights ("LURs") certificate2, which is granted by a competent State agency3 in order that land users may protect their legitimate rights and interests.4

Even though individuals, households and entities do not have ownership of land, when they are granted an LURs certificate, they have basic control over the land and are entitled to exercise many rights such as the right to use, transfer, mortgage, lease, and other rights as are associated with land ownership. Land users include any individual or entity that has been allocated or leased land or that have had their LURs recognized by the State,5 or that have received their LURs through transfer. They are overseas Vietnamese, individuals and domestic households, domestic entities, communities, religious establishments, foreign entities with diplomatic functions which satisfy certain requirements, and individuals and foreign entities investing in Vietnam.6

Each type of land user receives its LURs in a different way. For example, individuals, domestic households and foreign entities can receive their LURs by being allocated or leased land by the State or from others who are permitted to lease or sublease LURs by having their existing LURs recognized by the State or by receiving LURs by reason of a transfer from another LURs holder. On the other hand, foreign diplomatic entities and foreign investors or enterprises that contain foreign invested capital can only receive their LURs by being leased land by the State or, in some cases, being leased or sub-leased land from others who are permitted by law to lease or sublease land to them. Also, rights and obligations of a land user who is allocated land by the State are different from those of persons who are leased land by the State or who lease land from others. Generally speaking, each type of land user has different rights and interests in relation to the use of a specific parcel of land. By comparison to Vietnamese citizens who reside in Vietnam, overseas Vietnamese and foreigners have limited entitlements to the right to use land. Only overseas Vietnamese and foreigners who satisfy certain requirements stipulated by law can be granted an LURs certificate. We will discuss this below.

Under Vietnamese law, the term "house" is used to describe a place to live and the term "construction work" usually refers to a factory or a warehouse. The term "house" in this paper will mean primarily a residence, but within the appropriate context, it could mean a building which is not a residence such as a commercial complex or an office building. Different types of buildings may be treated differently for purposes of tax calculation or determination of value.

The rules that apply to land and the rules that apply to houses/construction works are somewhat different even though a house/construction work is affixed to a piece of land and even though one cannot legally own the house/construction work if s/he does not have the LURs for the land underneath. There are also some limitations imposed on overseas Vietnamese and foreigners, regarding ownership of a house/construction work, as a house/construction work is affixed to land and together with a certain piece of land, form an asset that cannot be divided.

I. FOREIGN INVESTORS AND FOREIGN INVESTED ENTERPRISES ("FIEs")

In this section, foreign investors include individuals and foreign entities which invest in Vietnam under legislation on foreign investment. Establishing an FIE is the most popular way for foreign investors to implement their investment projects in Vietnam7. An FIE is an entity owned 100% by foreign investors or a joint venture company that is collectively owned by foreign investor(s) and Vietnamese entity(ies). Even though the Land Law uses the term "foreign individuals and organizations" to indicate foreign investors who invest in Vietnam, in fact the land users are mostly FIEs.

1. How can a foreign investor/ FIE receive land to carry out its investment project in Vietnam?

Generally, a foreign investor/FIE with an investment project in Vietnam may select either to lease land and to pay rent annually or it may lease land and pay rent in a lump sum for the entire term of the lease.8 Foreign investors/FIES may choose to lease land from the State or lease land from a private person (Vietnamese entity) to implement their investment projects. While there is almost no restriction to lease land from the State, foreign investors/FIE may only lease or sublease LURs from a private person in the following cases:

  • A foreign investor/FIE that requires land to construct a factory or a commercial building for its own use (the land is located outside an industrial zone, a hi-tech zone or an economic zone) may: lease land or sublease land from a domestic economic entity or overseas Vietnamese; sublease land on which infrastructure exists from other individuals and/or foreign entities, provided that such individuals and entities are entitled to lease or sublease land as mentioned hereunder9.
  • A foreign investor/FIE that puts its factory in an industrial zone may lease or sublease land from the industrial zone developer.10
  • A foreign investor/FIE that has a license to develop a hi-tech zone or an economic zone can lease the land from the hi-tech zone management board or the economic zone management board; a foreign investor/FIE that puts its factory in a hi-tech zone or an economic zone may choose to lease land from the hi-tech zone management board or the economic zone management board, or lease or sublease land from the hi-tech zone developer or the economic zone developer.11

Of note, the terms "industrial zone", hi-tech zone" and "economic zone" are each, quite special terms. For the purpose of this memo, we do not include any detailed discussion of the differences. Please note that, only individuals and economic entities that satisfy certain requirements, as follows, are entitled to lease or sublease LURs to others (including foreign investors/FIEs):

  • Economic entities that have been assigned land by the State in return for payment of land use levies and on which levies have been paid from sources other than the State budget12 , can lease and sublease LURs and architectural works or infrastructure which has already been constructed on the land.
  • Economic entities that have leased land from the State and are permitted to invest in construction and to deal in infrastructure in industrial zones, hi-tech parks or economic zones may sublease land on which infrastructure has already been built.13
  • Economic entities that were leased land by the State before July 1, 2004 and that have paid the land rent for the entire lease term or that have paid land rent for many years, and if there is a prepaid period of at least five years remaining, may sublease land and architectural works or infrastructure that has already been built on the land14.
  • Overseas Vietnamese who have been assigned land by the State or who receive LURs in industrial zones, hi-tech parks or economic zones by transfer, can lease LURs and architectural works or infrastructure that has already been constructed on the land.15
  • Overseas Vietnamese who invest in Vietnam and have been leased land by the State, provided that land rents have been paid in a lump sum for the entire lease term, are permitted to sublease the land together with assets they have affixed to the land during the land lease term.16
  • Other foreign investors/FIEs that have been leased land by the State and pay the land rents in a lump sum for the whole lease term are permitted to sublease the land together with the assets that they have affixed to the land during the lease term.17

The very common way that foreign investors use to obtain LURs to implement an investment project in Vietnam is to set up a joint venture with a local partner that already has received land use rights for a particular piece of land. The local partner may designate its LURs as its contribution to the equity of the joint venture. Of note, only the following local partners are entitled to contribute LURs and assets affixed to the land as capital to a joint venture company:

  • A local partner that has been allocated land by the State and the LURs fees paid for such land did not come from the State budget.
  • A local partner to which LURs have been transferred from an entity other than the State and the money which paid for such transfer did not come from the State budget.
  • A local partner which was leased land by the State before July 1, 2004 and has paid the land rent for the entire term of the lease; if a prepaid period of at least five years remains, it has the right to contribute the leased land as capital for the remainder of the period for which it has paid.

2. Is an FIE entitled to be allocated a piece of land from the State to carry on its investment project?

According to the Land Law 2004 and its implementing regulations, an FIE may not be allocated land from the State. An FIE may lease land from the State or from other economic entities that are permitted to lease land to an FIE for an FIE to implement its investment project.18

3. When a foreign investor/FIE lease land from the State to implement its investment project, is there any limit on the term of the lease?

According to Point 3, Article 67 of the Land Law 2004, the lease duration is decided on the basis of the term of the Investment Certificate ("IC") that was issued to the foreign invetor/FIE; normally the IC itself may not exceed 50 years.

Upon expiration of the IC (or expiration of such term as is specified in the LURs Certificate), the IC holder may request the State to extend the land use duration. The LURs holders' behavior while using the land--observation of land legislation, environmental considerations, etc, during the course of the land use--and whether use of such land remains in line with current land use planning, will all be taken into account when considering an application for extension.

4. What is the difference between leasing land from the State and leasing land from a private person (either an individual or an entity)?

There are several differences between leasing land from the State and leasing land from an individual or an entity:

  • The main difference is that when a foreign investor/FIE leases land from the State, it may lease the land without infrastructure on the land. However, when leasing land from individuals or entities, the foreign investor/FIE has to lease land on which some structures or infrastructure have been built. This is due to the State's policy on the use of land. Private individual or entities that are allocated or leased land by the State cannot lease or sublease the land unless they have first invested in the land by, for example, building houses, construction works or infrastructure on the land.
  • Secondly, the duration of a lease is different depending on whether one leases from the State or from a private individual or entity. If a foreign investor/FIE leases land directly from the State, the duration of the lease depends on the duration of the investment certificate, but may not exceed 50 years. For projects that require large investment capital, but which provide a slow capital return; projects that are in geographical areas which are under difficult socio-economic conditions; projects that are in geographical areas which have exceptionally difficult socio-economic conditions; or projects that require a longer duration, the lease duration may not exceed 70 years, and is subject to special approval. If a foreign investor/FIE leases land from other private individuals or entities, the duration of the lease not only depends upon the duration of the investment certificate but also upon the remainder of the LURs that the lessor is entitled to.
  • Thirdly, rental rates are not always the same. The rates to lease land from the State are provided by the provincial people's committee; the rent to lease land from private individuals or entities may be settled by agreement between the parties to the lease.

5. Can an FIE contribute capital up to the value of its LURs?

Under the Land Law 2004, an FIE that leases land from the State, leases or subleases land from entities that are permitted to lease or sublease land in industrial zones, hi-tech parks and economic zones and that pay the land rents in advance for the entire lease or sublease term, can contribute capital in the form of the right to use the leased land or subleased land plus their own assets affixed to the land.19 However, in order for this right to be implemented, further implementing regulations are needed.

6. Is a foreign investor/FIE permitted to sublease a piece of land that it has leased from the State?

The Land Law 2004 has widened the rights of foreign investors/FIEs that lease land from the State. Point 3, Article 119 of the Land Law 2004 provides that foreign investors/FIEs investing in Vietnam and lease land from the State and that pay land rents in a lump sum for the entire lease term, have the right to sublease the land plus their own assets affixed to the land during the land lease term. This means that foreign investors/FIEs that invest in the construction of infrastructure in export processing zones and industrial zones may sublease their leased land. It also means that foreign investors/FIEs that lease land from the State and pay the land rent in a lump sum for the whole lease term, may sublease the land. However, qualified foreign investors/FIEs can only sublease the land together with their own assets affixed thereto for the land lease term; they cannot sublease only the land.

7. Can a foreign investor/FIE mortgage the value of its LURs?

Pursuant to the Land Law 1993 and its amendments, a foreign investor/FIE that invested in Vietnam and was leased land by the State could mortgage only the value of the immovable property it owned together with their LURs as collateral and only at credit institutions licensed to operate in Vietnam.

As of July 1, 2004, however, foreign investors/FIEs that pay rent in a lump sum for the whole lease term are entitled to mortgage not only the assets affixed to the land but also the right to use the leased land during the land lease term. The mortgage must be with a credit entity licensed to operate in Vietnam. The law does not make it very clear whether the foreign investor/FIEs can mortgage the LURs alone or whether they must be mortgaged together with the investor's assets affixed to the land. In reality, this probably depends on the agreement between the foreign investor/FIE and the credit institution. That is to say, the parties to the loan agreement may agree to mortgage the LURs without including the assets--there need to be no assets on the land.

Foreign investors/FIEs lease or sublease land and pay land rents annually are not permitted to mortgage the LURs. They can only mortgage assets that are under their ownership and that are affixed to the leased land. Again, such a mortgage may only be given to a credit institution licensed to operate in Vietnam.

8. Can a foreign investor/FIE mortgage assets affixed to land?

Foreign investors/FIEs that lease land from the State or lease or sublease land from others (who are permitted to lease or sublease land) are entitled to mortgage the value of their own assets affixed to the land, at credit institutions licensed to operate in Vietnam. Such investors/FIEs are entitled to mortgage their assets affixed to land regardless of whether they pay the land rentals upfront for the entire lease term or pay the land rent annually. However, if the investor pays the land rent annually, it is only entitled to mortgage its assets on the land not the land underneath. In reality, credit institutions are reluctant to take a mortgage on the assets only because it will be difficult to handle mortgaged assets separately from the land when if mortgagor is unable to pay the debt.

If a foreign investor/FIE pays the land rent upfront for the entire lease term, it can mortgage the LURs and assets affixed to the land--but, again, only from a credit institution licensed to operate in Vietnam.

9. Can an FIE transfer its LURs?

An FIE that executes an investment project in Vietnam may select either to lease land and pay the rent annually or lease land and pay the land rent in a lump sum for the entire term of the lease.20 FIEs that lease land from the State with land rents paid in a lump sum for the entire term of the lease are also entitled to transfer the right to use the leased land and to transfer their own assets affixed to the land during the term of the land lease. It is important to note that transfer of the right to use land mentioned above, is only permitted if the LURs are transferred together with the lessor's assets affixed to the land.

If an FIE leases land from the State to execute an investment project, and if the FIE does not use the land for 12 consecutive months from the date the FIE receives the land, or if it has begun to use the land, but the project falls 24 months behind the pace for usage stated in the investment project documents, then, absent an extension, the land may revert to the State.

10. Does the State of Vietnam recognize an FIE's ownership of construction work that it has built and paid for in the performance of its project in Vietnam?

Yes. A certificate of construction work ownership can be issued to an FIE to certify its ownership over construction built to implement its investment project. The statutory name of this certificate is Certificate of Land Use Rights, Ownership of Residential Housing, and Assets Attached to Land (in this paper we have used the phrase "LURs Certificate"). In that LURs Certificate, the ownership of the construction work of the FIE will be recognized even though the name of the land user in the LURs Certificate may not be the FIE but the lessor if the FIE does not lease the land from the State or from the developer of the industrial zones.

11. Can an FIE build houses for lease or for sale in Vietnam?

Before July 1, 2004, the Phu My Hung joint venture corporation was the only foreign invested entity that was permitted to build houses for rent and sale in Vietnam.

The Land Law 2004 opened the door for other FIEs to invest in the construction of residential houses for sale or rent (engage in real estate business). Licensed FIEs that lease land from the State and pay land rent in a lump sum for the entire leased term can build houses for sale.21 FIEs that pay the land rents annually can only develop houses for lease.22

FIEs that invest in the construction of residential houses for rent can be issued an LURs Certificate for those houses. FIEs that invest in the construction of residential houses for sale are entitled to sell houses to anyone who is entitled to own a house in Vietnam and those who purchased the houses are entitled to be issued house ownership certificates.

The law provides that after the term of the investment certificate expires, the FIEs must hand over the houses for rent and any unsold houses, to the provincial People Committee to manage and to convert to State ownership.23 However, there are opportunities for other arrangements such as extension of the investment certificate.

12. If a Vietnamese company becomes a joint venture partner of an FIE and wants to contribute capital up to the value of its land use rights, how may it do so (i) if the Vietnamese company has the LURs? and (ii) if the Vietnamese company does not have the LURs?

  • A Vietnamese company can contribute capital to a joint venture up to the value of its LURs only when it has the LURs. However, some but not all Vietnamese companies that have LURs can contribute them as capital together with capital contributed by other Vietnamese individuals and entities, overseas Vietnamese, individuals and/or foreign entities. Please refer to the answer to question no. 1, Part I of this paper for those local companies that can contribute their LURs as capital to an FIE.
  • If the Vietnamese partner of the joint venture does not have LURs to contribute as its capital, a joint venture may implement its project by leasing land from the State or may lease or sublease land from other entities that are permitted to lease land or sublease land to an FIE. See also question no. 1, Part I of this paper.

13. Can an FIE that needs land for its investment project lease a parcel of land from a Vietnamese individual?

An FIE cannot lease land from a Vietnamese individual to carry out its investment project. However FIEs can rent buildings or assets affixed to the land from a Vietnamese individual in order to implement its project in Vietnam. The difference between leasing a piece of land and leasing a building is that when leasing land, the lessee can receive the LURs; when leasing a building, the lessee can only receive the right to use the building. The LURs remain with the Vietnamese individual.

14. Can an FIE which does not engage in the real estate business own a residential house?

According to resolution No. 19/2008/QH12 on the pilot scheme permitting foreign organizations and individuals to purchase and own residential houses in Vietnam, FIEs which operate in industries other than the real estate business are permitted to buy apartments in commercial apartment buildings for employees working for them, to use as their residential house. FIEs may own the apartments only for the term of their IC.

II. FOREIGNERS

In this section, foreigner means individual foreigners who may be interested in having a house or a parcel of land in Vietnam.

1. Can a foreigner buy a residential house in Vietnam?

The Land Law 2004 and the Law on Residential House are silent on whether or not foreigners are entitled to own a house in Vietnam. Such silence may be interpreted as a prohibitive silence. However, on June 3, 2008, the National Assembly issued Resolution No. 19/2008/QH12 on the pilot Scheme permitting foreign organizations and individuals to purchase and own residential houses in Vietnam. According to this pilot scheme, foreign individuals who currently reside in Vietnam and who have permission to reside in Vietnam for one or more years are entitled to own an apartment in a commercial apartment building if s/he belongs to one of the following groups:

  • Foreign individual who directly invests in Vietnam in accordance with the Law on Investment;
  • Foreign individual who holds a managerial position in an enterprise operating in Vietnam;
  • Foreign individual whose contribution to Vietnam has been rewarded with a medal from the President of the State;
  • Foreign individual who has made a special contribution to Vietnam as provided for in a decision of the Prime Minister;
  • Foreign individual currently working in Vietnam who has a university degree or higher qualification and who is a person with special technical knowledge and/or technical skills that Vietnam requires; or
  • Foreign individual who marries a Vietnamese citizen.

The above foreign individuals can only own the apartment for a period of 50 years as from the date of the house ownership certificate.

2. Can a foreigner (individual) lease a residential house in Vietnam? Is there any limit on the term of the lease?

A foreigner can lease a home in Vietnam for as long as s/he is permitted to reside legally in Vietnam. The term of the lease depends on the lease contract and the duration for which the foreigner is permitted to live in Vietnam. Of course, the term of the lease can be renewed.

From July 1, 2006, according to the Law on Residential Houses, foreigners who are permitted to reside in Vietnam for three continuous months or more are entitled to lease a residential house to live in Vietnam. The law does not restrict the duration of the lease and, in practice, many foreigners have entered into a long-term lease which last for several decades.

3. If a foreigner can lease a residential house, what about the land surrounding the house?

If the land surrounding the house is an integral part of the house, it is governed by the same rules as the house is governed. When a foreigner leases a house, the land surrounding the house is automatically included in the lease.

4. Can a foreigner lease a piece of land (other than residential land) in Vietnam?

Foreigners who do not invest in Vietnam may not lease a piece of land other than residential land. Only individuals and foreign entities that invest in Vietnam under legislation on investment are entitled to lease land from the State in order to carry out their investment project. Please refer to our answers in Part I of this paper for the rights of foreign investors/FIEs to lease land in order to implement their projects in Vietnam.

5. Can a foreigner inherit a residential house in Vietnam?

Resolution No. 19/2008/QH12 on the pilot scheme permitting foreign organizations and individuals to purchase and own residential houses in Vietnam by implication allows foreigners who are qualified to own an apartment (as discussed in the answer to question 1, Part II of this paper) to inherit an apartment in a commercial apartment building in Vietnam. If the residence is not an apartment or if the foreign beneficiary already owns another apartment, such beneficiary may only inherit the value of the house.

III. OVERSEAS VIETNAMESE (VIET KIEU)

According to Vietnamese law, overseas Vietnamese--also sometimes called Viet Kieu--are either Vietnamese citizens or people of Vietnamese origin, who permanently reside and earn their living in foreign countries. People of Vietnamese origin are people who have or used to have Vietnamese nationality or people whose parents or grandparents have or used to have Vietnamese nationality. The Government has established a procedure whereby qualified persons can receive a certificate that establishes that they are overseas Vietnamese.

1. How can an overseas Vietnamese who invests in Vietnam have land to implement her/his investment project?

When an overseas Vietnamese invests in Vietnam, s/he can choose one of the following ways to have land to carry out her/his investment project:

  • Apply to the State for allocation of a piece of land;
  • Lease land from the State;
  • Lease land from either individuals or households;
  • Receive a transfer of LURs from others in industrial parks, hi-tech parks and economic zones;
  • Lease or sublease land from others in industrial parks, hi-tech parks and economic zones.

2. May an overseas Vietnamese be allocated land by the State?

Pursuant to Land Law 2004 only overseas Vietnamese who return to the country to invest may be allocated land by the State and it may be allocated only in order to carry out their investment project in Vietnam.24

3. Can an overseas Vietnamese buy a house in Vietnam (i.e. become the owner of a house)?

Note: when we talk here about a house, we refer to a residential house only.

According to the Law on Residential Houses, the following overseas Vietnamese are entitled to buy residential houses in Vietnam:

  • Certain overseas Vietnamese who are permitted to reside in Vietnam for three months or more are entitled to own residential houses/apartments. There is no limitation on the number of houses or apartments they may own. They may own them for residential purposes only. The following overseas Vietnamese qualify: (i) those who have Vietnamese nationality, (ii) those who have returned for long term investment; (iii) those who have made meritorious contributions to the country; (iv) cultural activists and scientists and those who possess special skills that are needed for Vietnamese organizations and are currently working in Vietnam, and (v) those whose wife or husband is a Vietnamese citizen residing in Vietnam.
  • Overseas Vietnamese who are entitled to visa exemption and who lawfully reside in Vietnam for a period of three months or more are entitled to own a separate residential house or apartment in Vietnam.

Anyone who qualifies to own a residential house as described above, can apply for a housing ownership certificate25 that refers to the house located on a particular parcel of land. When an overseas Vietnamese receives a housing ownership certificate, s/he can exercise her or his ownership rights to the residential house and the LURs to the land beneath, which means s/he can sell, mortgage, bequeath or present as a gift or donate the residential house and the LURs to the land beneath.

4. Can an overseas Vietnamese "buy" a piece of land in Vietnam to build a house? That is to ask, does an overseas Vietnamese have the right to purchase LURs from another individual or entity?

As mentioned in question no 3 above, only an overseas Vietnamese who satisfies certain, listed requirements may buy residential houses. Only such overseas Vietnamese can receive a parcel of land transferred from another individual or entity to build a house to live in, and can only do so provided that such parcel of land is categorized as residential land. Upon the transfer of the land, s/he automatically receives the LURs. The LURs certificate which was issued to the former user of the land will be handed over to the new overseas Vietnamese owner. After the house is built, s/he can apply to include the ownership of the residential house in the LURs Certificate or s/he can apply for a new LURs Certificate that reflects the land use rights plus the ownership of the house affixed to the land.

5. Can an overseas Vietnamese inherit a house in Vietnam?

Pursuant to the Land Law and the Law26 on Residential Houses, only overseas Vietnamese who are entitled to buy residential house(s) can inherit a house in Vietnam. Overseas Vietnamese who do not satisfy requirements to buy a house in Vietnam may only inherit the value of the house--that is, they may receive the proceeds from the sale of such a house, but not the house itself.

6. Can an overseas Vietnamese mortgage the LURs value?

According to the Land Law 2004, from July 1, 2004, overseas Vietnamese who return to Vietnam for investment and are allocated land by the State or who receive land transferred from others in industrial parks, hi-tech parks or economic zones, can mortgage the LURs, but only with credit institutions licensed to operate in Vietnam. In addition, overseas Vietnamese who return for investment in Vietnam and are leased land by the State or leased or subleased land by others in industrial parks, hi-tech parks or economic zones, with land rents paid in a lump sum for the whole lease term are entitled to mortgage the right to use the leased land, only at such credit institutions and only during the land lease term.27

Overseas Vietnamese who return for investment in Vietnam and are leased land by the State or leased or subleased land by others in industrial parks, hi-tech parks or economic zones and who pay the land rent annually are not permitted to mortgage the LURs. They can only mortgage assets which they own, and which are affixed to the leased land, again, only at credit institutions licensed to operate in Vietnam.28

7. Can an overseas Vietnamese mortgage assets affixed to land--e.g. a house or a construction work--in Vietnam?

An overseas Vietnamese who owns assets--for example, a house or construction work--affixed to land is entitled to borrow money and to mortgage the assets. S/he can mortgage her/his assets together with her/his LURs based on land allocated by the State or LURs s/he receives from others in industrial parks, hi-tech parks or economic zones. Also, an overseas Vietnamese can mortgage her/his assets together with her/his rights to use the underlying leased land in the case of leased or subleased land if s/he has paid the land rents for the entire term in a lump sum. However, in case s/he leases or subleases and pays the land rents annually, s/he can only mortgage the assets affixed to land and not the LURs. In all cases the lender must be a credit institution licensed to operate in Vietnam.

8. Can an overseas Vietnamese who has retained Vietnamese citizenship buy a residential house in Vietnam?

Only overseas Vietnamese who belong to one of the groups listed in the answer to question no 3, Part III of this paper--regardless of whether or not they have retained Vietnamese citizenship--are permitted to buy a house in which to live in Vietnam.

9. Can an overseas Vietnamese continue to own a residential house after leaving the country to settle in another country?

The answer to this question is complicated. There are several possibilities depending on the facts of each case.

  • An overseas Vietnamese who fled the country, whose house was subject to governmental management and, which, in fact, was managed by the State, cannot claim private ownership of the house because her/his ownership of the house was converted to State ownership.
  • Consider the case of an overseas Vietnamese who fled the country and whose house ought to have been managed by the State but which house, in fact, the State did not manage or which house the State missed or overlooked and which house, during the time the overseas Vietnamese lived outside of the country, was being taken care of on her/his behalf, by a private person. In such case, that overseas Vietnamese's ownership of the house is recognized by the State . If s/he returns and resides in Vietnam, s/he will be considered for issuance of a housing ownership certificate which certifies the ownership of her/his house and the LURs to the parcel of land on which the house is located.
  • For those Vietnamese who departed the country and no one used or took care of their house during their absence, their houses belong to the State, if the State managed the house or gave it to someone to use.
  • Except for the above cases, generally, continued ownership of their house is recognized by the State. They may sell or assign their house to other(s) to live in or to take care of.

10. Can an overseas Vietnamese contribute LURs as capital to form a new entity?

Overseas Vietnamese who have the right to use a parcel of land, that has been allocated to them by the State or that has been leased to them by the State for which they have paid the land rents in a lump sum for the whole lease term, or overseas Vietnamese who use a parcel of land in industrial parks, hi-tech parks or economic zones that has been legally transferred to them or that has been leased or subleased to them by other land users, and who use the land to execute an investment project in Vietnam, are entitled to contribute such land and the assets affixed thereto as capital. If the land is leased s/he may contribute the rights to use the leased land during the land lease term30 as capital to form a new entity in Vietnam provided that the overseas Vietnamese pays the land rentals up-front for the entire lease term.

11. Is a Vietnamese company that is fully or majority owned by overseas Vietnamese entitled to be allocated land by the State?

An enterprise which is formed by Overseas Vietnamese who no longer are Vietnamese citizens is treated as an FIE and such enterprise is not entitled to be allocated a parcel of land by the State to carry out its investment project. Such FIE shall be entitled to lease land from the State or other land users who are permitted to lease or sublease land to an FIE. Please refer to Part I of this paper.

12. Can overseas Vietnamese invest in building houses/apartments for rent or for sale?

Under the Land Law 2004, an overseas Vietnamese who invests in Vietnam and is either allocated or leased land from the State by making a lump sum payment for the whole land lease duration, is allowed to build houses/apartments for sale or for rent provided that the investor receives an investment certificate/business certificate authorizing her/him to invest in the construction of residential houses/apartments for sale or lease.31 Purchasers of houses/apartments built by such an overseas Vietnamese are entitled to receive LURs certificates. If overseas Vietnamese are leased land by the State with the land rental paid annually, they can only develop houses/apartments to rent.32

Footnotes

1 By "allocate" land in this context we mean an act by the State to give a piece of land to a Vietnamese individual, a household or an entity to use for a definite or an indefinite period of time with or without the need to pay a land use fee (levy).

2 The statutory title is Certificate of Land Use Rights, Ownership of Residential Housing, and Assets Attached to Land. This Certificate is used to recognize (i) either the land use rights or the ownership of the asset affixed to the land (residential house or other assets as the case may be) or (ii) both the land use rights and the ownership of the asset affixed thereto. We use LURs Certificate here for convenience.

3 The People's Committees of the provincial level are authorized to grant LURs certificates to domestic entities, religious establishments, overseas Vietnamese and foreign individuals and entities. The People's Committee of the district level is authorized to grant an LURs certificate to households, communes, and overseas Vietnamese who buy a dwelling house associated with residential-land use rights. These agencies may authorize the land management agencies of the same level to act on their behalf.

4 Land Law 2004, Article 4 (20)

5 By "recognized", we means the issuance of an LURs certificate by the State authorities to a current stable land user who has used a piece of land for a long time and there are no disputes relating to the use of that piece of land.

6 Land Law 2004, Article 9.

7 Foreign investors may choose to enter into Business Cooperation Contracts with Vietnamese entities to implement investment projects in Vietnam but this form of investment is not available in every industry and is not available as a form to carry on the real estate business.

8 Land Law 2004, Article 108 (3)

9 Land Law 2004, Article 93 (3).

10 Land Law 2004, Article 90 (4)

11 Land Law 2004, Article 91, 92.

12 Article 110 (2) (ñ), Land Law 2004.

13 Article 111 (1)(d), Land Law 2004.

14 Article 111 (1)(ñ), Land Law 2004.

15 Land Law 2004, Article 119 (1)(b) and Article 120 (1) (b).

16 Land Law 2004, Article 119 (3)(c).

17 Land Law 2004, Article 119 (3)(c).

18 Law 2004, Article 35, 90, 91, 92, 93 ect.

19 Land Law 2004, Article 119 (3)(e) and Article 120 (2)(c).

20 Land Law 2004, Article 108 (3)

21 Article 119 (3)(f), Land Law 2004.

22 Article 119 (2) (d), Land Law 2004.

23 Article 129, Law on Residential Houses

24 Land Law 2004, Article 9(6).

25 The full statutory title of the certificate is Certificate of Land Use Rights, Ownership of Residential Housing, and Assets Attached to Land.

26 Land Law 2004, Art 121 (2)(d).

27 Land Law 2004, Article 119 (3)(d).

28 Land Law 2004, Article 119 (2)(d).

29 Decision 297/CT date October 2, 1991 of the Council of Ministers (now, the Government) on resolving housing-related matters.

30 Land Law 2004, Article 119 (1) (b) and Article 119 (3)(e)

31 Land Law 2004, Art 119 (3)(f).

32 Land Law 2004, Art 119 (2)(d).

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