Since 1st July 2015 two new laws are in place, the Law on Real
Estate Business and the Law on Residential Housing. Those laws
allow foreigners to purchase, own and transfer real estate, houses
and condos. On 10 September 2015, the Decree implementing the Law
on Real Estate Business was adopted, shedding light on provisions
of the related law. The law and its guidance have been in effect
for one year and the market has witnessed positive improvement.
In general, there are two different possibilities to become
owner of property in Vietnam. The first option is to make
investment in construction projects of residential housing in
Vietnam. The second option is to purchase the house or condo after
its completion of construction.
The Law on Residential Housing provides that foreign individuals
who are permitted to enter the country are allowed to own property
in Vietnam. It grants even more rights to foreign individuals who
are married to a Vietnamese citizen. In particular, once married to
a Vietnamese, a foreigner is put in the same category with
Vietnamese investors in the market and exercises the right to
legally purchase and own property on a long-term basis.
Meanwhile, foreigners not married to a Vietnamese can only own
houses for a duration of 50 years. After this period, the owner can
require an extension of the ownership and the government will
decide whether and for how long it will extend the ownership
duration. Beside this 50-year limit, there are also other
restrictions on the number of properties that can be owned by a
foreigner according to the Law on Residential Housing.
As a result of these changes, Vietnam's property market is
heating up. According to the HCMC Real Estate Association, since
the new laws were put into effect, more than 1,000 transactions
were made by foreign clients to purchase properties in HCMC, while
the were only 250 similar transactions made during the period of
four years between 2009 and 2013 in the entire nation. Experts have
predicted that 2016 would be another prosperous year for the
Vietnamese real estate industry. The country is now considered to
be one of the prime real estate investment locations in the world.
With this development, there has never been a better time to invest
in the property developments in Vietnam.
However, some problems still exist in the field. Until now, it
has been announced that the Government will issue a detailed
guidance on how foreign individuals become eligible to own property
in Vietnam. This document is, however, not in place yet, despite
the reputation of the new Housing Law and Law on Residential
Consequently, although the Vietnamese market is considerably
attractive, foreigners are still hesitant to tap the opportunities
from new laws as transparent guiding documents have not yet been
released. In other words, the opportunities are clear but the
Government has been quite delayed in materializing them for
foreigners. It is reported that in the first half of the year,
there are 25 new projects in real estate sector being licensed with
total investment capital of more than USD600 million. In contrast
with the busy M&A and new foreign investment in the sector, our
own experience in dealing with our foreign client's request to
assist in the application for the red book shows that the licensing
authority is still hesitant to grant such certificate. There are
many reasons for this reaction, among those are lack of clear legal
basis, verification of the nationality of foreigners as well as how
to calculate the 50-year ownership.
Foreign investors being still cautious in searching for the
market cycle, trying to conduct appropriate procedures as Vietnam
is a new market for them, especially when information about the new
law is limited, also explains limited transactions made by
foreigners and foreign entities.
In conclusion, although the law has provided foreigners with
opportunities to purchase house in Vietnam, there are still several
obstacles that need to be tackled. The responsibilities lie both in
the policy-makers, who are urged to create more transparent and
detailed legal guidance, and the Vietnamese who are also required
to create a convenient and efficient transaction system.
Disclaimer:This Alert has been
prepared and published for informational purposes only and is not
offered, nor should be construed, as legal advice. For more
information, please see the firm's
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