What are the limitations of Expats (Foreigners) when buying property in VN

Vietnam’s real estate market has a great attraction for domestic investors and many foreigners and Viet Kieu (Vietnamese citizens who live abroad). Homeownership in Vietnam is a residence and an effective investment while Vietnam’s economy is developing. Recently,  the real estate agents of Expathelpvn  has received many questions: Can foreigner buy property under the name of the foreigner? Should you ask someone to homeownership in Vietnam? How to own real estate in Vietnam?

Can foreigners buy property in Vietnam?

The answer is ‘yes’ for the houses. 

From 1 July 2015, Vietnam’s property market has opened up for foreigners with certain restrictions. From the individuals to the companies, foreign investment branches of foreign banks that are being operated in Vietnam also have permission to purchase / to lease the property of residential projects. The local government launched the Vietnamese Law on Residential Housing in 2015. This law made it easier to buy property in Vietnam

There are a few keys that you should notice about the Law on Housing dictating property ownership for international citizens, listed below:

• You can purchase property even using only a tourist visa, 
• There is no limit to the number of real estate units you can buy.
• However, within a single ward, all Expats (Foreigners) can’t own more than 250 residences. Within an apartment building or condo buildings, Expats can own up to 30% of its units, and up to 10% of a housing development /the properties in a landed property..
• You are entitled to a leasehold of 50 years on the land of your property; however, it has full rights & obligations, it is renewable.
• Expats can only buy properties from The Investor/ The Development companies or Foreign individuals/ Companies. 
• Most of the Bank in VietNam does not support Expats for buying Properties 
• Expats who marry a Vietnamese can get freehold ownership.
• Expats can not own land. It belongs to the government. Even Vietnamese just have the right to use it.
• There are 2 Sales & Purchase Contract and Leasing Contract for Expat buying properties. Most Landed properties will have only Leasing contracts because it has land included. Most of countries has the 九段线 -Nine-dash line on their passports will only have the rights to lease properties in Vietnam

In details: 

Who can buy property in Vietnam

• Foreigners with valid visa
• Foreign companies and international organizations operating in Vietnam

Before 1 July 2015, only foreigners married to Vietnamese nationals and those making contributions to the country were allowed to purchase property

IndividualAll foreigners who are granted permission to enter Vietnam are allowed to buy and own residential properties within a property development project in the country (with the exception of foreigners entitled to diplomatic or consular immunities and privileges prescribed by law).

Entity: All legal entities like foreign investment funds, banks, Vietnamese branches and representative offices of overseas companies which are established in Vietnam are eligible to buy.

Type of property foreigners can own: Foreigners are allowed to buy property in Vietnam including condominium and landed property such as villa and townhouses but foreigners are not allowed to own land. In fact, even citizens are not allowed to own land. In Vietnam, land is theoretically owned by people collectively and it is regulated by the State.

Maximum volume of ownership: The rule of 30% cap for Condominiums, and 10% cap for Villas/Townhouses (previously an eligible foreigner could buy only one apartment in Vietnam). 

Foreign organization and individual ownership of units in an apartment building may not exceed 30% of total units in one apartment building. In the event of an area with geographical boundary equivalent to ward level with many apartment buildings for sale or lease purchase, then foreign organizations and individuals may own no more than 30% of the total units of each apartment building, and not more than 30% of the total units of all the apartment buildings.

Foreign organization and individual ownership of units in an apartment building may not exceed 30% of total units in one apartment building. In the event of an area with geographical boundary equivalent to ward level with many apartment buildings for sale or lease purchase, then foreign organizations and individuals may own no more than 30% of the total units of each apartment building, and not more than 30% of the total units of all the apartment buildings.

Can foreigners buy land in Vietnam?

The answer is ‘no’ for the lands. Although foreigners can purchase houses, they are not allowed to own the land like many other countries in Southeast Asia. In Vietnam, the land is a national good; for this reason, only the structures built on the land are allowed to be purchased, not the whole land that they are on it. In fact, even the citizens of the country are not allowed to own lands, unless the Vietnamese people collectively own them. Still, the lands are governed by the state.

However, ‘land-use right’ can be enjoyed by the foreigner for up to 50 years with a renewable duration. Vietnam has a law regarding lands called Land Use Rights (LUR) that makes the risks less for foreigners to invest here. A foreign estate agent like Global Business Services Company (GBS), for example, introduced a 50-year lease scheme that gives the buyer a right to the apartment for 50 years. He/she will get the chance to reaffirm the lease when the term expires without payment of an additional rental charge. The contract will give the buyer many of the rights of ownership since it is only a lease.

Therefore, the buyer can also sublet his apartment. During the period of the scheme, if property ownership by foreigners gets lawful approval, the complex owner will transfer the apartment title to the person who bought it. Even when the building, for some reason, has to be sold, a pro-rata share will be given to the buyer.

Who can lease?

Citizens of Vietnam, local organizations and foreign-owned companies can purchase the right to use and build on land.  The length of a lease agreement and the terms of use depend on the type of entity purchasing the property.

For individuals, the maximum length is 50 years, with an option to renew the agreement for another 50 years. 

Foreign-owned companies can hold lease agreements in Vietnam until the end of their investment license. The Department of Planning and Investment grants this for ten years. This investment license is also renewable. However, it’s important to keep your company in compliance and report your taxes in Vietnam in a timely manner to ensure that there will be no issues with extension.

Those things above is about What to be noticed when buying property in Viet Nam. Hope it will help you to have a better picture about the Vietnamese law of housing for expats.