Can foreigners buy properties in Vietnam?

The answer is yes. With effect from 1 July 2015, Vietnam property market has opened up for foreigners to purchase properties with certain restriction which will be explained in this article.

It is worth noting that before 1 July 2015, only foreigners married to Vietnamese nationals and those making contributions to the country were allowed to purchase property.

Individual

All 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.

Foreigners allow 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.

a Northern village in Vietnam

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.

The tenure allowed to foreign individuals buying homes is 50 years from the date the authority issues the house ownership certificate to the relevant owner with renewal possibility upon expiration.

Foreign individuals married to Vietnamese citizens are entitled to freehold tenure. Eligible foreign entities shall have the tenure of ownership of apartment/house in accordance with the duration as stated in their business license/investment certificate.

The properties owned by foreigners can be sold, sub-leased, inherited and collateralized (previously only for owner occupying purpose).

During the ownership term, the homeowner is entitled to gift or sell their house(s) to individuals/entities eligible for home ownership in Vietnam; if not, upon the expiry of the ownership term, their house(s) shall belong to the State.

Commonly referred to as “carpet area”, NSA refers to the area for private use of the purchased apartment, which is measured by a clearance method and stipulated in the House Ownership Certificate granted to the buyer.

It shall include the area of room-dividing walls built inside the apartments and area of balcony, loggia attached to such apartment (if any); but shall exclude the area of the external walls, apartment-dividing walls, columns and service ducts inside the apartment.

Generally, for projects under construction, the payment scheme is decided by developers and agreed with purchasers.

Housing laws limit the maximum collection before handover to be up to 70% for local Vietnamese developers, and up to 50% for foreign developers. The law also stipulates that 5% is to be collected upon issuance of the pink book.

A default interest shall be applied as agreed in the SPA (commonly the default interest rate is at 1.5% per month of the late amount). If this violation exceeds the time given in the SPA, the developer has the right to unilaterally terminate the SPA and forfeit an amount.

At a common practice, the forfeiture amount is roughly 20% to 30% of the apartment selling price.

Tax payable