Recent changes to Law on Residential Housing in Vietnam are granting more privileges to Foreigners who wish to own a residential property. We hope that the below article, based on information from one of the leading law firms in Vietnam will answer majority of questions prospective buyers might have:
On 25 November 2014, the National Assembly passed Law No. 66/2014/QH13 on Real Estate Business (New Law on Real Estate Business) and Law No. 65/2014/QH13 on Residential
Housing (New Housing Law), which will come into effect as from 1 July 2015, replacing the Current Law on Real Estate and the Current Housing Law.
Eligible owners of residential housing
Similar to the Current Housing Law, the New Housing Law classifies the eligible owners of residential housing in three categories being Vietnamese Entities; Overseas Vietnamese; and qualified foreign individuals and organisations (Foreign Entities).
As compared to the Current Housing Law, the New Housing Law provides newly favourable conditions for owning residential housing in Vietnam, especially applicable to Overseas Vietnamese and Foreign Entities. In particular:
All Overseas Vietnamese who are permitted to enter Vietnam are eligible to own residential housing. It is also noted that qualified Vietnamese residing overseas are now entitled to the same rights and obligations of Vietnamese individuals, households and organisations*. The pilot scheme under Resolution 19/2008/QH12 permitting Foreign Entities to purchase and own one condominium in Vietnam (Resolution 19) has concluded with unexpected results, failing to improve the housing market for Foreign Entities. The New Housing Law has addressed this issue by easing conditions for Foreign Entities to purchase and own houses in Vietnam. Accordingly, Foreign Entities are required to satisfy fewer conditions to own residential housing in Vietnam.
In particular, the following entities are entitled to residential housing ownership**:
- Foreign Entities investing in the construction of residential housing in accordance with the relevant property project (Foreign Investors);
- Foreign-invested enterprises, branches, representative offices of foreign enterprises, foreign investment funds and branches of foreign bank operating in Vietnam, other than the Foreign Investors (Foreign Organisation);
- Foreign individuals who are permitted to enter Vietnam, other than Foreign Investors, and who do not fall within the category of persons entitled to diplomatic or consular immunity and privilege (Foreign Individuals).
It is noted that Foreign Investors are entitled to the same rights and obligations of house owners as those applicable to Vietnamese individuals, households and organisations, except if they construct residential houses on leased land, in which case they are only entitled to lease such residential houses.
Eligible houses owned by Foreign Entities
Under the New Housing Law, Foreign Entities are entitled to own all types of commercial residential housing, including condominiums and separate residential houses (e.g. villas, townhouses) (Separate Houses) in residential housing projects***;
Duration of ownership
Similar to Vietnamese Entities, Overseas Vietnamese can enjoy housing ownership on a stable and long term basis. However, a Foreign Individual will only be permitted to own a house for a period of up to 50 years as from the date of issuance of the certificate on ownership of such house; the actual duration is set out in the certificate on ownership and may be extended if permitted by law. In addition, a Foreign Individual who is married to a Vietnamese citizen is entitled to an indefinite ownership term of their houses with the same rights and obligations as those applicable to Vietnamese citizens. A Foreign Organisation may own a house for a duration not exceeding the term of its Investment Certificate or establishment license****.
Conditions on the number of houses owned by Foreign Organisations and Foreign Individuals
The number of condominiums to be owned by Foreign Organisations and Foreign Individuals shall not exceed 30% of the total number of condominiums in one single condominium building.
The number of Separate Houses to be owned by Foreign Organisations and Foreign Individuals shall not exceed 250 Separate Houses in an area having the population equivalent to an
administrative level of a ward (or cap Phuong in Vietnamese).
Overseas Vietnamese will have the same ownership rights as those of Vietnamese Entities. For example, they will be permitted to sell or mortgage their residential property. A Foreign Individual may also have the same ownership rights as Vietnamese individuals, except that before leasing out their house, a Foreign Individual shall notify the relevant State agency of the leasing transaction and pay the relevant taxes in accordance with the applicable law.
Foreign Organisations are only entitled to use their houses as a residence for their employees and are not allowed to lease out nor use it for office use or any other purpose.
Payment for purchase of residential house
For the purpose of controlling housing transactions of Foreign Entities, the New Housing Law strictly requires all payments for purchase and hire-purchase be made through a licensed credit institution in Vietnam.
* Article 10 and 11 of the New Housing Law.
**Article 159.1 of the New Housing Law.
***Article 161.2 of the New Housing Law.
****Article 161.2 of the New Housing Law.
The above article is for information purpose only.
Source: Frasers Law Company (www.frasersvn.com)