|Kazuhide Ohya||Nguyen Dang Minh|
The new law on residential housing came into force on July 1 2015. The legislation, in addition to its guiding documents including Circular 19/2016/TT-BXD (effective from August 15 2016), has paved the way for foreign ownership of property in Vietnam.
The new law has broadened those who are eligible to own houses in Vietnam to include:
- foreign organisations and individuals who invest in project-based housing construction in Vietnam;
- foreign-invested enterprises, branches, representative offices of foreign enterprises, foreign funds and branches of foreign banks operating in Vietnam; and
- foreign individuals who are allowed to enter Vietnam (collectively, foreign entities).
Foreigners now have a significant opportunity to own property in Vietnam. This new policy is remarkable, considering that Vietnam had been enforcing a strict policy regarding ownership of real estate before the promulgation of this law.
The types of houses eligible for foreign ownership consist of condominiums and detached houses in housing projects, which would well serve the demand of foreign entities. The ownership term applicable to foreign individuals is limited to 50 years. However, this can be extended for up to another 50-year period. For foreign individuals who married Vietnamese citizens, the ownership term would be stable and long-term (indefinite). The ownership term applicable to foreign organisations must be as agreed in the house purchase agreements. It must not exceed the term stated in the investment registration certificates or other documents permitting its operation in Vietnam (including the extended term).
Nevertheless, foreign entities are subject to statutory restrictions on ownership of houses. In principle, the state authorities will announce the list of housing projects, the number of houses, and other criteria, that foreigners may own. Notably, there are restrictions in the areas of national defence and public security. There is also a limit on the quantity applicable to foreign entities. For apartment buildings, this is up to 30% of the total apartment units for residential purpose. For detached houses, in general, this is up to 10% of total number of houses of a project. However, it must not exceed 250 houses in an area the population of which is equivalent to that of a ward.
As a result of the new legislation, the market has witnessed several sales of houses to foreign individuals, notably in Ho Chi Minh City, Binh Duong Province, and Da Nang City. This may have contributed to the increase of housing development projects in the country.
Kazuhide Ohya and Nguyen Dang Minh