Update: 14:04:59 28-06-2018Date Submitted : 15:06:55 25-06-2018
Vietnam is one of Southeast Asia's premier emerging markets. From 2013 to 2015, Vietnam's economy recovered, with strong GDP growth of 5.4%, 6.0% and 6.7%, mostly due to the implementation of effective monetary policy. The positive signals of the economy and new update land laws have led to a significant growth in demands from foreign buyers aiming to own properties in Vietnam.
Who is eligible to own properties in Vietnam?
The amended Housing Law granting greater property rights to oversea nationals has been effective since 1 July 2015, with an implementation guide recently issued under Decree No. 99/2015/ND-CP. There are two groups of oversea nationals that are allowed to own properties: legal entities such as foreign investment funds and banks, Vietnamese branches and representative offices of overseas companies that are established in Vietnam; and overseas nationals who have an appropriate visa entry.
What are some types of property ownership?
Viet Nam's Land Law was updated in 2013 and effective since 1 July 2014. The land owner, in effect, manages the land on behalf of the state; land cannot be privately owned. Organizations and individuals can acquire land-use rights (LURs) via a land lease or a land allocation that may require a land-use fee (LUF). The land allocation is also known as a land grant. The differences between a land lease and a land allocation under the LUF are:
1/ For the land allocation, the land user pays a one-off fee, while for the land lease, the land user has a choice to pay the land rental on an annual basis or a one-off sum for the entire term of the lease;
2/ a land allocation term of agreement can be either for a definite or indefinite timeframe, whereas the land lease is for a fixed term. The land-use plan is approved annually by the local authorities, allowing land users to know which LURs are available.
According to the revised law, foreign enterprises are now eligible to allocate land requiring land-use fees for the development of residential projects for sale, or for sale and lease, promoting fairness between local and foreign investors in the property market. In addition, foreign investors may also acquire LURs through a land lease under which they can pay the land rental on an annual or lump-sum basis for residential projects for lease.
The new law also states that foreign entities eligible for land allocation and land lease with a one-off lease payment are entitled to transfer, sublease, give, mortgage and contribute the LURs during the term.
How long is the land lease term?
The term of a land lease and a land allocation for foreign enterprises must not exceed 50 years, although for certain major projects under difficult circumstances, there is the possibility to increase the term to 70 years. However, eligible buyers will obtain freehold LURs. For sites used for diplomatic purposes, the lease term can be up to 99 years and extended.
What are some ownership restrictions?
The Ministry of Construction issued Circular No. 19/2016/TT-BXD guiding the implementation of the Housing Law, and Decree No. 99/2015/ND-CP stipulating the number of apartments that foreigners can own, aiming to tighten resale procedures that will increase real estate transparency as well as streamline paperwork and administrative procedures. The new law limits overseas ownership to 30% of the total units within an apartment complex, and a maximum of 250 houses in a ward.
Overseas nationals are allowed to own properties as stated in the commercial contracts, but are limited to a 50-year tenure and optional renewal three months before the expiry date. An overseas national who is married to a Vietnamese citizen or a Vietnamese expat is entitled to freehold tenure.
The decree also allows foreigners to pay for the property via a financial organization operating in Vietnam. The retail banking sector is highly competitive, and this could promote property mortgage access for overseas nationals.
What are the procedures for buyers living abroad can transfer money to own properties in Vietnam?
Vietnamese who are residing abroad, or foreigners that are eligible to own properties in Vietnam can transfer money to purchase properties through the following forms:
- Open account in a Vietnamese bank to purchase property via bank transfer to sellers;
- Transfer money directly from overseas to the seller’s account, the seller will contact the bank to convert foreign currency into Vietnam dong. In this case there must be a swift code provided by the bank from the seller’s account when making payments.
- Pay by Cash via bank transfer to the seller.
The payments above applied only for common situations. For purchasing property in particularly, the Decree No. 99/2015/ND-CP of the Government dated 10/20/2015, under the Government’s instructions will further inform on the guidance of implementing the Residential Law by the State Bank, with specific instructions for payment of purchase, land lease or land allocation via financial organizations, foreign individuals, and Vietnamese residing overseas when buy/lease properties in Vietnam.
Therefore, while there’s no official guidance from the State Bank. Foreigners can contact commercial banks to learn about the procedures to own purchase properties via the payments mentioned above.
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