How do I make payments for my apartment/house in Vietnam?

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How do I make payments for my apartment/house in Vietnam?

Update: 11:16:29 28-06-2018Date Submitted : 16:40:53 27-06-2018

Foreign investors are recommended to set up a local bank account to transfer payments for their apartment to the Developer’s bank account.

How do I make payments for my apartment/house in Vietnam?
Below are some international banks with branches in Vietnam:


What are the payment schemes?


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


Housing Law 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.
 

Paying for my apartment
 

What are the taxes involved?


A foreigner may either directly or authorize a third party (by power of attorney) to declare and pay Tax at a District level tax bureau at the District where the property is located.


The following taxes apply to property sales transactions:

The following taxes apply to property rental income:
 

If personal income is earned through rental of house/apartment, 5% VAT and 5% PIT has to be paid on revenue.


For rental income exceeding VND 100 million per year, a business license tax of VND 1,000,000 per year applies.


What are my rights if the developer defaults?
 


Taking over my apartment
 

What is the handover process?
 

Upon the completion of the building, the developer shall serve a Handover Notice to the buyer to indicate the date of handover for the units and the outstanding amount to be paid before taking over the units.
 

  1. The buyer pays the outstanding amount as per the Handover Notice
  2. On the handover date, the buyer will check the unit and take over the units by signing the Minutes of Handover.
  3. The buyer will also sign the application for a pink book, electricity, water, and telephone contracts with supplier at the handover date.

Will there be property management services?


Before establishing the Committee of Management for the building, the developers shall act on behalf of the Committee of Management to engage a qualified company to provide the property management services.
 

Are these after-sales services provided?
 

After the unit is handed over, the developer is obligated to provide the following services:
 

1. Warranty on the units in accordance with laws and agreed in the SPA

2. Submitting the application file for obtaining pink books for buyers
 

 Additional after-sales services relating to assignment, rental, furnishing etc, will be supported within capabilities of the Developer and regulations on a case-by-case basis.
 

How do I find a tenant?
 

Under the new law, foreigners are entitled to enter into a lease contract with tenants in Vietnam. The lessor can contact the tax departments where the apartment is located to purchase a red invoice for issuance to the tenant for collecting rent.
 

While the Developer is not obligated to provide leasing services, such consultancy can be advised to investors on a case-by-case basis.
 

How do I collect rental income?
 

The method of collecting rental income is a commercial decision agreeable by the Landlord and tenant. Typically, the Landlord retains the right to instruct the management of the building to cut off water and electricity provision to the unit if the lessee fails to pay rent.
 

Insurance for my apartment
 

By law, the Developer is not obliged to provide insurance for private areas of the residential house/apartment. As such, owners of the house/apartment are recommended to buy insurance for their house/apartment in accordance with the law.
 

Disclaimer
 

This investor guide is compiled according to best information available to the Developer and does not constitute professional legal advisory. The buyer is recommended to consult with relevant parties such as legal and tax consultants for professional advisory. The developer and Savills shall not be responsible for any misuse, misrepresentation and misinterpretation of any statements in this guide. Further, the developer and Savills shall not be held accountable for any change in laws.