Real property law in Vietnam that every foreigner should know

Nhung Kieu26/10/2022

Real property law in Vietnam is one of the main concerns that every foreign investor has when it comes to investing or purchasing Vietnam’s real estate. Ever since the new laws on housing came into force in 2014 and 2015, foreigners find it way less challenging to buy properties in Vietnam. In this topic, Alpha Housing will be discussing some of the most important Vietnamese laws regarding  property rights.

Real property law in Vietnam regarding homeownership

Cases in which foreigners are permitted to possess houses in Vietnam

According to Vietnam’s real estate regulations, these are the subjects that can possess houses in Vietnam:

• Foreign companies, organizations or citizens residing and working in Vietnam
• Foreign companies, organizations or citizens investing in real property projects in Vietnam

Rules and restrictions for foreigners

However, there are still certain restrictions regarding foreigners owning houses within the territory of Vietnam:

• Expats can purchase a house in Vietnam as long as they own a valid tourist visa
• Foreigners can only possess up to 30% of the total number of units in an apartment complex; up to 250 separate houses in an area of a population equal to that of a ward-level unit
• Foreign individuals are allowed to buy up to 10% of the number of houses in a single property project
• Foreign citizens are restricted to possess houses only for a period of 50 years (from the release of the Certificate of homeownership in Vietnam)
• Foreign companies and organizations are restricted to possess houses within the time limit specified in the certificate of investment
• The purchaser of houses and lease must pay with the help of the credit organizations operating in Vietnam
• Foreigners married to Vietnamese citizens are granted with free homeownership
• Before the expiration of the homeownership, foreigners are allowed to sell, give away or donate the house

Real property law in Vietnam regarding land rights

Vietnam’s land use rights

In Vietnam, the people own land and the government administers the land on people’s behalf. That’s why both foreign or local citizens are not granted legal ownership of land. Citizens can only obtain land use right certificate (LRUC), which expresses their rights over the property. Only local Vietnamese people can own a LURC indefinitely, while foreign citizens are entitled to retain the certificate for no more than 50 years.

After 50 years, the government can either extend the LURC for foreigners or recover the land if the individuals or organizations didn’t obey Vietnam’s land law

Foreigners can choose to pay annual rental fees or pay the total lease amount at once. If you choose the first payment option, you can only utilize the property for stated purposes and sell assets as part of the property.

Meanwhile by paying the whole lease amount at once, you are allowed to sublease, mortgage or sell the land and the assets belong to the property.

Methods to lease land

There are 4 main methods to obtain a LURC and lease land in Vietnam:

• Method 1: The government grants a LURC to the land user through an administrative decision and charges land use fees. This way of leasing land is available for infrastructure projects in cemeteries and housing projects.
• Method 2: The State leases the land and in return, the land users have to pay land rental to the State. The payment for the rent can be made every year or in a lump sum. This functions mainly as the system of renting.
• Method 3: Lease the land through a lease or sub-lease contract with the landlord in an economic, high-tech, processing or industrial area, industrial cluster… The landlord is usually an enterprise that has been granted LURC.
• Method 4: With this method, foreigners can rent the land through a land lease contract, the transfer of LURC or a contribution of capital of the current land user.

The third method is considered the most convenient way to lease land in Vietnam since the landlord has most likely finished all the legal procedures before renting land.

The process of leasing land

Leasing land doesn’t require complicated steps, here are some key points that investors need to remember:

Step 1: Investors need to receive approval for your investment before signing any leasing agreement. The people’s committee at provincial level will give the investors a letter called “Approval in Principle”, which comments on the practicability of the project.

Step 2: Then, the organization who wants to rent land must be granted enterprise registration certificate and investment registration certificate.

Step 3: Finish the land lease contract and submit the registration form to the local Ministry of Natural resources and Environment (MONRE).

Step 4: Receive the LURC from the MONRE.

FAQs about real property law in Vietnam

Can foreigners sell land in Vietnam?

Foreign citizens in Vietnam who possess homeownership also have the same rights to sell their land as Vietnamese. However, there are some rules of which you should take notice:

• If the property is used for housing employees, the organization who owns it can’t lease or sell the house
• If the house is still under a lease contract, the lessee must be notified 30 days before the sale of the house

How to achieve the homeownership certificate in Vietnam?

Foreigners can obtain the Ownership of Residential House and Land Use Rights Certificate (also known as the Pink Book or homeownership certificate) through a contract of leasing. Foreigners are only allowed to have this form of property ownership in Vietnam.

Are foreigners permitted to do real estate business in Vietnam?

The law stipulates that foreign citizens, companies and organizations can only provide real estate services in Vietnam. Only overseas Vietnamese and foreign capital companies can do real estate business.

Having a thorough understanding about real property law in Vietnam plays a decisive role in helping foreigners purchase houses or land in Vietnam successfully. However, it’s always recommended that you consult a real estate agent or attorney when selling or buying properties in Vietnam.

Learn more: Foreigners buying property in Vietnam