BACKGROUND
We start with some comments.
Historically, land and housing issues in Vietnam have been and remain complicated. Land ownership carries with it an historical, political and emotional overlay. Under Vietnamese law, individuals or organizations do not have the right to own land. Land is owned by the Vietnamese People or, stated another way, land is owned by the State of Vietnam[1]. Individuals or organizations only have the right to use land. “Ownership” of a house means both “to own the house” and “to have the right to use the land on which the house is built”. Therefore, the sale of a house means the transfer, from the seller to the buyer, of both the right to own the house and the right to use the land on which the house is built. The legal framework is comprised of the Land Law (“Land Law 2024”)[2], and the Law on Residential Housing (“Housing Law 2024”)[3].
Many foreigners[4] who come to Vietnam to live or work want to buy a house[5]. Before July 1, 2015, the eligibility of foreigners to own a house was fairly limited. Permission was limited to certain classes of foreigners, types of houses, and purposes for which the house was used. Ownership was also limited to a certain length of time and was only valid while the foreigner remained in Vietnam. As a result, few foreigners owned houses.
The Housing Law 2015[6] and its implementing regulations — Decree No. 99[7] and Circular No. 19[8] — have introduced many reforms that loosen the restrictions on foreigners to own residential houses and this has begun positively to impact the residential housing market. Those reforms remained when the Housing Law 2024 came into effect.
NEW REGULATIONS ON A FOREIGNER’S OWNERSHIP OF A HOUSE
- Who is entitled to own a house for residential purposes?
Foreign individuals who have a valid passport affixed with a visa and entry stamp by the immigration authority of Vietnam are allowed to own houses in commercial housing projects eligible to sell houses to foreigners. Foreign organizations that have a valid investment registration certificate are also allowed to do so.
There is no residency requirement for a foreign individual — any valid passport affixed with a visa and entry stamp will do. That is, he may be a resident of another country (not Vietnam) when he buys the house, apartment, etc. He need not be an investor in the housing project he buys into; indeed, he need not even be an investor in Vietnam. He also need not be present at the time of buying the house. However, the foreign buyer must not be in a category of persons entitled to preferential treatment or diplomatic immunity in accordance with law.
- By which ways and from which entities may a foreigner acquire a house?
Foreigners entitled to own houses may acquire a residential house in commercial housing projects by one of the following ways and from the following entities:
(i) purchase or hire-purchase a house from a developer of a commercial housing project;
(ii) purchase a house from other foreigners entitled to own the house;
(iii) receive a house donated by a Vietnamese individual or organization; or
(iv) inherit a house from a Vietnamese individual.
Accordingly, there is still a limit on the way a foreigner may acquire a residential house. For example, a foreigner is allowed to purchase a house from the developer of a commercial housing project or from other foreigners entitled to own the house. He is not allowed to buy a house from a Vietnamese individual.
- What kind of houses and how many houses are foreigners entitled to own?
A foreigner is entitled to own not only houses, including villas and town-houses with attached land, but also apartments and condominiums in commercial housing projects eligible to sell houses to foreigners, except in national defense and security areas as prescribed by the Ministry of Defense and the Ministry of Public Security.
The number of apartments or condos is limited to 30% of the total number of apartments/condos in one apartment building.[9]
The number of separate houses is up to 250 villas/town-houses with attached land.[10]
Oddly, the law does not state clearly that the limited number of houses that can be owned by foreigners applies to one foreign owner or to all foreign owners in an apartment building or in an area in which foreigners are permitted to own houses. The provincial Department of Construction is responsible to publicly announce on its website a list of commercial housing projects in which foreigners are not permitted to own houses and the number of residential houses that foreigners are permitted to own in each project. It seems that the law limits the total number of houses that can be owned by all foreigners.
- How can payment be made for purchase or hire-purchase of residential houses?
Payment for purchase or hire-purchase of houses must be made through a bank in Vietnam. That is, the money may be wired from abroad to the seller’s bank account, provided that the seller’s bank account has been opened at a bank in Vietnam.
- How long can a foreigner own a house? Can we assume that there is no consequence if the foreigner moves out of Vietnam?
The term of ownership that applies to a foreign individual is 50 years from the date of the ownership certificate. This term can be extended one time for no more than a total of another 50 years upon the owner’s request to the provincial People’s Committee at least 3 months prior to the expiration. The limit does not apply to foreign individuals who are married to Vietnamese or to overseas Vietnamese. That is, they can own houses on a stable and indefinite basis.
If the foreign individual owner who lives in Vietnam moves out of Vietnam within his ownership term, there will be no consequence. Prior to the expiration of the ownership term, the foreigner may sell or donate the house. If the house is not sold or donated prior to the expiration of the ownership term, the house will become the property of the state.
The maximum ownership term that applies to a foreign organization (that does not engage in the real estate business) is limited to the investment term defined in its investment registration certificate. The ownership term can be extended one time for no more than the investment term if the investment registration certificate is extended and if the foreign organization applies for such ownership extension.
- Can a foreigner sell or rent a house directly?
A foreigner may sell his own house.
The law entitles a foreigner to sell his own house. It does not state clearly when a foreigner can sell his own house after obtaining the ownership certificate. However, it strictly prohibits a foreigner from buying houses to re-sell as a business and for profit-making purposes. Therefore, the authorities may require a foreigner, when selling a house, to specify reasons for the sale of his own house. The authorities may also not allow a foreigner to sell a purchased house within a certain time, or to buy and sell houses at frequent intervals. We do not know this as a matter of experience. We just raise this possibility. To date, no such restrictions have been put in place.
The right to rent or lease depends on the identity of the owner. A foreign individual is entitled to lease out his house, provided that prior to leasing it out, he sends a written notice informing the local competent authorities that he will do so.
A foreign organization (that does not engage in the real estate business), on the other hand, is entitled to use the house only as an accommodation for its employees, and is not entitled to lease it out as an office or for other purposes.
To know more about ownership rights to a residence, please refer to our article titled “A Foreign Individual Owner’s Right to A Residence in Vietnam.”
- Can a foreign individual owner leave the house to his/her heirs? Can he own it jointly — say with his spouse?
Yes, provided that the heirs or the joint owners are themselves eligible to own a house in Vietnam.
- Will a foreigner receive a certificate for land use rights and ownership of the house, condo, etc on the land (together, “LURC”)?
Yes. The LURC is a form issued to either foreigners or Vietnamese who own either a separate house or a condo. That is, the document is the same for Vietnamese citizens and foreigners.
With respect to a separate house, the LURC recognizes the private ownership of the separate house and related private land use rights.
Ownership of a condo/apartment is slightly different because an apartment/condo has both private and public areas. The LURC recognizes private ownership of the condo owners and the common use of land use rights by all owners in the condo/apartment building. The term of condo/apartment ownership and land use will start from the date of the LURC. With respect to Vietnamese citizens, the term of ownership is stable and indefinite. In relation to foreigners, it is 50 years and it can be extended (see 5 above).
The term of condo/apartment ownership is separate and is not affected by the project term of the developer of the condo/apartment building. The developer, as one of the owners of unsold condos/apartments or retained commercial areas in the condo/apartment building, will own its condos/apartments within the remaining term of the project term. The term of foreign owners who have bought the condos/apartments will be 50 years from the date of the LURC. If the project term expires before the 50-year ownership expires and is not extended, the Government will manage areas under the developer’s ownership, while the foreign condo/apartment owners continue to own their condos/apartments until the expiration of the 50-year term, plus the one-off extended term. Management of the condo/apartment building will be carried out by the management board selected by all owners of the condo/apartment building.
- Will there be any difference between the paperwork that Vietnamese citizens will follow and the paperwork that foreigners will follow in respect of purchase?
There may be differences in the application documents for the LURC among the various authorities that issue an LURC. For example, a Department of Agriculture and Environment may issue the LURC to foreigners, and a communal-level People’s Committee may issue the LURC to Vietnamese. There is also a requirement of the valid passport affixed with an entry stamp for foreign individuals or valid investment registration certificate for foreign organizations (see 1 above). However, like Vietnamese, a foreign individual may not need physically to be present to carry out the house purchase. He can give a power of attorney to another person to do that. However, we emphasize the need for a visa and entry stamp.
In general, we do not believe the differences will be substantial. However, due to the types of developments and total number of houses that foreigners can buy (see 3 above), prior to issuance of a new LURC, it takes time for the authorities to verify the existing number of residential houses already owned by foreigners and the national defense and security areas where foreigners are not allowed to buy houses. This matter will certainly be resolved, but it may take time.
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[1] Article 53 of the Vietnam 2013 Constitution, and Article 12 of the Land Law 2024.
[2] Land Law 2024 was passed on January 18, 2024 by the National Assembly of Vietnam and went into effect on August 1, 2024.
[3] Housing Law 2024 was passed on November 27, 2023 by the National Assembly of Vietnam and went into effect on August 1, 2024.
[4] For purposes of this paper, the term “foreigners” includes foreign individuals who want to own houses for residential purposes and foreign organizations (including foreign invested enterprises, foreign invested enterprises’ branches or representative offices, foreign investment funds and foreign banks’ branches allowed to operate in Vietnam) that do not engage in the real estate business and that want to own residential houses to serve as accommodations for their employees.
[5] Under Vietnamese law, the term “house” is used to describe either a place to live or a place for production or business activities like a factory, a warehouse, or a building such as a commercial complex or an office building. In this paper, the term “house” or “residential house” means a residence. It includes an apartment, a condominium, a separate house like a villa or town-house with attached land.
[6] Housing Law 2015 was passed on November 25, 2014 by the National Assembly of Vietnam and went into effect on July 1, 2015.
[7] Decree No. 99/2015/ND-CP of the Government dated October 20, 2015 providing detailed regulations and guidelines for implementation of a number of articles of the Housing Law 2015 and went into effect on December 10, 2015.
[8] Circular No. 19/2016/TT-BXD of the Ministry of Construction dated June 30, 2016 providing guidelines for implementation of some contents of the Housing Law 2015 and Decree No. 99/2015/ND-CP.
[9] If the apartment or condo is in an area having a population equivalent to the population that defines a ward and if there are two or more apartment buildings in that area, the number of apartments/condos is limited to 30% of the total number of apartments/condos in one apartment building and no more than 30% of the total number of apartments/condos in all such apartment buildings combined.
[10] In particular, (i) if there is only one project with 2,500 separate houses, the number of separate houses is limited to 250 villas/town-houses with attached land; (ii) if there is only one project with less than 2,500 separate houses, the number of separate houses is not more than 10% of the total number of villas/town-houses with attached land in such project; and (iii) if there are two or more projects with a total of 2,500 or less, separate houses, the number of separate houses that foreigners are entitled to owned is not more than 10% of the total number of villas/town-houses with attached land in each project.
