How to buy property in Vietnam

Understand how to buy property in Vietnam with this simple guide.

In recent years Vietnam has had a bit of a shake up with regards to its property laws. Applicable to ownership and also to foreigners, there are new regulations that apply to how to buy property in this emerging economy.

Property ownership.

Updated in 2013 and implemented on 1 July 2014, land can no longer be privately owned. Therefore the landowner manages the land on behalf of the state. However, individuals and organisations can obtain land-use rights, either in the form of a land allocation or land lease that may also need a land-use fee. Local authorities on a yearly basis approve the land-use plan which details what land-use rights are available.

Land-use fee.

Split into land lease or land allocation (as known as land grant).

1. Land allocation.
– The term for this ownership can be a definite or indefinite time period.
– A one time fee has to be paid by the land user.

2. Land lease.
– The period is a fixed term.
– The land renter can choose between either an annual cost or a one time payment for the whole length of the lease.

Are foreign purchasers restricted?

In recent years Vietnam has been more welcome to overseas investors. As of 1 July 2015, foreigners can purchase properties provided that they are:

1. An individual who holds a valid Vietnamese visa.
2. An overseas company who has an office or branch in Vietnam or a legal entity, for example a foreign investment fund and bank.

However there are some restrictions that apply to foreigners as follows:

1. Only 30 percent of all units in a project can be purchased by a foreigner, or 250 houses in a ward.
2. Foreigners are restricted to a 50 year tenure, which has an option to renew, unless they are married to a Vietnamese expat or citizen and then they are permitted to own property on a freehold basis.
3. It is possible for foreigners to buy property with the aid of a mortgage, but the lender must operate in Vietnam.

Land ownership.

Foreigners can allocate land on the following basis.

1. For residential projects and they must obtain land-use rights through a land lease.
2. The tenure of ownership is 50 years and 99 years in the case of the site being used for diplomatic purposes.
3. Foreigners can transfer, sublet or even mortgage the land during the term assuming they have paid a one off lease fee for the land.

Other points to be aware of.

1. In Vietnam property is mostly commonly measured in square metres.
2. Measurements are quoted as either a net area or gross area. The net area is any usable space, therefore excludes columns, whereas the gross area is all the space plus the outside of the external walls.
3. In order to streamline the measurements for apartments, the net area of an apartment that is included in the title defines the management fee that the owner is liable for. It includes the usable area between the walls of the apartment, and does not include interior columns, the technical box or external walls.
4. Land stamp duty is borne by the purchaser and is 0.5 percent of the value of the property.
5. The seller is responsible for the 2 percent property tax which is calculated on the sale price.
6. Under the Residential Housing Law 2014 apartments cannot be used as office or trading space. This implementation is to ensure other residents of the building are not disturbed.