I/ Do you intend to purchase property in Vietnam?
At the end of 2015, Vietnam opened up to foreign investors. Since then, Vietnam has welcomed all companies, expatriates, travellers and property buyers waiting to take a part in such exploding market.
I think Vietnam is currently one of the most exciting property investments in Asia.
Rental income is among the highest, while new condos in upcoming areas around Ho Chi Minh City can be worth as little as 1,500 USD per square meter.
Nevertheless, before deciding to buy, you need to make familiar and find out how it works practically when you purchase property as a foreign investor in Vietnam
In this article, I share a lot of useful data about foreign rules of ownership, property taxes, the purchasing process and how to get a mortgage, etc. Whether foreigners can buy property in Vietnam
Whether foreigners can buy property in Vietnam
Few foreigners in the past have succeeded in investing property in Vietnam. Mostly we can blame stringent and unfavorable rules on foreign ownership.
Still, in July 2015, the Government of Vietnam launched the Vietnamese Law on Residential Housing (LRH), which facilitates the purchase of property by foreigners.
Technically, you can purchase as many properties as you like, because the quantity of property that foreigners can purchase presently does not have constraints.
The cap had previously been set in a condominium to a maximum of one unit. Thus, the rules of foreign property have changed dramatically. The new law in Vietnam on foreign property ownership
The new law in Vietnam on foreign property ownership
I summarized the most significant data below to note the latest law:
- Foreigners can purchase properties merely by having a visa.
- The quantity of properties you can purchase is not limited.
- Foreigners shall purchase no more than 30% of the units in condominiums and may not own more than 10% of the units in a landed project.
- Foreigners may purchase homes now, but only 250 apartments in a certain ward (division). I recommend that you visit this wiki page to read more about Saigon districts and wards.
- The lease term remains 50 years but can be renewed.
- A freehold tenure can be obtained if you have a Vietnamese spouse.
Can foreigners buy land in Vietnam?
As in many other countries in South-East Asia, foreigners can not purchase or own land. Instead, all Vietnamese people collectively own the land, but under the control of the state.
As prescribed in the national Land Law, foreigners and foreign organisations are permitted to lease land. It takes up to 50 years to lease, but sometimes up to 70 years.
Also, in the time I am writing this article, extending the period of lease from 50 years to 99 years is considered by the Government, which, of course, is positive.
You still need to be cautious even if the rules become less rigorous and likely will loosen over the years. For instance, there is no assurance that you can renew your lease term. Vietnam’s Land Use Rights (LUR) Fortunately, the Land Use Law (LUR) in Vietnam decreases the hazards to Vietnam investment for foreigners.
Vietnam’s Land Use Rights (LUR)
You have the right to use the land, even if you are not allowed to possess the land, as specified in the LUR. It also grants you the rights to regulate the property which the Vietnamese government leases or allocates.
Beware that you must provide the Vietnamese Government with a Land Use Rights Certificate (LURC) before leasing the land. Can Vietnamese people sell the property for foreigners?
Can Vietnamese people sell the property for foreigners?
Foreigners often purchase property directly from developers on the main market or from foreigners who had earlier purchased property on the main market.
Such market restrictions have restrictions because if a foreign quota is already filled (30%), you cannot purchase the property from local people. Vietnam ownership certificates of property Importantly, you receive a certificate of ownership when you purchase a property from a developer. By 2017, foreigners had problems obtaining certificates of property ownership, which was understandably frustrative. So why has it occurred?
Vietnam ownership certificates of property
According to law, in areas reserved for national defense and security, foreigners cannot own properties. And whether the property is in the area reserved for protecting the national and security is a matter for the Ministry of National Defense and Ministry of Public Security to decide. I am unable to emphasize the significance of ensuring that your future property can be owned by you as a foreigner and confirm that you can obtain an ownership certificate before purchase.
The pink book
The certificate of property is often known as the pink book. The name comes from the small pink book you should be given after buying a property.
This book demonstrates your property's ownership and rights. It will allow you to lease and declare, for instance, information related to inheritance.
Pink books are shortly used in the title to check property ownership.
The red book
Also a red book has been used longer than the pink book. The red book is used instead of physical buildings, such as houses and condos for the title property. The pink book is, therefore, more prevalent to foreigners who usually invest in less controlled properties such as condos.
If I buy a Vietnam property, do I have to receive the pink book?
In short, for the title of property ownership, the pink book is being used. Even if you can make proof of your purchase of a SPA (Sales and Purchases Agreement), the strongest proof of ownership is to have both of them.
- The pink book is considered the strongest evidence of property, but it is not a legal requirement.
- The SPA (Sales and Purchase Agreement) is equally, if not more, important
- Without the pink book, you can have more problems if selling your property.
What is the pink book inclusive?
According to the pink book, you are entitled to:
- Use your house for residential and other purposes
- Demolish, preserve, refurbish or re-construct your house, if the terms and processes of Laws on construction are complied with
- Do transactions when the property is sold, mortgaged or leased
II/ Process for property purchases in Vietnam
You must comprehend the purchase process before you decide to invest in Vietnam. You would not like to receive any surprises or unknown charges later.
Below is a list of the main items you need to consider during the purchase process.
1. Paying for a property in Vietnam
This is the first and significant step in the process. Are you planning to pay with cash assets, home loans or both?
In Vietnam, because of the volatility of VND (Vietnamese Dong), residents often pay (part of the property cost) with actual gold. In the secondary market, we can still see this, but you won't participate in a market.
Transactions in VND (USD cannot be used when purchasing property in Vietnam) are usually carried out at present.
2. Why do you plan to buy?
You must also wonder why you would like to invest in Vietnam. The development of regions in Ho Chi Minh City, as it now attracts many overseas businesses, expats, and rich residents, can be a good option if you look for high appreciations. Da Nang or Nha Trang could be better options if you're looking for a beach-side resort. Da Nang has undergone recent major rises in housing prices and is growing strongly. I will clarify more about interesting property investments later in this article. You can also read my papers listing new upcoming property projects for sales in Ho Chi Minh City and other cities. One or more properties to purchase
If you are looking for high rates of rent, you might be better off buying a multiple number of units, particularly in locations such as Ho Chi Minh City.
You can also diversify your risks if you purchase multiple units.
(3. Hiring a property lawyer in Vietnam)
4. Booking a property/condo
5. Pay the first installment enter Deposit Contract
6. Pay the following installments per schedule
7. Sales & Purchase Agreement (SPA)
8. Handover of the unit
9. Preparation for granting the pink book
10. Final payment
- Open a local bank account namely Vietcombank and Vietinbank, for example. Before you go to Vietnam to see what they have to offer and to clarify all issues, I advise you to call or email them.
- Transfer your cash directly from your home country to another branch in Vietnam. Some international banks in Vietnam, such as HSBC, can assist you.
- Transfer money (VND) directly to the seller
- A loan of up to 80% of the property value.
- 15 years of the loan (so-called tenor of the loan).
III/ The best places to buy property in Vietnam
- Your’s and the tenant’s name and residence address
- Payable rental and the tenant’s payment method
- Rental time (generally 6-36 months)
- When the tenant can move in
- Prepare an inventory list (what furniture and appliances that are available to the property)
- Your and the tenant’s rights and responsibilities (for instance, keep your noise levels down after some time and right to use your car park)
- Signatures and date