Under Vietnam’s Housing Law, effective since 1st July 2015, broader categories of foreign individuals and entities are now entitled to purchase residential housing (apartments, condominiums and houses), including - amongst others - foreign-invested enterprises, branches, representative offices and foreigners permitted to enter Vietnam. Some basic points to consider if you want to purchase a house or apartment in Vietnam:

Who can purchase a house or apartment in Vietnam? Any foreigner with an entry visa is now authorized to purchase residential housing. Yes, a tourist visa is sufficient! Important: Whilst this is a welcome relaxation as compared to the old law, it still requires foreign purchasers to maintain their visa status during the time of their ownership (which may pose a risk in some cases). The permitted purposes for foreign ownership of residential housing have been extended: Foreign individuals may now not only purchase houses ‘for their own residential purposes’, but also rent-purchase, sub-lease or receive as donation or inheritance. Foreign organizations may own houses as agreed in the house sales- and purchase agreement (SPA) or rent-purchase contracts or donation or inheritance transactions within the term stated in their investment certificates.

How long is the duration of house ownership in Vietnam? For foreign individuals, the standard period of house "ownership" duration is fifty (50) years (and according to the law can be extended). Technically speaking, Vietnam at this point offers foreigners in principle only a 50-year "prepaid" lease contract and not freehold like in other ASEAN countries (such as e.g. the Philippines or Thailand). Only foreigners married to a Vietnamese citizen or an overseas Vietnamese are entitled to own houses in a ‘stable and long-term manner’, that is to have the same rights of house ownership as a Vietnamese citizen (i.e. freehold instead of 50 years). However, the 50-year limit for foreigners should not be overly problematic in case of purchase of new residential apartment projects in Vietnam. Why? Because the house/apartment ownership duration is counted from the date the foreign purchaser is granted his "ownership certificate" and clearly stated in such certificate. That means specifically that any license / time restrictions that the developer may have in its investment certificate do not apply to the foreign purchaser.

Is the project I am looking at commercially valid, and is it worth it for me? Next to location and quality of construction, the fact of limited ownership of 50 years must be considered (as 50-year leasehold must strictly speaking be discounted as compared to a full freehold purchase, at least if compared to other ASEAN countries). If the house needs to be financed, what are the available terms for financing in- and outside of Vietnam? Is the purchase of a house or apartment in Vietnam commercially feasible? Do you get “value for money” as compared to other ASEAN locations?

How about the developer's reputation and track record (developer due diligence)? In case of purchases of new / future apartment projects from a developer - Ask open about the seller’s or the developer’s reputation and track record, especially if you intend to purchase from a domestic developer. Always request a land title search and evidence that all permits and licenses have been granted. Ask the developer who they are and what they have done before, how are they funded? Do they own 100% of the land, or is it leased or optioned? Do they have the financial capacity to complete the project? Who is buying? Which firm is contracted to do the construction? What happens post construction, in particular: what about rental management? How are current projects performing in terms of rental? What provision is there for maintenance and what are the costs? Most importantly: Do not accept nebulous or vague answers - no serious developer will dismiss above questions.

Should I purchase from developer or can I purchase second-hand? Apartment purchases in Vietnam are certainly possible and common from second-hand sellers, but may be more complicated in terms of due diligence and if second-hand seller defaults. Specifically if a non-completed future project is purchased, and the apartment is not yet fully paid. In such case, second-hand seller and foreign purchaser enter into an assignment contract with regards to the initial apartment purchase contract of the second-hand seller with the developer. In case of existing projects, careful due diligence and contract review is needed. In any event, for foreign individuals, checking thoroughly the developer’s or second-hand seller’s Apartment Purchase Contract is essential: Detrimental provisions - that can sometimes still be found in developer’s contracts - relating for example to termination rights, deposits, interest payments and penalties can and should be negotiated.

Repatriation of purchase price and profits in case of selling the house or apartment in Vietnam: Contracts and payments for Vietnam property must be made in Vietnam Dong (VND). Accordingly, any foreign currency amounts have to be converted into VND before payment can be made. Whilst conversion is not a problem for money coming into Vietnam, converting back into foreign currency the original purchase price (and profits) can only be done if the initial payment has been made through a bank account at a licensed Vietnamese bank, and ALL documentation regarding the purchase can be presented, including the official red VAT invoices. More problematic is a complete offshore-transaction between foreign seller and foreign buyer (certain contract notarization, legalization requirements for foreign buyer to re-register ownership).

Know your exit strategy and pre-structure taxation: If you don’t know how you are going to get out, don’t get in! Ask yourself: How robust is the resale market? Who is buying? Where are they from? Is the market held up by investors? Is everyone trying to “flip” with no real buyers in sight? How does your purchase price stack up against comparables? If you buy well, you should be able to exit with relative ease at any time. Finally, how is your transaction taxed both when acquiring and selling the property, and how can it ideally be structured for your personal income tax (PIT)?