Foreign investors are recommended to set up a local bank account to transfer payments for their apartment to the Developer’s bank account. Below are some international banks with branches in Vietnam:

• Standard Chartered Bank
• HSBC
• Citibank
• ANZ

What are the payment schemes?
Generally, for projects under construction, the payment scheme is decided by developers and agreed with purchasers.

Housing Law limit the maximum collection before handover to be up to 70% for local Vietnamese developers, and up to 50% for foreign developers. The law also stipulates that 5% is to be collected upon issuance of the pink book.

A default interest shall be applied as agreed in the SPA (commonly the default interest rate is at 1.5% per month of the late amount). If this violation exceeds the time given in the SPA, the developer has the right to unilaterally terminate the SPA and forfeit an amount. At a common practice, the forfeiture amount is roughly 20% to 30% of the apartment selling price.

Paying for my apartment
What are the taxes involved?

A foreigner may either directly or authorize a third party (by power of attorney) to declare and pay Tax at a District level tax bureau at the District where the property is located.

The following taxes apply to property sales transactions:

• Value Added Tax (VAT): 10% VAT is taed on any sale of property by local or foreigners.
• Administration Fee: A minimal administration fee is to be granted an ownership certificate at the current regulation.
• Registration Tax for Ownership: 0.5% registration tax for obtaining the house ownership certificate on the apartment value.
• Personal Income Tax (PIT): If personal income is earned through the assignment or resale of apartments or houses, a 2% personal income tax has to be paid on the transacted value.

The following taxes apply to property rental income:

• Personal Income Tax (PIT):

If personal income is earned through rental of house/apartment, 5% VAT and 5% PIT has to be paid on revenue.

For rental income exceeding VND 100 million per year, a business license tax of VND 1,000,000 per year applies.

What are my rights if the developer defaults?

• Late Handover: If the developer does not handover the unit as per the date agreed in the SPA, the developer has to pay a default interest rate will be equal with the default interest rate applied to the purchasers.
• Failure to complete: If the developer does not complete the project in the number of days from agreed handover date as stated in the SPA, the buyers has the right to unilaterally terminate the SPA. In such case, the developer shall refund all paid amounts without interest to the buyers and compensate a default amount to the buyers which is equal to the purchaser’s forfeited amount (commonly from 20%-30% of apartment selling price).

Taking over my apartment
What is the handover process?

Upon the completion of the building, the developer shall serve a Handover Notice to the buyer to indicate the date of handover for the units and the outstanding amount to be paid before taking over the units. 

1. The buyer pays the outstanding amount as per the Handover Notice 
2. On the handover date, the buyer will check the unit and take over the units by signing the Minutes of Handover. 
3. The buyer will also sign the application for a pink book, electricity, water, and telephone contracts with supplier at the handover date. 

Will there be property management services?

Before establishing the Committee of Management for the building, the developers shall act on behalf of the Committee of Management to engage a qualified company to provide the property management services.

Are these after-sales services provided?

After the unit is handed over, the developer is obligated to provide the following services: 

1. Warranty on the units in accordance with laws and agreed in the SPA 

• Apartment Fittings: up to 1 year 
• Building Structure: up to 5 years from the date which the building is put into operation 

2. Submitting the application file for obtaining pink books for buyers 

Additional after-sales services relating to assignment, rental, furnishing etc, will be supported within capabilities of the Developer and regulations on a case-by-case basis.

How do I find a tenant?

Under the new law, foreigners are entitled to enter into a lease contract with tenants in Vietnam. The lessor can contact the tax departments where the apartment is located to purchase a red invoice for issuance to the tenant for collecting rent. 

While the Developer is not obligated to provide leasing services, such consultancy can be advised to investors on a case-by-case basis.

How do I collect rental income?

The method of collecting rental income is a commercial decision agreeable by the Landlord and tenant. Typically, the Landlord retains the right to instruct the management of the building to cut off water and electricity provision to the unit if the lessee fails to pay rent.

Insurance for my apartment

By law, the Developer is not obliged to provide insurance for private areas of the residential house/apartment. As such, owners of the house/apartment are recommended to buy insurance for their house/apartment in accordance with the law.

Similar to this:

Guide for foreign investors on residential property investment in Vietnam

Buying property in Vietnam

Introduction to Vietnam real estate