Vietnam has long been a popular tourism and business destination. Until 2015, it was not possible for foreigners to own property in the country, but changes to the Housing Law have introduced an opportunity for foreign buyers to invest in this growing economy. 

Can foreign investors buy property in Vietnam?
Vietnam’s constitution considers land to be a common good, therefore it cannot be owned by either Vietnamese nationals or foreigners. Instead, people are able to lease the land for specified periods of time and own the buildings on that land.

Effective July 2015, amendments to the Housing Law allow foreigners to lease and own a maximum of 30% of an apartment building or up to a maximum of 250 villas or townhouses within a ward. This effectively provides a registered 50-year leasehold title and, according to Savills, gives foreigners the same rights as Vietnamese as they can now sub lease, mortgage, trade and inherit.

There are two categories of ownership, or quasi-ownership since land cannot be owned by individuals, according to the Jones Lang LaSalle Vietnam Property Guide 2015. These are:

1. “Land use rights (LURs), which entitle the holder exclusively to use and deal with the land in a specified manner.” LURs are either allocated by the state or leased by the state.
2. “Ownership of houses and assets attached to land (“building ownership”), which relates not to the land itself, but to the buildings and other structures attached to land.”

LURs are the closest possible equivalent of freehold interest, but are technically not the same, since the Constitution of Vietnam states that all land is owned by the people and administered by the state.

Land use rights: understanding the right to use land
All rights to own land in Vietnam are held by the people and administered by the State. However, the laws of Vietnam allow ownership of a right to use land, known as the Land Use Right (LUR). To foreign investors, an LUR allows title-holders to conduct real estate transactions, including mortgages.

There are three main regimes for investors to acquire LURs in Vietnam:

• Allocation: The State can allocate LURs by administrative decision to national entities only. Allocated LURs may be subject to a land use fee, depending on the individual case.
• Recognition: The State can recognise LURs to national entities only, in which case no fee is applicable.
• Leasing: The State can lease LURs on a contract basis to both national and foreign entities. LUR leases are subject to a land use rent and are the only form of land ownership available to foreigners.

Foreign investors in Vietnam may obtain LURs either by way of a joint venture, to which a local Vietnamese partner contributes the LUR as a capital contribution, or by way of land leased directly from certain permitted lessors such as the State.

How to buy investment properties as a foreign company
In most cases, Foreign Investment Entities (FIE) will be granted a state-leased LUR rather than a state-allocated one for a specified term — usually 50 years. Foreign companies need to obtain an Investment Registration Certificate (IRC) from the relevant licensing authority for the project. As of the Law on Land 2013, foreign individuals were no longer recognized as land users.
 
How to buy residential properties as a foreign company/individual
Foreign individuals and companies are able to buy and own residential houses in Vietnam, as long as that individual/company does not own more than 30 per cent of the apartments in a building. There is also a cap on the number of separate residential houses within a ward area that a foreign individual/company can own. These caps are set out in the country’s Law on Housing 2014. Foreign individuals must have a valid visa for Vietnam to buy property.
As for the length of ownership, according to JLL, “...a foreign individual will only be permitted to own such residential housing units for a period of up to 50 years,” though the actual term will be determined during the sale and in the contract. This period “may also be extended in accordance with government regulations.” If the foreign individual marries a Vietnamese national or a Vietnamese person who lives overseas, they are able to own housing on a stable, long-term basis.
 
Property law in Vietnam is governed by the:
•    Constitution
•    Law on Land
•    Law on Residential Housing
•    Law on Planning
•    Law on Construction
•    Law on Investment
•    Law on Real Estate Business
 

Major property legislation
Revised Law on Real Estate Business 2014
Revised Law on Residential Housing 2014
Revised Land Law 2013
Revised VAT Law 2013
Decree 11/2013/ND-CP
Decree 70/2014/ND-CP

Source: Jones Lang Lasalle Vietnam Property Guide 2015
Savills Vietnam Real Estate Investment Guide 2015
Vietnamese embassy

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