Legal update on house ownership by foreigners: Briefing on regulations regarding real estate purchase in Vietnam

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​published on September 20, 2019 | reading time approx. 3 minutes

 

It is no longer beyond reach for foreigners to own real estate property in Vietnam (“Property”). The promulgation of the 2014 Law on Residential Housing (LORH) opens the door for foreigners to purchase and enjoy ownership over Property in Vietnam.

 


Under the LORH, foreigners who meet the following requirements are eligible to purchase Property in Vietnam (“Foreigners”):

  • Being permitted to enter into Vietnam;
  • Having a valid passport affixed with an entry stamp by the immigration authority of Vietnam;
  • Not being entitled to diplomatic privileges and immunities; and
  • Having full civil capacity to commence civil acts to initiate a residential housing transaction.

 

Types of purchased property

Property to be purchased can be apartments or residential housing (including villas, terraced houses) satisfying the following requirements:

 

 

 

Obstacles

Though owning a Property in Vietnam may be financially attractive, potential foreign buyers should be aware of the challenges they may meet in practice.

 

  • Firstly, on each province, the Provincial DOC will issue a list of permitted commercial residential housing projects for foreign individuals to buy in. The purchase of Property in the projects which are outside of the list may not be approved by the Provincial DOC.
     
    Some provinces such as Ho Chi Minh City still do not issue that list, therefore, the issuance of LURC is still pending for Foreigners. In a worst case scenario, Foreigners may find themselves confronted with the fact that the Property they already purchased is actually not allowed to be owned by foreign individuals; in these cases, the Foreigner must try to transfer the contract to other entities. A popular solution is that the Foreigner will ask a Vietnamese individual (i.e. their spouse, relative, etc.) to purchase the house for them. Nonetheless, this solution contains massive risks regarding the house ownership.
     
  • Secondly, not all developers will strictly abide by the law and the regulations in the contract. The Vietnamese market has witnessed many cases in which the developer carries out the project improperly, e.g. by using the land for others than the permitted purposes, by building the apartments in excess of the permitted number of floors etc. Therefore, the Foreigners may need assistance from experienced lawyers to assess the project prior to buy a Property.

 

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