In order to boost its residential market and economy as a whole, Vietnam loosened its laws to allow foreign housing ownership in the country. On November 25, 2014, the National Assembly approved the long-awaited amended Housing Law which dealt on certain issues including rules on foreign ownership of properties in Vietnam.
The new law replaced the initial regulations which previously restricted foreign individuals from buying properties in Vietnam. Foreigners with a valid visa as well as foreign companies and international organizations currently operating in Vietnam will now be allowed to buy houses and apartments. The new rule permits 30% foreign ownership in any apartment building or 250 houses in a ward.
Present provisions do not allow foreigners even married to Vietnamese citizens to attain ownership of any property in Vietnam, even more so for “those foreigners deemed to make significant contributions to the nation’s development.” But as a result, the country suffered a 13% or 82.3 trillion dong ($3.85 billion) decline in its property market. Around 17,000 apartment units were left unsold. This is based on official statistics reported last Aug. 20, 2013.
Photo by http://www.worldpropertyjournal.com/real-estate-news/vietnam/
The World Bank also released a report on July stating that “the real estate market remains frozen and parts of the sector are unlikely to bounce back soon…” Moreover, under Vietnam’s constitution, “all land belongs to the state. Land-lease certificates good for a maximum of 50 years are granted in real-estate purchases.” That is, until concrete changes will be made.
Since the new law was passed, the real estate stocks in Vietnam increased significantly. Specific companies like the Khang An Investment Real Estate JSC suddenly saw a 6.7 percent gain while the Ba Ria-Vung Tau House Development JSC enjoyed a 5.3 percent rise as of 12:16 p.m. on November 26, 2014 in the Ho Chi Minh City trading. Furthermore, the benchmark VN Index climbed 0.1%.
For this year 2015, the Vietnamese government is aiming for a 5.8% boost in its economic growth as well as paying off its debts, some of which are real estate-related. It already started a low-cost housing loan program in order to jump start its economy and make its property market attractive to the foreign sector. With the new law, Vietnam-based expats will hopefully be encouraged to purchase property and improve the real estate market, even economy of the country in the long run.
The new law will take effect on July 1, 2015 and is summarized as follows:
- All foreigners who are granted a visa to Vietnam are allowed to buy residential properties in the country; All foreign investment funds, banks, Vietnamese branches and representative offices of overseas companies are eligible to buy.
- Types of properties which foreigners can purchase: All types of residential sectors including condominiums; and landed property such as villas and townhouses
- There is no limit on the number of dwelling units a foreigner can buy, but must not exceed 30% of the total units in one condominium complex or 250 landed property units in one particular administrative ward.
- The properties owned by foreigners can be sub-leased, traded, inherited and collaterized.
- Foreign individuals buying homes and other properties in Vietnam have a 50-year lease period with a possibility of renewal upon expiration.