The Ins and Outs of Buying Residential Properties in Vietnam for Foreigners Dao Nguyen Managing Partner 14 July 2020
CONTENTS Definitions • Conditions • How to purchase and own residential properties • Types of properties • • Quantities Ownership title • • Extension of ownership title Mortgages • • Chinese passports • Process for purchasing residential properties in Vietnam Can foreigners sell their residential properties in Vietnam? • • Payments Taxes • • Statistics • Conclusions www.daonguyenlegal.com 2
Definitions Foreign Foreigner Spouse Overseas Vietnamese Organization A person who carries personal A foreign-invested A foreign Refers to either: identity documents proving his enterprise, branch individual married (i) a Vietnamese citizen who or her foreign nationality, or a or representative to a Vietnamese permanently resides in a person without a nationality office of a foreign citizen or an foreign country; or who enters, leaves, transits enterprise, foreign overseas through, or resides in Vietnam. investment fund or Vietnamese in (ii) a person who used to have foreign bank branch accordance with Vietnamese nationality which currently operating the Law on had been determined at the in Vietnam, whose Marriage and time of his or her birth (and principal business Family. his or her offspring and activities are non- grandchildren) and are real estate business. permanently residing in a foreign country. www.daonguyenlegal.com 3
Conditions Foreigner Foreign Organization Spouse Overseas Vietnamese - Must be permitted to enter - Must have an investment - Same - Must have documents into Vietnam; registration certificate or conditions as evidencing status as an documents evidencing those overseas VN; and - Must have a valid passport permission being granted applicable to a with a stamp of entry - Must have a valid to operate in Vietnam foreign verification from the Vietnam passport with a stamp (“ IRC ”) issued by a individual. Department of Immigration; of entry verification Vietnamese competent and from the Vietnam authority. Department of - Must not be in the category Immigration. entitled to preferential treatment rights, or diplomatic or consulate immunities as provided by the law. www.daonguyenlegal.com 4
How to purchase and own residential properties Foreign Foreigner Spouse Overseas Vietnamese Organization May purchase and own residential properties through: Same rights as a May own residential properties in foreigner except Vietnam through: (i) purchase or lease-purchase of residential ownership is on a properties from a project developer; freehold basis. (i) purchase or lease-purchase (ii) purchase of residential properties from another of residential properties foreigner that owns residential properties within from a project developer; his or her ownership period; (ii) purchase, receiving (iii) receive an inheritance or donation of residential donation, exchange, properties from a family household or an inheritance of residential individual or an organization. properties or land from NOTE: Vietnamese households, (i) Foreigners may not purchase residential Vietnamese citizens or properties from Vietnamese citizen(s). foreigners; or (ii) Before the expiry of the ownership period, a (iii) purchase of land plots in a foreigner may donate or sell his or her residential commercial residential property to either a foreigner or a Vietnamese housing project which is citizen. If a foreigner fails to sell or donate his or permitted to be sub-divided her residential property within the ownership into smaller plots for sale. period, upon the expiry of the ownership period, the residential property will belong to the State of Vietnam. (iii) Foreign companies can buy only for staff use. www.daonguyenlegal.com 5
Type of properties Foreign Foreigner Spouse Overseas Vietnamese Organization Residential properties (including apartments in apartment buildings or All types of properties anywhere residential landed housing/villas) in commercial residential housing including land, landed housing, or projects which are outside of national defense and security areas as apartments. prescribed by the law of Vietnam. For each province, the provincial Department of Construction (“ DOC ”) will issue a list of permitted commercial residential housing projects, of which foreigners can purchase residential properties. The purchase of residential properties in a project which is outside of the list will not be approved by the provincial DOC. www.daonguyenlegal.com 6
Quantity Foreign Foreigner Spouse Overseas Vietnamese Organization The law does not limit the number of residential No limitation No limitation properties that a foreigner can purchase and own. However, the law does limit the total number of residential properties that a commercial residential project is allowed to sell to foreigners, particularly: (i) One apartment building is allowed to sell only thirty per cent (30%) of the total number of apartments to foreigners; and (ii) One landed housing project is allowed to sell only ten (10%) of the total number of landed houses to foreigners with the cap of no more than 250 landed houses to be sold to foreigners in an area with the population size equivalent to that of an administrative unit at the ward level. www.daonguyenlegal.com 7
Ownership title Overseas Foreigner Individual Foreigner Organization Spouse Vietnamese May own residential properties May own residential properties Freehold Freehold within the period stated in the within the ownership period as Sale and Purchase Contract stated in the Contract. However, (“ Contract ”), not to exceed fifty the ownership period may not (50) years from the date of exceed the operational term of issuance of the ownership such organization as stated in its certificate for the residential IRC (and any extension thereof). property (“ Certificate ”), which The ownership period is calculated may be extended upon the from the date of issuance of the expiry of the ownership period Certificate and is specified in such if the owner applies for an Certificate. extension. The ownership period must be specified in the Certificate. www.daonguyenlegal.com 8
Extension of ownership title Foreigner Foreign Organization The extension of the ownership period is as follows: (i) If the owner wishes to extend the ownership period, no later than three (03) months prior to the expiry of the ownership period, the owner must apply for an extension, and submit it together with a certified copy of the Certificate to the provincial People’s Committee (“ PC ”) of the province where the residential properties is located. (ii) Within thirty (30) days from the date of receipt of the application, the provincial PC will consider and provide an extension to the owner. The owner can extend for one additional period. The extended period may not exceed fifty (50) years The extended period may not exceed the extended from the expiry of the initial ownership period as operational term as stated in the IRC of the owner. stated in the Certificate. www.daonguyenlegal.com 9
Mortgages Foreign Foreign Individual Spouse Overseas Vietnamese Organization May mortgage their residential properties. Has full rights as those Has full rights as those of a of a Vietnamese citizen. Vietnamese citizen. However, in practice there are few cases of foreigners mortgaging their residential Thus, he or she can use Thus, he or she can use his or her properties for a loan at a local bank. This is his or her residential residential property to mortgage. because banks usually do not provide loans to property to mortgage. foreigners for purchasing residential properties. The law provides that the loan term must not be longer than the period that a foreigner is allowed to stay in Vietnam. Note, however, that the terms of loan provided for a residential property purchase is usually long-term from 10 to 20 years. Practically, this makes it almost impossible for banks to provide loans to foreigners to purchase residential properties as the length of a foreigner’s stay as permitted in his or her visa is usually no more than 3 years. www.daonguyenlegal.com 10
Chinese passports In a Chinese passport, there is an image of Chinese map with the Ø “nine-dash line” which shows the lines forming a U-shape in the South China Sea, for which China claims its maritime sovereignty. Vietnam has strongly rejected such maritime claim by China. One of the actions that Vietnam has taken is that Vietnam Department of Immigration (“ VDOI ”) refuses to affix the stamp of entry verification onto any such passports with the "nine-dash line" map. A "nine-dash line" Chinese passport holders will not be able to Ø purchase residential properties in Vietnam due to reasons pertaining to sovereignty and politics. VDOI does not affix the stamp of entry verification onto passports Ø of these people but issue a separate visa to them. Thus, difficulties may arise during the application for the Certificate (because of a passport without a stamp of entry verification). www.daonguyenlegal.com 11
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