Foreigners can only purchase apartments with a maximum lease period of 50 years and they cannot buy land. The reality though is that no-one, not even Vietnamese, can own land in Vietnam. This is because according to the Vietnamese land law, the land in Vietnam “belongs to the people and is managed by the State on behalf of the people”.
Technically, no-one can own land.
However, although the State owns the land of the entire territory, it gives rights to use the land to individuals and entities under specific conditions, commonly called “land use rights.” Land use right certificates are issued. These allow quasi-ownership.
While land cannot be owned, Vietnamese law allows full ownership of any real estate attached to the land.
So while foreign individuals cannot be granted land use rights, they are allowed to own real estate attached to the land under very strict conditions.
But as always, developers and real estate agents look for ways around the law.
A typical arrangement to get around the law involves a foreigner engaging a Vietnamese nominee (a friend or an arranged nominee) to hold the land use rights on his behalf.
The land use right certificate would be issued to the Vietnamese person (the nominee). A private side contract would then be entered into between the nominee and the foreigner.
The validity of this side contract under Vietnamese law is questionable.
This means the foreigner is at great risk if the nominee breaches the contract. If the foreigner seeks legal redress, a Vietnamese judge would probably consider the contract itself to be illegal. This means the foreigner could not enforce what he sees as his rights and the holder of the land-use rights certificate would be regarded as the holder of that land.
These deals are therefore every dangerous.
The current law only allows for five specific categories of foreign individuals and organizations to own apartments:
- Individuals who invest directly in Vietnam or who are employed in management positions by domestic or foreign-invested companies in the country;
- Foreigners who receive certificates of merit or medals from the president or government for their contributions to the country;
- Foreigners who work in socioeconomic fields, hold at least a bachelor’s degree or higher and possess special knowledge/skills;
- Foreigners who are married to Vietnamese nationals; and
- Foreign-invested companies operating in Vietnam that need to buy homes for their employees.
To be entitled to own a residential house in Vietnam, the foreign individuals meeting the above criteria, must be legally residing in Vietnam for at least one year and must not be subject to diplomatic or consular privileges and immunities under Vietnamese laws.
However, even if a foreigner does meet the above criteria, Vietnamese law only allows foreigners to own a residential house for a maximum of 50 years from the date of issuance of the residential house ownership certificate.
Foreign owners must transfer ownership of the property within 12 months after the end of the term of the certificate.
There is the possibility of change to Vietnams property ownership laws. Vietnamese lawmakers have been debating draft laws that would allow foreigners to buy more than one apartment, secure apartment leasehold rights for longer than the current limit of 50 years and buy land.
Late last year a report to Prime Minister Dung by the Ministry of Construction proposed new regulations that would allow organizations like foreign investment funds, banks, Vietnamese branches and representative offices of overseas companies, as well as all foreigners who have a visa to the country that is valid for at least three months, to buy homes both apartments and independent houses in Vietnam.
In May last year, Hanoi, Vietnam’s capital, agreed to grant certificates of land-use rights and house ownership to overseas Vietnamese and foreign home buyers.
But demand has not picked-up. Foreign ownership remains low. According to CB Richard Ellis, Vietnam, up to the end of the first quarter of 2013 Hanoi still had an unsold stockpile of about 21,600 apartments, mostly middle and high-end apartments, an increase of 21 per cent over the same term last year.
And in 2013, according to the General Department of Land Management, only 427 overseas Vietnamese and foreigners own their houses in Vietnam.
Of the 80,000 foreigners living and working in Vietnam, only 64 own their own house. Clearly renting is the preferred alternative. It is safer. Comfortable apartments can be rented in Da Nang, for example, from around $A200 a month or more. There is some real luxury around Da Nang as many American ex servicemen return.
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