Buying Guide

1. Vietnam’s existing law allows foreign citizens to buy house for the first time with a simple requirement, they must enter Vietnam legally. The law is extended the rules that currently apply to apartments, according to the amended Housing Law which took effect on 1 July 2015. This allow foreigners to own any property within a property development project in the country for a maximum of 50 years and enjoy the same rights to lease transfer or sell the property as Vietnamese citizens.

2. Eligibility Foreign Individuals: Those who are granted entry into Vietnam and not entitled to privileges and diplomatic immunity. According to the Article 74 of Decree 99/2015/ND-CP, they need to show a valid passport, and have a passport stamp approved by the Immigration Office.

Foreign Organizations: Those which are foreign invested enterprises, branches and representative offices of foreign enterprises, foreign funds, and branches of foreign banks duly operating in Viet Nam. Foreign organizations must have the valid Investment Registration Certificate (IRC) or the Enterprise Registration Certificate (ERC) at the time of entering into the residential housing transaction.

Foreign organizations and individuals: Who join in investment projects for construction of commercial residential housing in Vietnam under the provisions of this Law and related laws.

3. Foreign individuals and organizations cannot take up more than:
(a) 30% of the total units of one building,
(b) 250 individual houses within an administrative unit equivalent to a ward.

The quota is subject to change by the authorities and in accordance with Viet Nam’s laws and regulations. In the event that foreigners receive or inherit house(s) in a particular area where housing quota for foreigners has been met, they will only be entitled to the value of the house(s).
 

1. Quoted price of the property

Whether the quoted price is inclusive of Value Added Tax or Maintenance Fee, they should be clearly indicated in the Sales & Purchase Agreement:
Quoted Price = Property Price + Value Added Tax (+ Maintenance fee) Value Added Tax (VAT): Is usually 10% of the property value at the moment. VAT rate is subject to change in accordance with VAT laws.

Maintenance Fee (or Sinking Fund): (The villas owners do not pay this fee.) Before the handover of the unit, all apartment owners have to contribute 2% of the apartment price for the maintenance and major repairs of common areas in the apartment building. This Maintenance Fee is different from the operation and management of the condominium, which will be covered by Management & Operation Fee.

2. Transaction Costs

Besides VAT and Maintenance Fees which have been included in the quoted price, real estate transactions often result in the following transaction costs:
Registration Tax (Upon registration for Ownership Certificate): 0.5% of the property value (capped at VND 500 mil.) and in the case of land residential property, 0.5% * land or house area * land price announced by the local people’s committee at the time of registration.

Personal Income Tax (PIT): Income gained from real estate transaction is taxable with tax rate fixed at 2% (of the selling price). Currently, tax laws in Vietnam allow PIT exemption in case the transfer is between immediate family members or the seller owns only one real property and meets other criteria.

Fee for granting of certificates: Maximum level of a paper is VND 500,000

Notary’s Fees: Calculated based on the value of the property under transaction (from VND 50,000 and capped at VND 10 mil.)

Management & Operation Fee: Service fee for the management and operation of property. This fee will be identified and paid periodically by the property’s owner (amount depending on the agreement). It can fluctuate based on the consumption of services, the service fee to lease the management & operating unit. (All these costs are subject to change in accordance with relevant laws and regulations)

It is a common practice in Vietnam for: The seller to bear the PIT + The buyer to pay the quoted price (the apartment owners have to pay the Maintenance Fee) and to bear the Registration Tax and the Management and Operation Fee. + Both parties to negotiate who will bear the remaining taxes and fees

In 2016, Vietnam’s economy was a highlight in the South East Asian region. Vietnam’s Gross Domestic Product (GDP) increased by 6.21% year-on-year (YoY), which makes Vietnam one of the fastest growing countries worldwide. In the same year, Vietnam attracted over US$24 billion in total newly-registered and additional Foreign Direct Investment (FDI), and achieved over US$15 billion of FDI disbursement, a record high 9% increase over the previous year. Vietnam’s property market continues to show its resilience, with consistent growth across different sectors despite the ups and downs of the global economy. Top-tier real estate companies, especially local players, are shifting their focus to low- to mid-end residential developments to attract more buyers, targeting the young workforce which accounts for the majority of Vietnam’s population. The trend is towards smaller units in locations with good accessibility, a full range of amenities, competitive pricing and favorable payment terms. This market movement is going to help the real estate sector in Vietnam to continue its sustainable growth trend moving forward. Source :savills.com.sg

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Land tenure

Foreign individuals - up to 50 years (with possible extension) from the date of issuance of the Ownership Certificate. One-off extension of residential house ownership duration can be provided up to another 50 years.

Foreign individuals married to Vietnamese citizens - freehold tenure.

Foreign organizations – up to the duration (inclusive of extended duration) indicated in the Investment Certificate/Investment Registration Certificate (IRC). One-off extension of residential house ownership duration can be provided up to the extended duration stated in IRC by making an application to the provincial people’s committee where such residential house is located within 3 months prior to the expire date of the ownership. However, the duration of residential house ownership may not be extended in case such foreign individual is subject to a decision to be deported or such foreign organization is subject to compulsory termination. Before the ownership expires, the owners can donate or sell the houses on their own or authorize another person/ organization to sell or donate the houses. If not, such houses shall belong to the State.