Buying and registering property in Vietnam
Prior to 1st July, 2015, foreign nationals were only able to buy one leasehold apartment for their own use for 50 years and with no extension options. The rental of residential property in Vietnam, conveyance by inheritance and donation were prohibited. In addition, at least a year of working experience in Vietnam was required.
Since 1st July, 2015, foreign citizens can not only buy apartments but also townhouses and villas in Vietnam. However, three restrictions exist:
- International investors can buy new build properties from developers and existing properties from the other foreign citizens and only within quotas. Victoria Hoang, Sales and Leasing Manager at Indochina Capital, notes that, "as the law applies only from 1st July, 2015, existing property for sale within a foreign quota is difficult to find at the moment [early 2017]. The Vietnamese property market is pretty
fast-paced, and so quotas are filled at the early stages of sales and sometimes even before sales start in for some of the most coveted projects.”
- Foreign nationals can own no more than a 30% share of residential units in an apartment building, 10% of villas and townhouses in a development project and 250 detached houses in any administrative area. The only exception is made
for non-residentsof Vietnamese origin.
- The term of property ownership cannot exceed 50 years, but may be extended for another 50 years if the government approves such an extension. Foreign spouses of Vietnamese nationals can buy freehold properties.
The process of buying real estate in Vietnam includes several stages:
- Choosing a property. Real estate agencies offer properties in accordance with
- Reserving the property. Property buyers transfer about 100 mln VND (about $4,000) to agents or the developer as a reservation fee. The payment is recorded in the preliminary sales agreement.
- Opening a Vietnamese bank account. "Vietnamese law does not oblige property buyers to open an account in the country,” says Victoria Hoang." However, we insist on doing so, in order to later have an opportunity to withdraw money from the country. Exchange transfers from Vietnam are strictly controlled, and withdrawing money from the country is impossible without due cause. As such, when withdrawing funds (income from sale or rental revenue) you need to demonstrate that such funds initially came from other countries.”
- Signing the Sales & Purchase Agreement (SPA). The agreement is notarized. When buying a new build property, the agreement is registered by the developer and cannot be changed later.
Paying for the property. The buyer makes a lump sum payment for already complete properties but pays for properties under construction via installment, progressively at various stages of construction: when the building framework is complete, then again when the last floor is done, and lastly when the property is being furnished. The buyer pays no more than 70% of the property price to a Vietnamese developer and no more than 50% to a foreign developer before completion. 95% of the property price must be paid when the property is fully commissioned.
Delays in payments may result in interest being charged (usually 1.5% of the payment per month). The same penalties are applied to developers if the property
isn’tcompleted on schedule.
Mortgages in Vietnam are available to residents only.
Obtaining a title deed. In Vietnam, there are two types of property ownership certificates: Red Books for the owners of detached houses and Pink Books for the owners of apartments.
In the case of new build properties, ownership certificates are issued within three to six months. After that, the remaining 5% of the price is paid.
In the case of existing property, the seller may already have a Red or a Pink Book. The seller turns the original over to the buyer who sends this document to the registry along with the sales agreement
to re-registerthe ownership of the property. It is registered to the new owner within two or three months. If the seller has not yet received the Red or the Pink Book, the buyer asks the developer to re-issuethe agreement in their name.
Taxes and fees
In Vietnam, the buyer pays an additional
|Sinking fund fee||2% of the propertyprice excluding VAT|
|10% of the property price|
|Registration tax||0.5% of the transaction amountupon the registration of ownership|
|Upon buying existing real estate|
|1 mln – 10 mln VND
|Registration tax||0.5% of the transaction amountupon registration of ownership|