Conditions and Steps for Foreigners Buying a House under the New Laws and Regulations

Conditions and Steps for Foreigners Buying a House under the New Laws and Regulations

 

Conditions for foreign individuals that wish to buy a house in Vietnam:

A foreigner must comply with the conditions for foreign individuals to own residential housing in Vietnam. In particular, foreign individuals must be permitted to enter into Vietnam and not fall into the category that entitles them to preferential treatment rights, diplomatic or consulate immunities in accordance with the law[1].

After satisfying all the conditions under the law, foreign individuals are required to undertake the following procedures to own a house in Vietnam

I. Step 1: Foreign individuals enter into housing purchase and sale contracts (“PSC’) with developers under an investment project.

Prior to the execution of the purchase of housing and individual residential houses, the developer may require the foreign individual to make a deposit of an amount of money for a period of time in writing as agreed by both developer and the foreign individual as security for entering into, and performance of the PSC.

In this context, the term “residential housing” refers to apartments and individual residential houses developed in investment projects for the construction of residential housing[2].

The PSC must be made in writing and contain the following items[3]:

  1. Full name of the individual, name of the developer and addresses of the parties;
  1. Description of house’s characteristics, and characteristics of the parcel of residential land attached to such residential house;

In respect to a contract for the sale and purchase of an apartment, the parties must specify the areas that are under common use and under common ownership; the areas for use under private ownership; the floor area of the apartment; and the use purpose of the areas under common use and under common ownership in the apartment building in accordance with the originally approved design purposes.

  1. Value of the residential house transaction if it is agreed in the contract;
  1. Time and method of payment;
  1. Time of delivery and receipt of the residential house; period of warranty of the residential house;
  1. Rights and obligations of the parties;
  1. Undertakings of the parties;
  1. Other agreements;
  1. Effective time of the PSC;
  1. Date of signing of the PSC; and
  1. Signatures and full names of the parties.

II. Step 2: Foreign individuals making payment for the residential housing.

Foreign individuals shall make payment for the residential housing as agreed in the PSC.

For payments under which the foreign individual will purchase residential housing to be built in the future may be made in instalments, in which, the 1st payment must not exceed 30% of the value of the PSC, and subsequent payments must comply with the schedule for construction of the residential house, but the total amount must not exceed 70% of the value of the PSC of the house that has not been handed over to the client yet. In case foreign individuals have not been issued with the Certificate of land use rights and ownership of residential house and other assets attached to land, the maximum payment shall be 95% of the value of the PSC, the remainder of the PSC shall be paid when the competent authority has issued such Certificate for the foreign individual[4].

III. Step 3: Developers hand-over the residential house as agreed in the PSC for foreign individuals.

The time of transfer of ownership of the residential house is the time when the developer hands over the residential house to the foreign individuals, or when the foreign individual has made full payment to the developer, except when otherwise agreed by the parties[5].

IV. Step 4: Obtain Certificate of land use right and ownership of residential house and other assets attached to land.

The developers have the obligation to conduct procedures for the issuance of Certificate of land use right, ownership of the residential house and other assets attached to land, and deliver such certificate to foreign individuals within 50 days from the handover date of the residential house to foreign individuals[6].

NOTE:

Term of ownership of residential house of foreign individuals: 50 years from the date of issuance of the Certificate of land use right and ownership of residential house and other assets attached to land which may be extended in accordance with Government regulations[7] (the extended period shall be 50 years according to latest draft of Decree providing guidance on the implementation of the Law on Residential housing 2014).

Foreign individuals married to Vietnamese citizens or to Vietnamese residing overseas may own residential houses on a stable, long-term basis, and have the same rights as residential house owners that are Vietnamese citizens.

Limit on the residential houses in which the foreign individuals are entitled to buy: the residential houses which foreign individuals have entitled to own shall not be more than 30% of the number of apartments in case purchasing residential houses in apartment building and no more than 250 houses, comprising of villas and terraced houses, in one area with the population size equivalent to that of an administrative unit at the ward level in case purchasing individual residential houses.

[1] Art 160.3, Law on Residential housing 2014

[2] Art 159.2(b), Law on Residential housing 2014

[3] Art 121, Law on Residential housing 2014

[4] Art. 57, Law on Real Estate Business 2014

[5] Art. 19.5, Law on Real Estate Business 2014

[6] Art. 16.7 Decree 71/2010/NĐ-CP. Note: This old guidance on Law on Residential housing 2005 is still in effect until the issuance of new guidance on Law on Residential housing 2014.

[7] Art 161.2(c), Law on Residential housing 2014

By Vietnam Law Insight (LNT & Partners)

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact Mr Binh Tran at: Binh.Tran@LNTpartners.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s