Asia is quickly becoming a hub of economic development and Vietnam is no exception to that. Since they have opened up their markets in 2015, the county has seen everyone from corporations, expats, and tourists wanting to take advantage of the opportunities in this exploding market. With project development happening in major cities and tourist destinations there are plenty of options for you to purchase homes for sale in Vietnam. However, even though the market is more open than before there are still some important items to be aware of before buying property in Vietnam, as a foreigner. This guide will walk you through the purchasing process and how Vietnamese laws affect you as foreigner purchasing property.
Can Foreigners Buy Property in Vietnam?
In 2015, the Vietnamese Government passed the Law on Residential Housing. The passage of this law made it easier for foreigners to buy property in Vietnam. Previously, the restrictions with the number of properties foreigners could purchase was set to one have now been lifted under the new law. Allowing for an influx of foreign investment into the market.
Below, is a summary of the most important information regarding the new law:
- Properties can be purchased by foreigners by simply possessing a tourist visa
- There’s no longer a cap to the number of properties you can buy
- Foreigners are only allowed to purchase a maximum of 30% of the units in condominiums and cannot own more than 10% of the properties in a landed project
- Foreigners, now, can buy houses, but only 250 of the houses in a given ward (division).
- The leasehold period is still 50 years but can be renewed
- If you have a Vietnamese spouse, you can get a freehold tenure
Can Foreigners Buy Land in Vietnam?
Foreigners cannot own land, collectively it is owned by the Vietnamese People and the land is managed by the government. Foreigners are allowed to lease the land for use. The Land Use Rights (LUR) is a Vietnamese law that reduces risks for foreigners to invest. This law allows foreigners to lease the land. Under the law, you need to submit a Land Use Rights Certificate (LURC) to lease the land. Lease agreements last for 50 years and in some cases 70 years. Even though regulations have changed, there’s no guarantee you’ll be able to renew your lease agreement
Vietnam Ownership Certificates of Property
Under Vietnamese law, foreigners cannot own property that is reserved to protect the national security and defense. The Ministry of National Defense and the Ministry of Public Security make the decision if a property is located within an area of national security/defense. Thus, it is extremely important that you prospect the property you planned to purchase, confirm it can be purchased by a foreigner, and receive the ownership certificate.
The Pink Book vs. The Red Book
The ownership certificate is referred to as the pink book because it’s s small pink booklet that shows your ownership and rights of your property. It declares the right to lease and information regarding inheritance. It is your proof of ownership and is commonly used for the title to the ownership of land vs. physical structures like houses or condos. The red book is something similar but used as the ownership certificate for land. The pink book is more common for foreigners because they tend to invest in condos instead of land.
Do I need to receive The Pink Book when buying property in Vietnam?
The pink book acts as the title of ownership to the property. The Sales and Purchase Agreement (SPA) also acts as the proof of ownership but it’s better to have them both.
- Though it’s not a legal requirement to have one, the pink book is considered the strongest proof of ownership,
- The SPA (Sales and Purchase Agreement) is just as important as having the Pink Book to show proof of ownership
- If you do not have your pink book, you can face more difficulties when you sell your property.
What does the pink book include?
In addition to acting as the proof of ownership, the pink book also makes the following declarations:
- Allows you to use your house for residential and other purposes
- Demolish, maintain, renovate or rebuild your house (complying with the conditions and procedures of Laws on construction)
- Perform transactions when selling, mortgaging or leasing the property
Vietnam is growing rapidly and property prices are still low, almost 20-30% lower when compared to larger Chinese cities such as Beijing, Shenzen, and Shanghai. This combined with the Vietnamese government changes in regulations regarding foreign investment makes for a great opportunity. Remember, to make sure you prospect your property thoroughly before purchasing and ensure that you get the proper documentation.