With the amendment to Vietnam’s Housing Law with came into effect in July 2015, the country’s residential property market offers long term growth potential and immerses opportunities for foreigner investors.

       This guide aims to provide foreigner investors with a quick overview of Vietnam’s legal framework as well as some key information on residential property investment in Vietnam.

I.    At a glance:

Vietnam lies in the heart of Southeast Asia and spans across 330,967 km2. It is home to over 90 million people with nearly 50% of the population below age 30. The country has experienced stable economic growth in recent  years with GDP growth rate averaging 6.15 percent from year 2000 and 2015.  The formation of ASEAN Economic Community and the passing of the TPP will provide a favourable setting Vietnam’s economy and increase foreign investments into the country.

II.    Vibrant Ho Chi Minh City:

Located in the South of Vietnam, Ho Chi Minh City (HCMC), formerly named Saigon, in one of the largest and most important cities in Vietnam. This city is not only a centre of commerce and finance, but also Vietnam’s hub for science, culture, education and technology. With a young and dynamic population of over 8 million people and a growing middle class, HCMC enormous market potential. The city boasts the best infrastructure in the nation including modern transportation and telecommunication systems to create modern well-planned city that can become the most desirable and international business centre in Southeast Asia.

III.    Top reasons to invest in property in Vietnam:

    Capital appreciation: The property market’s long term growth is highly potential, driven by the country’s stable political environment, promising economy, high urbanisation rate and young population.

    Rental yields: With the increasing inflow of foreign investment, more expatriates and local professionals are expected to relocate to Vietnam’s major cities, which promises good rental yields for homeowners.

    Affordability: High-end residential options with a full suite of complimentary facilities, good location, and convenient accessibility are very affordable, compared to its regional peers.

  Tourism Paradise: A popular tourist destination with major ASEAN cities located within a 2-hour flight, Vietnam is an ideal place for vacationers and retirees

I.    New Law on housing:

The Law provides regulatory conditions for residential property ownership in Vietnam. The new law which took effect on 1 July 2015 allows foreigners granted entry into Vietnam to buy residential properties in the country


II. Land use rights:

Private ownership of land is not recognized in Vietnam. Under the laws, the Vietnamese hold all ownership rights with the State as the administrator on their behalf. However, the laws of Vietnam allow individual person or corporate entity to have ownership of a right to use land as the land user. Such right is called the land use right (“LUR”). A building, house or apartment constructed on land may be owned where a person has a consolidated legal document called as “Certificate of Land Use Right and Ownership of House and Other Assets on the Land” (or in short as the “Pink Book”).

III.    Eligibility:

    Foreign individuals: who are granted entry into Vietnam and not entitled to privileges and diplomatic immunity.
Detailed documentation: valid passport affixed with an entry stamp by the immigration authority of Vietnam and such individual must not be in the category of people entitled to preferential treatment or diplomatic immunity.

    Foreign entities: who are foreign invested enterprises, branches and representative offices of foreign enterprises, foreign funds, and branches of foreign banks duly operating in Vietnam.
Detailed documentation: an investment registration certificate or document proving permission to operate in Vietnam (both referred to as investment registration certificate or IRC) as issued by the competent agency of Vietnam and effective as at the time of entering into the residential housing attraction.

IV.     Right and protections:

Foreign individuals granted Pink Books for their residential property in Vietnam will be entitled to ownership and use rights similar to the local Vietnamese, except for certain restrictions including purchase limit & ownership tenure (as discussed in Section 2e below). These rights include without limitations:

  • To use their houses for residential and other purposes not prohibited by law;
  • To maintain, renovate, demolish, or rebuild their houses in accordance with conditions and procedures of Laws on Construction;
  • To carry out real estate transactions on their properties such as selling, leasing, mortgaging, bequeathing, etc., in accordance with conditions and procedures of Laws on Real Estate Business;

To receive the compensation in accordance with market price as prescribed in Laws when the State demolishes, purchases compulsorily, or commandeers their houses for the purposes of national defense and security, socio-economic development, disaster prevention, or in the state of wars or emergencies; and To file complaints, denunciation, or lawsuits over violations against their lawful ownership rights.

Foreign entities can use their properties with similar rights as mentioned but only as accommodation available to their staff. Such rights are also subject to certain restrictions including purchase limit and ownership tenure (to be provided below). To clarify, foreign entities are not allowed to use their houses for business including sublease, offices for other purposes.

   Foreign homebuyers are not required to reside or work in Vietnam to be eligible for house ownership. Despite the difference in tenure of ownership for foreign and local homebuyers, there is no difference in the purchase price between a local and foreign purchaser.

V.    Restrictions:

  • Land tenure:

–   Foreign individuals – up to 50 years (with possible extension) upon issue date of the Pink Book.

–   Foreign individuals – married to Vietnamese citizens – freehold tenure.

–   Foreign entities – up to the duration (inclusive of extended duration) indicated in the investment certificate.

  • Purchase limit:

–    30% of the total units within one condominium complex; 10% of the total separate landed homes within one residential compound; or 250 homes within an administrative unit equivalent to a ward.

–    In case the foreigners receive or inherit house(s) in a particular area where housing quota for foreigners has been met, they are only entitled to the value of the house(s)

   Three (03) month prior the expiry of ownership duration, foreign homeowners can apply tenure renewal which must not exceed 50 years. They can also sell or bequest their property. If the foreign homeowner fails to do so before the expiry day, his/her property will be converted into the State property.

     Purchase process: Unit measurement is included selling price and management fee will be based on Net Usable Area (Carpet Area or Inner Area), which will also be clearly indicated in the Sales & Purchase Agreement (SPA). In general, Carpet Area is the area within  the building and inclusive of areas taken by room-divided walls, balcony/loggia attached to the building. It excludes the area external walls , columns, service ducts, and technical compartments.

  • Booking: Place a non-refundable deposit of VND 100 million (by credit card payment or bank telegraphic transfer) and sign the Option to enter into Deposit Contract Agreement.
  • 1st instalment and Deposit Agreement: Pay the 1st instalment by bank transfer within 14 days from the date of deposit to execute the Deposit Contract
  • Other instalment as schedule: Pay subsequent instalments in accordance to the payment schedule
  • Upon Completion of foundation: Execution of Sales & Purchase Agreement (if eligibility for foreign ownership is confirmed)
  • Handover: Pay maintenance fee, 1 year of management & operation charges, registration fee, and an instalment amount upon handover of the apartment
  • Preparation for ownership Certificate: Submit documentation for the application of Ownership Certificate (for buyers who have signed the Sales & Purchase Agreement).
  • The last payment: Pay the remaining balance within 14 days from the date of the notice to take delivery of the ownership certificate.

     Note: As the guidance for the new Law on Housing is pending, transaction involving foreigners shall be conducted under the Long Term Lease Contract, which will be subsequently converted into Sales & Purchase Agreement if the purchasers are eligible, upon the issuance of the official guidance.

I.   Quoted price for apartment units:

Whether the quoted price is inclusive of Value Added Tax or Maintenance Fee should be clearly indicated in the Sales & Purchase Agreement:

Quoted Price = Apartment Price + Value Added Tax + Maintenance fee

  • Value Added Tax (VAT): Is usually 10% of the apartment value at the moment. VAT rate is subject to change in accordance with VAT laws.
  • Maintenance Fee (or Sinking Fund): 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 not used for the operation and management of the condominium, which will be covered by Management & Operation Fee.

II.    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): 5% of the apartment 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.
  • Notary’s Fees: Calculated based on the value of the property under transaction (from VND 1 mil. and capped at VND 10 mil.)
  • 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.
  • It is a common practice in Vietnam for:
  • The seller to bear the PIT;
  • The buyer to bear the Registration Tax;
  • Both parties to negotiate who will bear the remaining taxes and fees.

III.    Payment Methods:

Foreign homebuyers can choose one of the following paying methods;

  • Open a local bank account in Vietnam to transfer payments to the Developer’s bank account;
  • Transfer payment directly from abroad to the developer’s bank account set up in Vietnam; or make cash payment in VND

IV.    Payment Scheme:

The developers will decide the payment scheme, which will be clearly indicated in the SPA. Usually subject to negotiation between buyers and sellers, homebuyers can choose to pay in lump sum or to make milestone payments. For projects being under construction, the current Law on Real Estate Business sets the collection limit to 50% for foreign developers and 70% for local Vietnamese developers prior to the handover. Plus, they can only collect up to 95% of the home value before the clients receive the Ownership Certificate (Pink Book).

I.    Warranty and Insuance:

Developers are required by laws to provide homebuyers warranty services for the house structures and equipment which malfunction or are damaged. The warranty period starts from handover date and must last at least 24-60 months depending on the property types. Warranty terms shall be clearly indicated in the sales and purchase agreement.

Developers are not bounded by law to offer homebuyers insurance for their purchased properties. Homeowners are recommended to arrange insurance for their property on their own.

Vinhomes Golden River expected in 2018, June

II.    Failure to deliver:

Late handover may result in a compensation amount equal to the interest on the paid amounts to the buyer. The interest rate shall be equal to the lending rate at a commercial bank at the time of the late handover.

In case the developer cannot commit to the ultimate deadline for handover as stated in the SPA, the buyer has the right to unilaterally terminate the SPA. The buyer shall be refunded the full paid amount plus compensation amount as mutually agreed in the SPA.

III.    After-sale cost:

    Management Fee will be paid monthly by the residents and used for the operation and management of the condominium. Services include, but are not limited to, elevator’s operation, security services, garbage collection, pest control, janitorial and gardening services, and maintenance of common facilities, etc. The monthly fee is calculated based on the carpet area.

    Miscellaneous Fees such as utilities fees, parking fees, etc. will also subject to negotiation between residents and the developer.

I.   Subleasing property and tax obligation:

Foreigners are allowed to sublease property, but they shall report to the district-level housing authority if he/she wishes to rent out property. Rental income is taxable. Tax rate will vary in accordance with the rental income.

II. Selling property and tax obligation:

Foreigners are allowed to sell property. If a homeowner with a valid Pink Book sells to another eligible foreigner the remaining tenure is pending the Government’s guidance. If the transferee is a Vietnamese, the tenure shall be automatically converted to Freehold. Personal income tax from sale of property is subject to 2% of the selling price.

III. Professional support:

The Foreign homeowners are encouraged to consult with professional brokerage firms or real estate agents who have experiences in property management, transactions, and leasing. Developer can refer some of these well-known consultants to the foreign homeowners.


I.     Movement of physical currency:

Foreigners carrying cash exceeding USD 5,000 or VND 15 million (or equivalent amount in other foreign currencies) will have to declare upon entering or exiting Vietnam via international border checkpoints. This also applies to individuals carrying less than the cash limit but has the intention to use the amount for later payment via bank deposit.

In case the individual wants to carry an amount of cash exceeding the cash limit out of Vietnam, they must declare and produce the following document:
(a) Confirmation of carrying cash overseas from a credit institution authorized to issue such document; and (b) Document showing approval for individuals to carry cash overseas issued by the State Bank of Vietnam.

II.   Inward and outward remittances:

Transfer limit for inward remittances will be subject to the rules and regulations of the transferor’s home country. Outward remittances are closely monitored in Vietnam and are subject to the regulations of the State Bank of Vietnam and the Vietnam’s laws. For outward remittances from Vietnam, the transferor is expected to produce necessary documents proving his source of income such as Proof of Income in Vietnam (if applicable), Proof of Inward Remittances to Vietnam, Sales & Purchase Agreement, etc. He/she shall also produce proofs of his/her tax fulfillment (income gained from real estate transactions and leasing activities are taxable).

IV.    Opening a bank account in Vietnam:

Foreigners can set up a bank account with either Vietnamese banks or branches of foreign banks in the country. Most banks require valid passport, visa/entry permit, residential address, and a minimum deposit amount.

Tags: , , , , , , , , , , , , ,