Foreign ownership of real estate in Vietnam

Vietnam, with its rapidly growing economy, has become an attractive destination for foreign investors. As the country continues to modernize and urbanize, the demand for both residential and commercial property is surging. And in fact the supply is following, with many new and interesting projects developing. There is even more and more focus on sustainable development, which we believe is going to be a positive trend in this market. For foreigners looking to buy (real estate) property in Vietnam, however, it is crucial to understand the legal framework, limitations, and procedures. This article will provide an introduction into foreign ownership of real estate in Vietnam, including some practical tips.

Foreign ownership, the legal framework

Foreign ownership of property in Vietnam is governed most importantly by the Law on Housing. This law, among other things, is designed to regulate the type and the amount of property that foreign investors can own. At the same time, it is meant to protect local interests and to maintain balance in the property market. The following is an overview of some of the main topics.

Who is considered a foreigner in Vietnam?

A foreigner is anyone who is not a Vietnamese citizen. This includes both individuals from other countries, as well as foreign entities, such as companies that are legally registered in Vietnam. While foreign investors can purchase certain types of property in the country, they are subject to specific ownership limits and regulations.

Foreign ownership limitations

Even though Vietnam’s law does indeed allow foreign nationals to own property, there are restrictions. Most importantly these restrictions apply to the percentage of properties that can be owned by foreigners in a given development project. These restrictions were recently clarified in Decree 95/2024/ND-CP, effective from 1 August 2024:

• Up to 30% in condominiums: foreigners can own up to 30% of the apartments in a residential building. This limit is applicable to new developments that are open to foreign ownership. Furthermore, if a development has more than one unit / block, then the 30% cap applies to each one individually.
• Up to 250 houses in a ward: for landed properties (e.g., townhouses, villas), if there is a housing construction investment project implemented in a certain ward (i.e. an administrative area with a population of 10,000 people), foreign organizations and individuals may own only 250 houses at most.

Land use rights vs. ownership

In Vietnam, all land is owned by the State. This means that neither foreigners nor Vietnamese can own land outright. Instead, when somebody buys property in Vietnam, what they really buy are the rights to use the land. Vietnamese people and companies can buy these rights for “long term”, which could mean indefinitely. However, foreigner can only buy these rights for a period of up to 50 years. In theory, this period may be extended, but in practice this has simply not been tested. One important point to take away, however, is that the land itself is still considered State owned. The land use rights represent the ability to occupy, use, and develop the land. But it is technically not the same as outright ownership as is common in other countries.

Foreign ownership, eligible properties

Foreigners are allowed to buy only some types of property, including:

• Condominiums and apartments: foreigners can buy apartments in high-rise residential building projects, subject to the aforementioned 30% ownership limit. The ownership of these units is tied to the land use rights.
• Townhouses and villas: foreigners can also purchase “landed” properties in certain projects. Subject, again, to the quota of 250 houses in a ward, as set out above.
• Important to note: not all projects are deemed “suitable” for foreign ownership. Generally speaking, each city or province has a list of projects where foreigners are allowed to buy, subject to the applicable quota. Feel free to inquire with us, if you would like to know more about this list in your preferred city or region.

For foreigners considering real estate investments in Vietnam, high-rise apartments in urban centres are typically the most accessible option, especially with the recent clarification about the ownership quotas for condominiums.

The process of buying property

The process for foreigners purchasing property in Vietnam is relatively straightforward, but requires attention to legal details:

• Finding the property: the first step is finding and selecting a property. Foreign buyers must ensure the property is eligible for foreign ownership, and take into account the ownership caps. In developments with mixed-use units, verifying the remaining quota for foreign ownership is essential.
• Signing the sale agreement: after selecting a property, the buyer and seller will sign an agreement outlining the terms of the sale. This document should specify the price, payment schedule, and other relevant terms.
• Making the payment: foreign buyers are required to pay in Vietnamese dong (VND). It is also necessary to make payments through authorized channels such as a bank transfer. Depending on the agreement, there may be installments, but typically, the full payment is required before the transfer of ownership.
• Registering property ownership: the transaction must be registered with the local authorities to formalize the sale. The registration process ensures that the foreign buyer’s name appears on the property records and that the land use rights are transferred accordingly.
• Obtaining the ownership certificate: when the registration is completed, the foreign buyer will receive a Certificate of Land Use Rights and Ownership of the House and Land, which confirms the legal ownership or land use rights of the property.

Key considerations for buying

Before purchasing property in Vietnam, foreigners should consider the following factors:

• Financing: most foreign buyers do not have access to mortgages from Vietnamese banks. As such, foreign buyers typically need to provide the full purchase price upfront. If a foreigner plans to invest in real estate in Vietnam, having sufficient funds is therefore (extra) important.
• Market conditions: the Vietnamese real estate market is dynamic, particularly in major cities like Hanoi, Ho Chi Minh City, and Da Nang. Before making an investment, foreign buyers should conduct thorough research to understand current market trends, demand for properties, and future growth potential.
• Legal and tax implications: foreign buyers should be aware of the taxes and fees involved in purchasing property. In addition to the purchase price, there are taxes on land use rights, registration fees, and maintenance costs. Engaging a local lawyer or real estate expert can help navigate these obligations.
• Long term investment: foreign buyers looking to invest in property should consider the potential for the future. With Vietnam’s growing economy and influx of expatriates and tourists, rental properties in major cities may offer profitable returns.
• Foreign ownership quotas: before making a purchase, it is essential to check whether the foreign ownership quota for a development has been met or is near completion. If a project has already reached its foreign ownership limit, buyers will need to explore other properties.

Conclusion

Vietnam is an attractive destination for foreign property buyers due to its economic growth, urbanization, and rising middle class. The 30% foreign ownership cap for condominiums, along with the 250 houses cap for landed properties, ensures a balance of local and foreign ownership in property markets. Foreigners interested in buying property in Vietnam must be aware of the country’s land use rights system, financing restrictions, and legal framework. By working with local experts and staying informed about market conditions, foreigners can make informed decisions about their investments in Vietnam’s real estate market.

VNHL is here to help you

At VNHL, we closely follow the news and developments regarding real estate in Vietnam. If you have any questions about this topic, or if you would like to look at some real estate options that may be suitable for you or your business (purchase or rent): you can reach out to us via the chat button on the right of this page, or via our contact us page for further information and questions. Our three main services are: (i) consulting, (ii) networking, and (iii) supporting. We look forward to hearing from you and to supporting you. And who knows, maybe we will be neighbours one day 😉

*Dear reader, our VNHL Consulting team always tries its very best to provide its Clients with correct and complete info. However, we are not a Vietnamese law firm. The information in this post is therefore not meant to, and should also not be construed to, constitute legal advice. For specialized advice in the fields of law, accounting, tax, etcetera: we always recommend our Clients to speak with qualified specialists in those fields. We have several such specialists in our nationwide network, and we are always happy to introduce our Clients to them, when appreciated.