Living in Vietnam

House Ownership Law in Vietnam

Would-be Law Allowing Vietnam Expats to Buy Housing has Caveats

A bill drawn up by Vietnam's Ministry of Construction that would allow foreigners to own houses has been hailed by expatriates, albeit with a degree of caution.

The Vietnamese National Assembly will review a bill that sets six categories of foreign ownership possibilities. One categorie is corporate, while five are individual.

6 Categories of Foreigners Eligible to Buy Houses in Vietnam

1. People coming to Vietnam for direct investments
2. People who have contributed to Vietnam and have been honored by ministries or higher-ranked agencies
3. Cultural and scientific experts
4. People married to Vietnamese citizens and living in Vietnam
5. Honorary citizens
6. Foreign-invested enterprises not operating in the property sector

The plan will first be implemented on a trial basis in Hanoi and Ho Chi Minh City for a few years. The plan will allow foreigners to own housing for 70 years. But other conditions apply.

• Prospective buyers must have lived in Vietnam for at least one year
• They can buy the house for themselves or their families and not for commercial purposes
• They can only sell the house one year after receiving the ownership certificate
• Foreigners who already own a house can only receive the monetary value of other houses they inherit or receive as a gift
• Foreign companies doing business in Vietnam can buy one or more houses for their foreign employees

At the end of the 70-year period, if the title is not renewed, the owner has to sell or gift the house.

The ministry hopes that besides easing the living and working conditions for foreigners in Vietnam, the plan will also help attract more foreign investment and develop the real estate sector.

Foreigners now rent over 1,300 houses and apartments in Hanoi and 4,000 in HCMC. If the pilot program goes without a hitch, the government will expand this program to the rest of the country.

Thomas Speeger, executive director of the German Business Association in Vietnam, said the new scheme would offer an alternative to leasing for expats who pay US$3,000-4,000 a month on average.

"We think this makes the market for Vietnamese real estate larger and more international in scope," said Rick Mayo-Smith, a founder of Indochina Capital. He mentioned that foreigners were able to buy and sell houses freely in many countries like Thailand, Malaysia, the US, and Britain and these markets were performing well and efficiently. "This is a big incentive for foreigners to invest and stay in Vietnam. The people and government are very friendly and respected by foreigners."

Note: Mr Mayo-Smith is not 100% correct. One example, an expat can buy a house in Thailand, but not the land on which it stands.

Terence Anderson, general director of AIG General Insurance Vietnam Company, shrugged off worries that the law would add more heat to the property market which is already sizzling due to a bulging demand-supply gap. "Vietnamese consumers are driving demand and foreigners will have only a small impact on the market, though they may have a bigger impact on the resale market," he said.

Mayo-Smith concurred that adding foreign buyers might take up the slack when an expected housing glut hit in three years' time. He said the country would see over 15,000 high-end housing units entering the market every year for the next five years.

If foreigners hope to have their own houses when they invest in Vietnam, clearly the move will spur investments.

Speeger from the German Business Association said though it would not be the main reason for attracting foreign investors, it would make things easier for them and make Vietnam more attractive as an investment destination.

Anderson believed it would make foreigners consider Vietnam as a retirement destination if they were allowed to own housing.