Vietnam, previous off-the-radar for foreign property buyers and investors, has approved legislation allowing limited ownership of property by foreigners from July 1, 2015.
The move could herald the start of more foreign ownership law changes throughout the region ahead of the ASEAN Economic Community (AEC 2015) which comes into force in one-year from now.
The Vietnamese government’s aim is to inject action in what has been a broadly stagnant real estate sector whilst boosting economic growth at the same time.
The law will allow foreigners with a valid visa, as well as foreign companies and international organisations operating in Vietnam, to own houses and apartments. Previously, only foreigners married to Vietnamese nationals and those making contributions to the country were allowed to purchase property.
Foreigners will be allowed to own a maximum of 30 percent in any apartment building, or 250 houses per ward in the country. This 30 percent rule appears similar to Thailand where foreigners are permitted to own up to 49 percent of the space in any condominium in their own name.
On November 25, the Vietnam’s National Assembly passed the long-awaited amended Housing Law that addresses a number of issues including regulations on foreign ownership of properties in Vietnam, replacing the pilot scheme that expired in December 2013.
The new law, to take effect from July 1, 2015, removes many of the previous restrictions on foreign individual buyers.
CBRE Vietnam noted that all foreigners granted a visa to Vietnam will be allowed to buy residential properties. All foreign investment funds, banks, Vietnamese branches and representative offices of overseas companies are also eligible to buy.
Purchases of all types of residential property, including condominiums and landed property such as villa and townhouses, can be purchased.
CBRE confirmed there is no limit on the number of dwelling units a foreigner can buy, but the total number of dwelling units owned by foreigners must not exceed 30 percemt of the total units in one condominium complex, or not exceed 250 landed property units in one particular administrative (or the equivalent of) ward. Previously an eligible foreigner could buy only one condominium in Vietnam.
Properties owned by foreigners can be sub-leased, traded, inherited and collateralised, where previously the owner could only use the property occupying purposes.
CBRE Vietnam also confirmed the tenure allowed to foreign individuals buying homes is a 50-year leasehold with renewal possibility upon expiration. Foreign individuals married to Vietnamese citizens are entitled to freehold tenure.
CBRE Vietnam said: “The relaxation of foreign ownership restrictions is more significant than previously anticipated, and marks a strong step towards opening up the Vietnam real estate market to overseas investment.
“There are only two major restrictions imposed on foreigners, including a leasehold tenure of 50-years and a cap on the total number of units owned collectively by foreigners in one single condominium project or one administrative (or the equivalent of) ward.
“In addition, there is also no cap on the sizes of dwelling units or number of units a foreigner can buy, or additional tax.
“This recently passed Law makes the market more attractive to Vietnam-based expats seeking an investment in residential properties in Vietnam, and clears away the initial barriers to create a level playing field.”
Adding a note of caution, CBRE Vietnam said: “It should be noted that the implications may not be felt immediately, it will definitely benefit the already improving residential market. Generally, it will provide another boost to the strengthening of confidence and market sentiments, which is currently much needed for Vietnam real estate investment after it lost its lustre post 2008.
“This long awaited change in the Foreign Ownership Law will help create a more balanced, transparent and sustainable residential property market in Vietnam, and is expected to play a major role in correcting, to some extent, the above-mentioned issues, but the participation of the private sector players will also play a big role,” added Dung Duong, Head of Research Vietnam for CBRE.
Image: Ho Chi Minh City © PropertyGuru 2014