Tiếng Việt
中文 (中国)
日本語
Vietnam, with its rapidly developing economy and potential-filled real estate market, has become an attractive destination for foreign investors. However, under current regulations, foreign investors do not have full ownership rights over real estate assets like Vietnamese citizens do, leading to a bottleneck in foreign investment flows into the Vietnamese market.
Complex legal regulations, ownership restrictions, along with challenges in accessing information and administrative procedures, have posed numerous barriers for international investors despite Vietnam’s efforts to address these difficulties over the past two decades.
Vietnam’s Policies on Foreign Ownership of Real Estate
Recognizing the potential to develop the land market in Vietnam through foreign investment, Vietnam early on issued policies allowing foreign organizations and individuals to buy and own houses in Vietnam under Resolution 19/2008.
However, it was only with the promulgation of the Housing Law of 2014, No. 65/2014/QH13 (“Housing Law 2014“), that foreign investors were able to access detailed regulations on conditions for owning real estate in Vietnam. These regulations include the entities allowed to own houses, the conditions for establishing house ownership rights, the rights and obligations of house owners who are foreign organizations or individuals, and the recognition of house ownership rights for foreigners by the Vietnamese government.
It should be noted that the ownership rights of foreigners for houses differ from land use rights. Article 5 of the Land Law of 2013, No. 45/2013/QH13 (“Land Law 2013“), stipulates that land users granted land by the State, leased land, recognized land use rights, or acquired land use rights include domestic organizations, individuals, domestic households, Vietnamese communities, overseas Vietnamese, or foreign organizations with diplomatic functions and foreign-invested enterprises.
Accordingly, foreign individuals and organizations, except those with diplomatic functions, are not among the entities granted land use rights in Vietnam. This restriction is in line with the policy of prioritizing the protection of Vietnamese citizens’ interests because land is a unique asset in Vietnam, closely linked to national defense and security. Not only foreign investors but also Vietnamese citizens do not have land ownership rights but only land use rights.
Nevertheless, since the enforcement of the Land Law 2013 and Housing Law 2014, foreigners have been granted more practical access to real estate products in Vietnam than before when access was strictly limited to overseas Vietnamese.
This policy is viewed by foreign investors and international organizations as one of Vietnam’s most significant efforts to open its economy and deepen international integration. It also marks a period when Vietnam began to rapidly develop by welcoming diverse and potentially substantial foreign investment.
These changes have also led to a wave of foreigners entering Vietnam, some of whom wish to stay permanently to live and work in the country.
However, despite the relaxation of regulations on real estate ownership for foreigners, they still experience many difficulties in owning real estate, especially concerning the procedures and practical processes that include many limitations and restrictions for foreigners.
This view is accurately reflected in the data from the Vietnam Real Estate Brokerage Association. Specifically, the number of houses purchased by foreigners in Vietnam since the Housing Law 2014 took effect only accounts for about 0.53% of the total number of houses in Vietnam from 2018 to 2022. This result significantly contrasts with the demand for house ownership for living and business purposes by foreigners and overseas Vietnamese, which the report indicates is around 4 million people.
Legal Regulations on Foreign Ownership of Real Estate in Vietnam
Clause 3 and Point a, Clause 4, Article 76 of Decree No. 99/2015/ND-CP (“Decree 99“) stipulate that foreign organizations and individuals are allowed to own no more than 30% of the total number of apartments in a condominium, and for individual houses, if the number of individual houses in a project is less than 2,500, foreign organizations and individuals can own up to 10% of the total houses in that project, i.e., 250 houses.
This is one of the provisions of Vietnamese law that limits the amount of real estate that foreign investors can control in Vietnam.
Regarding the duration of ownership, Point c, Clause 2, Article 161 of the Housing Law 2014 states that foreigners can own houses for no more than 50 years from the date the Certificate of House Ownership is issued. If foreigners wish to extend their ownership, they must follow the procedures stipulated by law and can only extend it once for no more than 50 years.
Thus, even if foreign investors are granted housing ownership rights, they still face many restrictions. However, these limitations are not unfair to them, as Vietnamese residents are subject to similar conditions. For instance, the duration of condominium ownership for Vietnamese residents is typically 50 years, after which the condominium must be inspected and a decision will be made whether to demolish or continue its operation.
Notably, the Land Law 2014 stipulates that foreigners do not have land use rights, meaning that even if they own individual houses or apartments, they only have rights over the structures attached to the land, not the land use rights like Vietnamese citizens.
Owning real estate assets like apartments or individual houses without actual land use rights is not fundamentally different from foreign investors investing in real estate models such as vacation villas, condotels, or officetels, which have previously surged in Vietnam. In these cases, they must pay for the construction costs and the land use value to Vietnamese partners.
If foreign investors only have rights over assets attached to the land, they will be restricted in exploiting their assets, as they cannot transfer land use rights or fully modify the assets attached to the land without the consent of the land use rights owner.
Moreover, foreign investors are also limited in fully exploiting the potential of their assets attached to the land. Specifically, foreign investors are not allowed to buy and sell houses for profit, unlike other assets, as Vietnamese citizens can.
Points a and b of Clause 4, Article 7 of Decree No. 99 stipulate that if a foreign investor sells or gifts a house to an organization, household, individual in the country, or overseas Vietnamese, the buyer or recipient will have stable, long-term ownership. However, if the sale or gift is to a foreign organization or individual eligible for housing ownership in Vietnam, the buyer or recipient will only have ownership for the remaining duration.
These restrictive provisions mean that despite legal accommodations for foreign investors in the Vietnamese real estate market, the investment path remains narrow and overly restrictive.
Recognizing the legal inadequacies and inconsistencies with the actual development of society under the Land Law 2013 and Housing Law 2014, the 15th National Assembly of the Socialist Republic of Vietnam passed the Housing Law 2023, No. 27/2023/QH15 (“Housing Law 2023“) on November 27, 2023, and the Land Law 2024, No. 31/2024/QH15 (“Land Law 2024“) on January 18, 2024, during the fifth extraordinary session.
It is anticipated that the Housing Law 2023 and Land Law 2024 will include many revised provisions to match the practical situation of Vietnam’s real estate market, aiming to liberate the market for land and assets attached to land and to prevent speculation and inflated land prices, which have plagued the real estate market for many years.
However, it should be noted that in this major revision, the regulations concerning foreign individuals and organizations have not been prioritized. For example, Article 4 of the Land Law 2024 adds “Persons of Vietnamese descent residing overseas” to the group of subjects granted land, leased land, or recognized for land use rights by the State, reflecting many aspirations and contributions from the overseas Vietnamese community. Nevertheless, the Vietnamese government still maintains a policy of restricting foreign access to land use rights in Vietnam.
Conclusion
Overlooking this substantial and high-quality source of capital is a significant shortcoming during a period when Vietnam is rapidly developing and needs to urgently mobilize effective financial resources from all legal channels.
To ensure Vietnam’s ability to develop and gain international recognition for having an open and friendly policy toward other countries and potential international investors, the Vietnamese government should soon establish a mechanism allowing foreigners to access land use rights, along with relaxing the current restrictions on assets attached to land.
One of the main reasons for Vietnam’s reluctance to expand foreign rights is the concern over inadequate control and management of granted land parcels. However, this concern may not entirely apply to the unique nature of real estate, as it is immovable and remains fully within Vietnamese territory.
Thus, even if foreigners are granted land use rights, they will still be subject to limited land use duration, similar to the current rights over assets attached to land. Article 53 of the 2013 Constitution also stipulates that land is public property owned by the entire people, with the State acting as the representative owner and unified manager.
Therefore, granting land use rights to foreigners would be similar in nature to granting such rights to Vietnamese residents, limited to use rights rather than ownership. Land management would remain under the absolute control of the State and could not be infringed upon.
Furthermore, legal difficulties are not the only reasons affecting foreign investors’ decisions in the Vietnamese real estate sector. Like Vietnamese investors, foreign investors will only invest in potential sectors that can develop and bring them benefits, whether in actual profits or advantages they can leverage in the future.
Thus, if foreign investors feel they cannot achieve benefits in any form commensurate with their time and effort, they will not proceed with the investment. This will further slow down the flow of foreign investment into Vietnam and risk halting it entirely.
In addition to legal inadequacies, many foreign investors have voiced that even in fields that have been opened up and granted rights since the Land Law 2013 and Housing Law 2014 took effect, they still face difficulties in registration procedures, such as delays in issuing Housing Ownership Certificates to foreigners.
These inadequacies continue to invisibly reduce the appeal of the Vietnamese real estate market to foreign investors. Resolving these bottlenecks would not only expand Vietnam’s real estate market but also bring numerous other positive development opportunities, helping Vietnam elevate its real estate market to a new level.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
ASL LAW is the top tier Real Estate law firm in Vietnam. If you need any advice, please contact us for further information or collaboration.
