Investing in farm stay after considering project legislation in Vietnam

“New model with super profit”, “safe and high profit” … are the good words used by brokers when calling for investment in farm stay projects recently. Starting to appear in mid-2019, this model is explained by many brokers as a “hybrid” product, combining farm (farm) and homestay (local accommodation).

Farm stay is a new investment model with high profit. Image: VIR

The trendy and flexible investment model

“With 1 plot of farm stay land, the profit from leasing is about 50 million VND/year for 10 years from the program of investing in bungalows for eco-resort. In addition, buyers also enjoy 15 free nights at the resort, provided with 15 kg of clean vegetables per month … The area of ​​each plot of more than 150 m2 costs 390 million VND, 3 years later there will be a house ownership certificate. If the house ownership certificate cannot be supported, the investor commits to buying back at 124% of the original price,” Mr. Minh Tuan, a consultant for a farm stay project in Ky Son, Hoa Binh said.

In another project nearby, the reporter was also offered a similar offer by a self-proclaimed exchange director. This position said that the entire land area is being asked for permission to convert into an ecotourism area, if the customer makes a deposit, the company will organize a tour of the project.

When asked about the issuance of a separate house ownership certificate for each land plot, he said that only the house ownership certificate is common for the whole area, the buyer will invest in the form of capital contribution and receive his share of land. After the capital contribution, they can build temporary houses and cultivate agricultural products themselves, or return them to the seller for household deployment and will harvest seasonally.

“This is a trendy investment model with significant added value from the farm along with the commitment of profit from the investor. Buyers can sign investment cooperation contracts with investors, also can take profits flexibly. When the trend of vacation business associated with the farm is on the rise, investing in farm stay will bring high returns to pioneers, ” he advises.

… but there are many shortcomings

According to the General Statistics Office, the middle class in Hanoi needs about 20-30 million weekend trips/year. Thus, only to meet the needs of this group, resort real estate in the outskirts of the capital needs at least 50,000 rooms per year. Not only large in scale, but the peri-urban resort bridge is also very diverse due to the differentiation into many different groups. Therefore, the advent of many farm stay projects quickly attracted the attention of a part of individual investors.

Mr. Nguyen Van Dinh, Vice President and General Secretary of the Vietnam Association of Realtors (VARS), said that the farm stay model originates from developed countries such as Japan, the US …, But their purpose is the learning experience, not the accommodation business. In Vietnam, because serviced apartment, condotel or hotel models are no longer attractive due to high investment costs and low profitability, there are opportunities for new models to be imported from abroad, including farm stay. However, due to the new investment model, there are still many uncertainties, especially in terms of legislation.

“My observation shows that the farm stay projects being promoted are mostly located in provinces such as Lam Dong, Gia Lai, Binh Thuan, Quang Binh, Hoa Binh …, so most likely forest or agriculture land projects, so we will not be able to build permanent houses there. On the other hand, although forest land is still granted a land use right certificate, it is mainly used for a term, not indefinitely. These factors are potentially risky for investors ”, Mr. Dinh said.

According to Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), farm stay can be spontaneous due to many reasons, such as local government loosening management, while some teams business organizations, individuals, regardless of the law …, or can also be derived from the documents under the law.

“Article 143 and Article 144 – Law on land in Vietnam only stipulates the separation of plots for” rural residential land “and” urban residential land “, while Clause 31, Article 2 – Decree 01/2017/ND-CP supplement Article 43d is added in Decree No. 43/2014/ND-CP to allow the division of land plots for each type of land. This may increase the rampant subdivision of plots for sale, or the separation of agricultural land, forest land … difficult to control ”, Mr. Chau cited.

ASL LAW is the top tier Real Estate law firm in Vietnam for. If you need any advice, please contact us for further information or collaboration.


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