Is your money safe? How can you spot bad agents? Will the law change again? With foreigners able to purchase here for the first time, we look at the biggest issues facing property buyers in Vietnam.
For the last decade, Vietnam has been opening its doors to the world. In that time, McDonalds have opened their first branches here, WTO membership has been secured, and foreign tourism – though currently stagnating – has become an integral part of the Vietnamese economy.
Beautiful riverside Saigon Pearl apartment price from $125.000
On July 1st 2015, another milestone was met: for the first time, foreigners were allowed to buy property in Vietnam. 2 months on, a steady flow of purchases have been welcomed by the industry as a sign the policy will boost a market which has suffered over-capacity in recent years.
While bottom-line contributions to the economy – which is still experiencing robust growth – are the key driver of the changes, there is fervent hope that an additional benefit will be felt in improvement of Vietnam’s international business reputation.
Although cross-border trade and exports are healthy, Vietnam still suffers an unwanted reputation for ‘dodgy dealing’ and limited transparency. Concerns abound that this may discourage foreigners from investing capital in.
But what are the realities of the situation?
Question time
If our inbox is anything to go by, the realities matter far less than suspicions that all is not as it seems. Expats resident in Vietnam and buyers overseas have inundated us with questions, laden with concern and cautiousness. Some have had bad experiences trading on the ground, or dealing with the authorities, while others have simply read horror stories on the internet and fear the worst.
The questions have a repetitive ring to them:
- “Can I actually buy property, and then sell it afterwards?”
- “Is it true that I can’t take my money out of Vietnam?”
- “Are there any safeguards if it all goes wrong? I’ve heard it’s the wild west out there….”
Simple questions, but – as with any aspect of life in a developing country – the answers are not always straightforward. We’ve tried our best, however, to come up with answers for these and other key points which honestly reflect the situation as it stands.
1. “Is it really ownership, or just a lease?”
Perception: Foreigners don’t have the same right to buy as locals, and ‘foreign property ownership’ is effectively just a lease with severe limitations.
Reality: In many media articles and in government output, the allowed ownership term has been described as a ’50 year lease’. The term ‘lease’ is interchangeable in modern English with ‘rent’, and this is the source of confusion.
The new law does limit the term of ownership to an initial 50 years, with an extension of 50 years allowable after that. However, this is very different from a ‘lease’, and is in line with neighboring countries like Singapore and Thailand.
And unlike a lease, if a foreigner buys a property, there is no other ‘owner’ with overall rights to the residence, office etc. The foreigner owns the property entirely, just as a Vietnamese person would own it.
The difference between local and foreign ownership is this: after 50 years, or 100 years after extensions, you are compelled to sell the property. You can sell it to whoever is eligible to buy it, and revenue from the sale would be yours. Period.
2. “Can I transfer cash out of Vietnam?”
Perception: Getting cash into Vietnam is easy, but banks and the authorities will block any transfer of money out of the country. They want to keep the money in the country at all costs.
Reality: It’s not as quite as easy transferring money from bank to bank in your own country, but it’s pretty straightforward – as long as everything is legal and above board – although exchange rates might prove problematic.
Sending money home from a sale does require a few hurdles to be jumped, but it is a transparent process regulated by the State Bank. They stipulate the procedures to the commercial banks, who are required to check the legality of all money going out of the country.
We spoke to Techcombank, which is backing some big new projects like Vinhomes Central Park and Masteri Thao Dien, and were told the steps to transferring your cash out following the sale of a property are:
- Retain all documentation, including banking transactions, proving the property you’ve sold is yours and the proceeds are rightfully yours.
- Take this, along with ID like passport, Visa and/or resident’s card, to the relevant bank, and fill out the transfer order forms
- The bank then checks your paperwork, and that the amount being transferred doesn’t exceed the proceeds of the sale. If it all checks out, they process the transfer.
There is one issue which might cost foreigners to lose some cash in such a transaction: exchange rates. By law, all purchases must be in the local currency – Vietnamese Dong (VND). The buyer is required to transfer the cash into the country in foreign currency, and then convert it to VND prior to purchase.
The reverse then applies after a sale – VND has to be converted back into foreign currency before it can be transferred out.
The big banks offer globally competitive currency exchange fees, and remain a better option than using secondary or ‘black market’ sources, especially for preserving the legality of the sale. The real question for every buyer and seller – as with any international transaction – is: will global exchange rates help or hinder your profit margin at the end of the day?
3. “Are there any agents we can trust?”
Perception: Everything in Vietnam is about getting quick cash today and not thinking about tomorrow, and it makes vendors impossible to verify. Can any local agent be trusted?
Reality: Sadly, there are too many bad agents out there for this to be entirely in the ‘myth’ category. But there ARE good ones, and there are ways to find them.
Though there are isolated cases of outright theft in the industry, the biggest issue that all buyers – foreign and domestic – face with disreputable agents is what can be charitably called ‘misdirection’:
- assurances that facilities can be included when they can’t;
- promises of lovely views tarnished by the reality of a new adjoining construction;
- wildly overestimating completion and delivery times; and
- a complete lack of transparency in dealing with problems and questions on every level.
As agents ourselves, we despair at hearing tales of dodgy dealings. Most Vietnamese people are honest, and feel genuine anger and embarrassment each time a fellow countryman behaves dishonorably towards an honest foreigner.
Don’t despair though – here are some tips on avoiding the bad guys:
- Check their trade memberships: the industry as a whole is keen to improve its reputation, and bad agents tend to shy away from its glare by acting alone. Always check whether an agent is part of an association which regulates its membership, such as Ho Chi Minh City Real Estate Association, the Hanoi equivalent, or the national association, VnREA.
- Take on two: want to verify the answers you get from an agent? Speak to a competitor, and compare the information. If something doesn’t add up, then move on. It’s a buyer’s market out there, so use this to your benefit.
- Ask lots of questions: don’t be afraid of asking the most searching queries. If the answer is always “Yes, of course” or a broad, smiley shrug, they’re probably a wrong ‘un: good agents want you to have all the information you ask for, not just tell you what you want to hear.
- Research, research, research: Found somebody whose website looks great? Ask around about them, whether a friend or an online expat/business community. Check and double check every reference you get, and if they don’t provide them, say goodbye.
- Check the menu: does an agent keep offering you property in a development you’ve already rejected? If so, go elsewhere. A good agent is there to help you find the right solution for you, not their mates at a project offering them extra commission, and should have a wide range of options available.
We of course can’t guarantee these steps will always lead to a good experience, but they will help.
4. “Won’t the government change its mind?”
Perception: Vietnam’s communist government lacks transparency, and is prone to sudden changes. They are pro-foreign money now, but they could well change their policies in a heartbeat.
Reality: It’s true that the Vietnamese policy-making machine is far from open and accountable, and remains a mystery to those outside its inner circle.
However, it’s track record suggests it isn’t prone to knee-jerk changes in big chunks: in fact, quite the opposite. Big changes happen slowly – too slowly for some – and any major policy shifts which would reduce their standing in international circles (apart from China perhaps) are thought to be seriously unlikely.
Especially so in 2015, when the previous decade has seen the Government double down time and again to increase – not decrease – its entanglements with foreign bodies. From WTO membership in 2007 right through to the imminent TPP deal, international trade ties are deepening all the time, and any moves – like suddenly changing foreign property laws – would do lasting harm to these pursuits. Details have been amended through subsequent circulars, and further updates are expected, but the core of the legislation is likely to be unmoved for some time. Foreign ownership is here to stay.
Of course, there is technically the possibility that a big change could occur. But isn’t there also a technical possibility that Canada could declare war on the USA?
5. “Is it true we can buy property but not land?”
Perception: the law says that while foreigners can buy property, they can’t own land.
Reality: Entirely accurate – but this goes for all buyers, not just foreigners. Officially, the state is the sole owner of all land in the country.
6. “Why can we only buy apartments, and in certain areas?”
Perception: Foreigners are corralled into buying in certain districts, and certain types of property.
Reality: The law is clear on this: though there are some restrictions on the quantities of foreign ownership, individuals retain the right to buy any kind of property, in any part of the country.
The broadest restriction is this: each individual ward (or Phuong) can only allow 250 houses, or 30% of an apartment block, to be purchased by foreigners. Currently, there’s plenty of capacity for anyone to buy where they want, and any local authority resisting this faces investigation higher up the food chain, and even by the police.
There are other caveats yet to be clarified, such as foreign ownership being disallowed in areas owned by the military, but risks around contravening this are minimal.
7. “Is our investment safe in Vietnam?”
Barring the acts of criminals, it’s as safe as it is at home. Of course, the value of property can go down as well as up, but the same is true anywhere. Right now, the market looks positive, and the deepening of US-Viet ties look set to keep it buoyant in the long term.
Just the beginning
So, is it safe for foreigners to buy property in Vietnam? We think so. We think it’s a good investment too, but it’s important to note that there are hurdles to jump along the way. These are just some of the issues facing all buyers – foreign and domestic – in an emerging market taking its biggest steps to openness in history. We’re only 2 months into this ‘brave new world’ and some parts are still to settle down and reveal themselves, while other issues are yet to emerge. When they do, we’ll let you know about it honestly and objectively.
It’s important to note that, yes, we are an agency – and we would love to sell you a property 
– but in addressing these questions, we feel the right thing to do is to give you an honest appraisal based on facts and experience.
Got any questions you want answered about the property market here in Vietnam? Get in touch and let us know.
Subcribe our Newsletters
VietApartment NEWS
(Any reproduction of this material by any means, in whole or in part, is prohibited without written permission from VietApartment.com)
