While the law allowing foreigners to buy property is now in place, further details from the Government outlining exceptions relating to meeting demand and security issues are eagerly awaited.
Though the broad legalities sanctioning property sales were brought into force on July 1st 2015, expected circulars and decrees to offer guidance on their application have yet to be published. Domestic real estate developers and agents are urging the Government to accelerate publication to negate any market uncertainty.
The Sun Avenue in District 2, hot project of Novaland
Chairman of the Basico Law Company, Luong Thanh Duc, is clear that the new law allows all foreigners and organizations who enter Vietnam legally to buy property if they wish – but detail on regulating some of the finer points is still to be clarified.
Of particular concern is the limitation in the law stipulating foreign ownership may only account for “250 houses or 30% of an apartment block” in any administrative ward. Mr. Duc is still unclear as to who will “monitor and manage this stipulation, and keep vendors informed about whether that ward can allow the sale. If parties proceed under this cloud and then the contracts is voided in such a circumstance, how will this be handled?”
Mr. Le Hoang Chau, chairman of Ho Chi Minh Real Estate Association (HoREA), is buoyant about the impact of foreign ownership in his constituency. He too, however, would like to see questions answered by the government – and sooner rather than later.
Specifically, further detail is needed on definitions of “Viet Kieu”, Overseas Vietnamese who, in the same law, were granted the same property rights as their resident relatives.
“In practice, many Viet Kieu – particularly 2nd or 3rd generation – may not have any extensive documentation outlining their heritage. We’d like the Government to confirm that documentation acquired from the Viet Kieu’s host country is sufficient to enjoy the benefits of the law.”
Regarding the provision limiting sales to foreigners by ward, he said the industry would like to see rational flexibility applied to account for natural migratory demand.
“It’s natural that communities of expats form over time. We’ve seen many foreigners cluster together in Hanoi, Da Nang, Khanh Hoa, Hai Phong, Binh Duong, Dong Nai, and Thanh Hoa. In Ho Chi Minh City, foreign demand is highest in Tan Phong Ward, District 7, Thao Dien Ward, District 2.”
Gateway Thao Dien, luxury apartment for foreigner in District 2
Some members of HoREA have also suggested that, to protect domestic supply to local low and middle-income families, restrictions on ownership in these areas are limited to properties starting at VND 21 million/1sqm($1.000/1sqm), although there is little prospect of this being applied.
Mr Nguyen Huu Cuong, chairman of Ha Noi Real Estate Club, agrees that percentage flexibility should be applied. “In Ha Tinh province there are a lot of foreigners already, so we expect to see big demand in this area which we hope the Government will allow us to meet.”
Exemptions in the law apply to areas controlled by the Defense department, and Mr. Cuong considers extension of this provision be applied to areas in close proximity to key facets of national and civil defense, such as airports, sea ports and other sensitive geographic areas. These need to be established to allow thorough transparency.
With the legislation being so new, there is little data yet on how property laws surrounding foreigners will complement laws on immigration and residency. He cites the United States and Canada “which allow foreign ownership but separate this from residency rights. We’d like more information on the separation of these in Vietnam to best inform buyers.”
In the meantime, enterprises and associations are urging that prospective buyers keep in touch with reliable agents and advisors to stay in touch with expected developments.
Want more information about buying property in Vietnam? Need to know more about your legal right to purchase as a foreigner? Then get in touch today.