Vietnam mulls opening ailing real estate market to foreign buyers

Vietnam’s Ministry of Construction has proposed that foreigners residing in the country are given more chances to buy homes in Vietnam as part of efforts to reduce inventories in real estate sector.

In a report sent to Prime Minister Nguyen Tan Dung late last month, the ministry proposed that organizations like foreign investment funds, banks, Vietnamese branches and representative offices of overseas companies as well as all foreigners who have a visa to the country that is valid for at least three months, are allowed to buy homes – apartments and independent houses – in Vietnam.

Diplomatic institutions, NGOs and their employees will not be allowed to purchase homes in the country, the ministry said.

It also proposed that those foreign organizations and individuals eligible for home purchase in Vietnam are allowed to buy different types of properties, including townhouses and villas with less than 500 square meters of land to apartments. These properties can be leased if their foreign owners are not living in them.

The houses can only be sold or given to 12 months after the ownership certification is granted to the foreigners.

The ministry put forth two options for individual purchasers. Under one, foreigners can buy any number of housing properties, and under the other, the number will be limited to one or two. The number of houses an organization can buy will depend on the number of foreign employees it has.

The proposal also contains two options for the duration of ownership of housing properties by foreigners. The first option will allow ownership for 50 years with the possibility of a 50-year extension, or 70 years with no extension.

It, however, mentioned no proposed change in ownership duration for foreign organizations. Under current regulations, organizations’ ownership of their properties will last until their investment registration expires.

Under a law that took effect on January 1, 2009, foreigners are allowed to buy apartments, but not houses, and each individual or organization can own one apartment that cannot be leased or used for other purposes except living. The law was to be implemented on a trial basis for five years.

The law also stipulates that only five categories of foreign individuals and organizations are allowed to own apartments: individuals who invest directly in Vietnam or who are employed to management positions by domestic or foreign-invested companies in the country; foreigners who receive certificates of merit or medals from the president or government for their contributions to the country; those who work in socioeconomic fields, hold at least a bachelor’s degree or higher, and possess special knowledge and skills that Vietnam needs; foreigners who are married to Vietnamese nationals; and foreign-invested companies operating in Vietnam, except for those in real estate industry, that need to buy homes for their employees.

The foreigners should be legal residents of Vietnam and have lived here for at least one year at the time of purchasing the apartment. Companies wanting to buy residential properties in Vietnam should have their investment registrations valid in at least one more year in the country from the time of purchase.

Individuals have to sell or give their apartments to others after 50 years – the general time limit to own an apartment in Vietnam. As mentioned earlier, companies’ ownership will last until their investment registrations expire.

The current law leaves out a large number of foreigners in Vietnam who do not belong to the five categories.

According to the construction ministry, only 126 expats and foreign organizations have purchased apartments in Vietnam as of the end of June 2013, most of them were in southern and south-central localities like Ho Chi Minh City, Ba Ria-Vung Tau, Binh Duong and Khanh Hoa Province.

Only 20 percent of the buyers are organizations, the ministry says, adding that housing prices have been too high compared to renting costs, and companies are not allowed to have their local employees live in the houses that they purchase. They are also not allowed to rent their properties, which have to lie vacant when foreign employees leave the country.

Around 80 percent of foreign individuals who have bought houses are married to locals, while another 15 percent have invested directly or are employed in management positions in the country.

Statistics from the General Department of Land Administration show that more than 80,000 foreigners live and work in the country.

Many experts and industry insiders have supported the recent proposal by the construction ministry, saying that relaxing regulations for purchase of residential properties by foreigners, if approved, will give some hope for Vietnam’s stagnant property market./.

Thanh Nien News