Are you looking to expand your company’s operations in Vietnam? Or maybe you are considering an investment in Vietnam’s real estate market? Then this article will be your starting point for understanding the country’s land ownership regulations and buying property in Vietnam as a foreign entrepreneur.
Overview of regulations for buying property in Vietnam
How does land ownership work in Vietnam?
Vietnam’s land ownership structure defines Vietnamese land as belonging collectively to all people. The government therefore acts strictly as the entity managing land and property ownership. Locals and foreigners can therefore obtain the right to use land, which is similar to ownership rights.
While private ownership is not allowed, land use rights allow the holder to use the bought property for multiple purposes (as long as they are disclosed in the initial acquisition), including real estate transactions. There are two ways to acquire land in Vietnam as a foreigner:
| Leasing of land | Land use rights are available for leasehold via contracts between the Vietnamese government and private entities and investors. |
| Allocation of land | Only possible for specific investment projects (housing, residential) deemed beneficial to the national economy. |
Keep in mind that foreign individuals and companies cannot buy, rent, purchase, receive, inherit, or own more than 30% of the units in an apartment building, or more than 250 separate housing units in total. The definition of a unit as a separate house includes villas, as well as row houses in areas where the population is organized by a traditional ward system.
Leasing property as a foreigner in Vietnam
Land and property leasehold agreements are available for citizens of Vietnam, local organizations, and foreign-owned companies and investors. The length of a lease agreement and the terms of use depend on the type of entity purchasing the property and the purpose of land use:
- For individuals, the maximum length is 50 years, with an option to renew the agreement for another 50 years.
- Foreign-owned companies can hold lease agreements indefinitely for up to 50 years in Vietnam, as long as their investment license is valid.
- Foreign investment licenses and related leases can be extended, but you need to ensure full compliance with tax regulations to avoid potential delays, which could disrupt your lease.
As a foreign entrepreneur, you can lease land directly from the government, or from an industrial park that already holds land use rights. This allows you to build or buy property in Vietnam for commercial use, as long as your activities adhere to the business line of your legal entity. For example, a manufacturing company can build a manufacturing facility on its leased premises.
How to buy property in Vietnam
Setting up a 100% foreign-owned company
The most common method for buying property in Vietnam as a foreigner is to set up a foreign-owned company. If your company includes foreign investments, then you can purchase either homes or apartments to provide housing to company founders, members, or employees. You can navigate this process through Emerhub’s company registration service:
- Investment Registration License: We will register your investments and legal entity with the Department of Planning and Investment (DPI)
- Business Registration Certificate: Once we have registered your company with the DPI, you will have 90 days to make your full capital contribution.
- Additional permits: Depending on the business type, you may need additional licenses, especially if you intend on subleasing your property. Additional licenses are determined on a case-by-case basis.
- Buying property: Emerhub’s team consists of property experts who can help you find the right location and accommodation for your needs.
Emerhub’s property experts can help you set up the right type of company for your planned operations, as well as provide you with valuable insights on leasehold contract negotiations. We will also assist you in processing extensions and managing your financial compliance.
Buying property in Vietnam through a Joint Venture
A second option to buy property in Vietnam is to form a joint venture with a Vietnamese shareholder. The term of lease agreements for Vietnamese citizens is indefinite, meaning that local companies can hold ownership of the property until the termination of the entity. By setting up a joint venture, you therefore have more options for buying property in Vietnam:
- Households
- Buildings for sale, lease, or lease-purchase
- All or part of a real estate construction project of buildings for sale, lease, or lease-purchase
Exercising careful due diligence is important when entering into a contract with a local business partner. You can identify potential liabilities via the company registry in Vietnam. Alternatively, Emerhub can also act as a nominee company to provide you with a local partner while setting up legal agreements that should protect your rights as a business owner.
Owning property as an individual buyer
Foreign citizens in Vietnam can purchase homes for dwelling without forming a legal entity. The term of ownership for a housing sale agreement can not be longer than 50 years for the first contract. This type of agreement is a common practice in Vietnam and is the closest available arrangement to the concept of private ownership.
Individual purchase agreements can be renewed for another 50 years by adding an extension clause to your agreement. Emerhub’s advisors can help you negotiate terms in the agreement with the seller that protect the precise renewal terms, such as:
- Renewal of the contract does not come with additional charges
- Renewal of the contract does not come with advance rent collection for the next lease period
- Processing of the extension is not subject to additional fees
- If the law on foreign ownership changes, the transfer of ownership to you will not incur additional charges
Can foreigners set up a real estate company in Vietnam?
You can only buy property for your company’s use. This includes primarily purposes like accommodating your employees. However, if you register your company as a real estate business, you can then proceed with developing and building property on land that you are leasing. Registered real estate companies can also sublet these properties.
As a foreign-owned real estate company in Vietnam, you are restricted to the following activities:
- renting a residential property and subleasing to third parties
- renting out residential property constructed by the LLC on land leased from the state
- selling or renting out non-residential property constructed by the LLC on land leased from the State
- Purchasing part of an ongoing real estate development project and listing the developed property for sale or rent
- Selling real estate constructed by the LLC on land leased within industrial parks, industrial complexes, export-processing zones, hi-tech zones, and economic zones
Emerhub’s team of experts in Vietnam can help you every step of the way from setting up your legal entity to buying property in Vietnam. If you are interested in finding property for your company or for yourself as an individual, get in touch with one of our advisors via the form below!
