Suggestion: Watch the 5 minutes video tutorial before reading this article
Vietnam opened up to foreign investors as late as 2015. Since then, the country has welcomed everything from corporations, property buyers, and stock investors, eager to capitalize on this exploding market.
I believe that Vietnam is one of the most interesting places for real estate investments in Asia at the moment.
Rental yields are among the highest and you can pay as little as USD 1,500 per square meter for new condos in upcoming areas around Ho Chi Minh City.
With that said, you must get your feet wet before you buy and learn how it works practically when buying real estate as a foreigner.
In this article, we review foreign ownership regulations, property taxes, the buying process, how you can get a mortgage, and more.
Can foreigners buy property in Vietnam?
Few foreigners have managed to invest in Vietnam real estate in the past, unfavorable and strict foreign ownership regulations are mainly to blame.
However, in July 2015, the Vietnamese Government introduced the Vietnamese Law on Residential Housing (LRH), which made it remarkably easier for foreigners to buy property.
Technically, you can buy as many units as you want, as foreigners don’t have any restrictions on the number of properties they can buy.
Previously, the cap was set to a maximum of one unit in a condominium, so there’s been a drastic change in the regulations of foreign ownership.
Vietnam’s New Law to Foreign Ownership of Property
Below, I’ve summarized the most important information to take note of the new law, issued in 2015:
- Foreigners can buy property if they are allowed to enter Vietnam
- There’s no cap to the number of properties you can buy
- Foreigners are restricted to buying a maximum of 30% of the units in condominiums and cannot own more than 10% of the properties in landed projects
- Foreigners can buy houses, but only 250 of the houses in a given ward (division). To read more about the districts and wards in Saigon, I recommend you to check this wiki-page
- The leasehold period is still 50 years but can be renewed
- You can get a freehold tenure if you have a Vietnamese spouse
Can foreigners buy land in Vietnam?
Foreigners cannot buy land in Vietnam, this is the standard in most other Southeast Asian countries.
Malaysia is technically the only country where you’re allowed to buy land in Southeast Asia, even if there are some regulations to foreign ownership of certain land types.
In Vietnam, the land is collectively owned by all Vietnamese people but governed by the state.
As written in the national Land Law, foreigners and foreign organizations are allowed to lease land. The leasehold period is up to 50 years, but in some cases up to 70 years.
At the time I’m writing this article, the Government is considering extending the leasehold period from 50 years to 99 years, which is positive of course.
Vietnam’s Land Use Rights (LUR)
Thankfully, Vietnam has a law on land called Land Use Rights (LUR) that reduces the risks for foreigners to invest in Vietnam.
Even if you’re not allowed to own land, you have the right to use land – as stipulated in the LUR. It also gives you the right to control the land leased or allocated by the Vietnamese state.
Keep in mind that you need to submit a Land Use Rights Certificate (LURC) to the Vietnamese Government before you’re able to lease the land.
Can foreigners buy property from Vietnamese people?
Foreigners often buy property directly from developers on the primary market, or from foreigners that previously did so.
There are restrictions on the secondary market as you can’t buy property from local citizens in case the foreign quota is filled (30%).
Besides, keep in mind that you can only buy units in branded condominiums, not local flats unless you’re married to a Vietnamese citizen.
Vietnam Ownership Certificates of Property
When you purchase a property from a developer, you must receive an ownership certificate. In 2017, foreigners had issues getting their property ownership certificates, understandably, this caused some frustration.
So why did this happen?
According to law, foreigners cannot own properties in areas that are reserved to protect the national defense and security.
And it’s up to the Ministry of National Defense and the Ministry of Public Security to decide whether a property is located in an area that is reserved to protect the national and security.
Make sure that your prospective property can be owned by you as a foreigner, and confirm, before the purchase, that you will be able to receive the ownership certificate.
The Pink Book
The ownership certificate is often referred to as the pink book. The name comes from the small pink book that you should receive after you purchased a unit.
The book proves your ownership and rights to the property. It will give you the right to lease your property and declare information regarding inheritance, for example.
Shortly speaking, pink books are used for the title and to verify the ownership of property.
The Red Book
There’s also a red book that’s been used for a longer time than the pink book. The red book is used for the title to ownership of land, instead of physical structures, like houses and condos.
Thus, the pink book is more common for foreigners who primarily invest in condominium projects.
Do I need to receive a pink book when buying property in Vietnam?
Shortly speaking, the pink book is used for the title to ownership of property.
Even if the SPA (Sales and Purchase Agreement) can be used to prove that you bought the property, the strongest evidence of ownership is to have both of them.
- The pink book is considered the strongest proof of ownership, though it’s not a legal requirement to have one
- The SPA (Sales and Purchase Agreement) is equally, if not more, important
- You can face more difficulties to sell your property without having the pink book
What does the pink book include?
The pink book declares that you can:
- Use your house for residential and other purposes
- Demolish, maintain, renovate or rebuild your house, if complying with the conditions and procedures of laws on construction
- Do transactions when selling, mortgaging or leasing the property
Process when Buying Property in Vietnam
Before you invest in Vietnam’s property market, you have to understand the local buying process. You don’t want to come across unknown fees to come up later in the process.
1. Why do you want to invest in Vietnam?
You should ask yourself why you want to invest in Vietnam.
If you look for high appreciations, developing areas in Ho Chi Minh City can be a good choice, as it’s currently attracting a lot of foreign companies, expats and wealthy locals.
If you look for a beachside resort, Da Nang or Nha Trang could be better choices. Da Nang has experienced great increases in housing prices recently and gets heavily developed.
Later in this article, I will explain more about interesting places for property investments. You can also read my separate articles that list new upcoming property projects for sale in Ho Chi Minh City, and other cities.
2. Find a Real Estate Agent
The easiest way of acquiring real estate in Vietnam is with the help of a real estate agent. Compared to Thailand and Malaysia, it can be a bit more daunting to find reputable and English-speaking agents.
Asia Property HQ can help you get in touch with an acclaimed agency that has helped numerous foreigners to buy property in Vietnam.
3. Find a Property Lawyer
I recommend you to hire a property lawyer for larger transactions, and when buying landed property.
If you buy condominium units on the primary market, it’s generally not needed as your estate agent or developer will involve a property lawyer.
4. The First Announcement of New Projects
For new projects, there’s first a so-called ‘rumor phase’. At this stage, the developer announces some basic information about an upcoming project, for example:
- The location
- The area
- The type of project (condominium or townhouse)
- The number of units
- The price range
Your agent will provide this information as it’s not that easy to get hold of the information as an individual buyer
If you buy property on the resale market, this step won’t be included.
5. Pay the Refundable Booking Fee
During the first announcement of a new project, the developer will also collect refundable booking fees from interested buyers. The agent will also attend the event.
You usually have to pay the following amounts:
- USD 2500 for mid-range projects
- USD 5000 for high-end projects
- USD 10,000 for luxury projects
When paid, the developer will provide you a booking number and you’ll be on the list of ‘First buyers’. This gives you priority to choose units when the first sales event is launched later.
Notice that the booking fee is refundable and you can cancel the booking without any reason given.
6. Visit the Official Sales Event
When the ‘rumor phase’ has finished, the developer organizes the official sales event, people who have a booking number are only allowed to attend.
The developer will share more details about the project 4-8 weeks before the event, such as:
- Floor plan
- Unit types
- Unit Area
During the sales event, they will share all the details, including sales prices.
You can choose units from a list during the event but it’s not obligatory to attend the event in person. If you won’t have the opportunity to join, the agent can join on your behalf.
If you’re not satisfied with the unit, you can ask for a refund of the booking fee.
7. Sign the Deposit Agreement
If you decide to proceed and buy a unit, you will sign a deposit agreement around 2-3 weeks after the sales event.
The refundable booking fee will then become a non-refundable deposit. At the time of signing the deposit agreement, you have to pay around 10% to 20% of the unit value.
8. Sales & Purchase Agreement (SPA)
You can sign the Sales & Purchase Agreement (SPA) around 3-6 months after paying the deposit agreement. You will then pay around 10% to 20% additionally.
The reason is that according to the Law on Real Estate Trading (2014), off-plan projects can only be put up for sales when the foundation completed. This typically takes 3-6 months.
Payment Schedules when Buying Vietnam Property
Payment schedules differ according to projects and developers, but you generally pay 1% to 3% each month.
The Law on Real Estate Trading (2014) explains that foreigners should only pay 50% of the unit value in installments prior to hand over. Vietnamese buyers have an advantage as they can pay up to 70% in installments.
When the developer is ready to hand over the unit, you pay 45% (Vietnamese buyers: 25%), you have then paid 95% in total.
You pay the remaining 5% when you receive the certificate of ownership (pink book).
Before you can acquire the unit, you also need to pay a maintenance fee which is 2% of the purchase value and 1 year of management & operation charges.
- Refundable Booking Fee: USD 2,500 to USD 5,000
- Deposit Agreement: 10% to 20% of property value
- Installments: 1% to 3% per month – up to 50% of property value
- Hand Over: Pay 45% (totally 95% paid at this stage)
- Hand over and issuing Certificate of Ownership: 5%
- Maintenance fee/sinking fund: 2%
The total is 102% due to the maintenance fee of 2%.
Transferring Money to Vietnam when Buying Property
In general, you have three options when making payments:
- Open a local bank account at banks such as Vietcombank and Vietinbank. I recommend you to give them a call or send them an email before you go to Vietnam to see what they have to offer and to clear all questions
- Transfer your money directly from your home country to another branch in Vietnam. There are international banks such as HSBC in Vietnam that can help you to do this
- Transfer money (VND) directly to the seller
At the moment, you need to declare any cash values that exceed USD 5000, when entering or exiting Vietnam.
Property Loans for Foreigners in Vietnam
It’s been difficult, if not impossible, for foreigners to get property loans in Vietnam.
Even if it’s still being restricted, you’re able to get property loans more easily from banks like OCB, HSBC and Standard Chartered.
At OBC, you’ll be able to get the following benefits as a foreigner (if you’re married to a Vietnamese spouse):
- A loan covering up to 80% of the property value
- A loan period of 15 years (so-called loan tenor)
To get a loan, you need to provide some collaterals such as proof of savings or other properties you currently own.
Shortly explained, collaterals are used to make sure that you can repay the mortgage in case you default.
Contact some local banks and see what they have to offer. The interest rate, amortization requirements, and payback period are of importance to assure that you get the best loan.
Vietnam Property Taxes
Vietnam offers competitive real estate taxes. Below I’ve included the real estate taxes you need to pay when buying property on the primary market.
The VAT is 10% when buying condominiums on the primary market.
Maintenance Fee/Sinking Fund
A maintenance fee of 2% will also be paid by the buyer.
The registration fee is 0.5% and paid by the buyer.
Rental Income Tax
If you buy-to-let, you need to pay a VAT of 5% and a personal income tax of 5%. Thus, a total rate of 10% applies to your rental income.
Capital Gains Tax
Even if capital gains tax doesn’t exist in theory, you need to pay a personal income tax of 2% when selling property.
Foreigners can normally not buy land, but the tax is 0.03 – 0.15%, just for reference. Consult with your agent or lawyer if needed, to confirm how to deal with the tax payments.
The Best Cities to Buy Property in Vietnam
It’s not always easy to choose the right location when investing in a foreign country. Below I’ve listed some of the most interesting and popular cities where I recommend you to look for property.
Ho Chi Minh City
Ho Chi Minh City is one of the fastest-growing cities in Asia and attracts more and more investors. One reason is that manufacturing in China is getting more expensive.
Another reason is that people from Hong Kong and Mainland China look for overseas investments as the prices have increased immensely there in the past years.
You can be sure to find properties with prices that are 20-30% compared to prices in cities like Shanghai, Singapore, Hong Kong, and Shenzhen.
And not only property prices increase fast, but the rental yields are also good, especially in comparison with other Southeast Asian countries.
Personally, I like Ho Chi Minh City a lot due to its business atmosphere, the opportunities it has to offer, the short distance to other business hubs like Kuala Lumpur, Phnom Penh, Hong Kong, and Singapore.
Old colonial style buildings mixed with local culture and new skyscrapers make this place one of the most interesting places to invest in the coming years.
Da Nang is a coastal city located in the middle parts of Vietnam, with direct flights from the major business hubs in Asia.
Even if the city is receiving more and more investments, especially from countries like Korea, Japan, and China, it’s more famous for its holiday resorts and beautiful nature.
Property prices are on a higher scale and you’ll be sure to find the upper-end hotels and condominiums being built here. Still, prices are lower than in Ho Chi Minh City in comparison.
The infrastructure is one of the best in Vietnam and it has a business-friendly environment. If you look for a place to enjoy your holidays or to invest for business purposes, you should not neglect this city.
If you want to check interesting properties for sale in Da Nang, you can visit this article.
Located between Ho Chi Minh City and Danang, Nha Trang is probably the most well-known tourist destination in Vietnam.
A large number of Chinese people and Russians have chosen Nha Trang as their favorite location to spend holidays.
When I visited Nha Trang some time ago, I was surprised to see signs in both Chinese and Russian, many locals, even street vendors, are capable to communicate in Russian or Chinese, when foreigners try to haggle over prices.
Property prices and living costs prices are generally cheaper in Nha Trang compared to places like Ho Chi Minh City, Hanoi, and Da Nang.
Hanoi is the capital in Vietnam, but still smaller than the biggest business hub, Ho Chi Minh City.
With a comparison to China, I’d say that Hanoi is similar to Beijing, whilst Ho Chi Minh City resembles Shanghai or Shenzhen.
As the political and cultural center, Hanoi has not attracted as many investors compared to Ho Chi Minh City. You’ll also notice that the media talk less about Hanoi, in comparison.
Even if Hanoi draws less attention and investments compared to Ho Chi Minh City, many foreign investors (including many Koreans) still pour money into the capital’s property market.
Do I need to reside in Vietnam if I buy a property there?
No, you don’t need to reside or stay in Vietnam for a long time under the new regulations. In other countries like Australia, you sometimes need to be actively living there to keep your property.
Can foreigners rent out property in Vietnam?
Under the new regulations, there are no particular restrictions for foreigners to rent out real estate in Vietnam.
But, in case you decide to rent out your property, you should first report this to the housing authority in your district.
Also bear in mind that you’ll need to pay a personal income tax (PIT) plus a value-added tax (VAT) of 10% of the total yearly rental income.
Your agent can help you to find tenants and to draft the tenant agreement. In case your tenant moves out, they’ll found you a new one.
The tenant should pay you a deposit of 1-3 months rent (generally 2 months) that you can keep in case the tenant decides to leave the property earlier than your contracted time.
Ask your agent for help to create a rental agreement.
Below I’ve included some commonly asked questions among prospective property buyers and my answers.
How can I settle in Vietnam?
Even if Vietnam doesn’t offer any investor visas or retirement visas, like Thailand and Malaysia, it’s easy to stay on a tourist visa long-term. Foreigners also have the option to apply for business visas that are valid for 3 months (12 months for Americans).
Is Vietnam a good place to retire?
Both yes and no. Sure, Vietnam has a nice climate and offers very low living costs and nice cuisine. Still, places like Thailand, Malaysia, and the Philippines are preferred options among retirees. Here, you can easily obtain retirement- and long-term visas.
Can a foreigner buy a house in Vietnam?
You can buy houses in new projects and you can lease the land for up to 50 years. There’s also a possibility to renew the lease for 50 more years.
How high are property prices in Vietnam?
In Ho Chi Minh City, District 1, 7, and 2 tends to be more pricey. However, property prices are still some of the lowest in Asia. The average price per square meter is USD 2,269 in the central areas, while property in suburban areas averages at USD 1,083 per square meter.
In Metro Star (District 9), the starting price was as little as USD 1,500 per square meter before completion. Metro Star is located in the upcoming District 9 and is close to Thao Dien, directly connected with the MRT.
If you check for property in places like Da Nang and Nha Trang, you can easily find condos starting from USD 60,000 – 80,000 per unit.
Vietnam is growing rapidly and prices are still low, with numbers that are 20-30% of property prices in bigger Chinese cities (like Beijing, Shenzhen, and Shanghai).
The Vietnamese Government has made it remarkably easier for foreigners to buy property since 2015, but you need to be careful before your purchase. Make sure to hire a lawyer and that you will receive your ownership certificate (pink book) beforehand.
Foreign investors pour money into places like Ho Chi Minh City, but other cities like Da Nang are on the rise. You should check the market carefully before making any investment decisions.
I hope this article has been useful to you and wish you good luck with your property purchase in Vietnam.