Buying Property in Vietnam: The Ultimate Guide

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Vietnam opened up to foreign investors as late as 2015. Since then, the country has welcomed everything from corporations, expats, tourists, and property buyers, waiting to grab a piece of this exploding market.

Personally, 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, at the same time, you can pay as little as USD 1,500 per square meter for new condos in upcoming areas around Ho Chi Minh City.

Still, before you buy, it’s important that you get your feet wet and learn how it works practically when buying real estate as a foreigner in Vietnam.

In this article I share a lot of valuable information covering 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. We can mainly blame unfavourable and strict foreign ownership regulations.

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 currently don’t have any restrictions on the amount of properties they can buy.

Previously, the cap was set to maximum one unit in a condominium. Thus, 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:

  • Foreigners can buy properties by simply possessing a tourist visa
  • There’s no cap to the amount 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 a landed project
  • Foreigners can now 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
  • If you have a Vietnamese spouse, you can get a freehold tenure

buy-property-vietnam

Can foreigners buy land in Vietnam?

Foreigners cannot buy and own land, like in many other Southeast Asian countries. Instead, 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 to extend the leasehold period from 50 years to 99 years, which is positive of course.

Even if the regulations are getting less strict, and will probably loosen up over the years, you need to be careful. There’s no guarantee that you’ll be able to renew your leasehold period for example.

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 rights 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?

You can only buy property directly from developers on the primary market. It should also be a commercial project, a definition that many new condominium projects fall under.

If you buy real estate in Vietnam, it will most likely be one or more units in a condominium, which has a strata-title.

There are restrictions on the secondary market as you can’t buy property from local citizens, but only from foreign individuals or entities.

Therefore, buying new or off-plan properties with the help of an agent is the most common option.

vung-tau

Vietnam ownership certificates of property

When you purchase a property from a developer, it’s important that you receive an ownership certificate. In 2017, foreigners had issues getting their property ownership certificates, this understandably 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.

I cannot stress the importance that you make sure that your prospective property can be owned by you as a foreigner, and confirm, prior to 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 property.

The book shows your ownership and rights of your property. It will give you right to lease your property and declare information regarding inheritance, for example.

Shortly speaking, pink books are used for the title to verify the ownership of properties.

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 that normally invest in properties like condos, which are less regulated.

Do I need to receive the pink book when buying property in Vietnam?

Shortly speaking, the pink book is used for the title to ownership of property. Even if an 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.

Remember:
  • The pink book is considerably 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 decide to invest in Vietnam, you need to understand the buying process. You don’t want any surprises or unknown fees to come up later in the process.

Below, I have made a list of important items you need to consider during the buying process.

1. Paying for a property in Vietnam

vietnamese-dong

This is the initial step of the process, and an important one. Do you plan to pay with cash assets, housing loan or a combination of both?

In Vietnam, it was previously common that locals paid with real gold, due to the volatility in VND (Vietnamese Dong). This is not the case anymore though.

Nowadays, transactions are normally made in VND (USD can’t be used when buying property in Vietnam).

2. Why do you plan to buy?

You also need to 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 beach side 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.

Buying one or several properties

If you seek high price appreciations and rental yields, you might be better off buying a multiple amount of units, especially in places like Ho Chi Minh City.

If you buy a multiple amount of units you can also diversify your risk.

But don’t forget that there will be more work with several units and you might need a company to manage them for you. The legal work and risk can be bigger, from other perspectives, too.

Search on the internet to see what options you have when it comes to the management of your property. If you buy a unit (or more) in a condo, the staff there might be able to help you.

3. Hiring a Solicitor in Vietnam

vietnam-solicitor

I highly recommend you to hire a Solicitor (lawyer). At least for bigger transactions and when buying landed property. The Vietnamese market recently opened to the foreign world, so there can be many roadblocks on the way.

The lawyer will help you to confirm that you’ll get the ownership certificate, help you with translation/communication and the documentation needed when purchasing your property.

What should I ask my Solicitor?

You should also ask your Solicitor questions upfront, such as:

  • Do you have any testimonials or case studies from previous foreign clients?
  • Will you help me to confirm that I’ll get my ownership certificate/pink book?
  • How much will it cost me to hire you as my lawyer
  • Are there any other fees I should be aware of?
  • How long time have you been in the business?
  • Will you handle all the communication with the authorities and the seller’s side?

Add questions to the list and check their business license.

Checking the title and other documents

Review the title and all the other documents together with your lawyer, make sure that the seller is the owner of the property.

It’s important that you make due diligence before transferring the final payment, the conditions should be clearly written in the SPA (Sales and Purchase Agreement) and in the title.

As mentioned above, make sure that you’ll be able to receive the ownership certificate after the deal is finished.

5. Pay your deposit to the developer (seller)

You usually need to pay a deposit to the seller, to trigger the purchase process and to book the property.

Consult with your lawyer or agent and see what’s needed. Preferably you should have a reservation agreement in place.

6. Confirm that the seller is trustworthy

Review the title and all the other documents together with your lawyer, make sure that the seller is the owner of the property.

It’s important that you make due diligence before transferring the final payment, the conditions should be clearly written in the SPA (Sales and Purchase Agreement) and in the title.

As mentioned above, make sure that you’ll be able to receive the ownership certificate after the deal is finished.

Transferring money to Vietnam when buying property

Before you’ll be able to pay your lawyer, your deposit and other fees, you need to figure out how you should make these payments.

In general, you have three options to make your 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 out 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.
 

Mortgages for foreigners in Vietnam

mortgage-vietnam

It’s been difficult, if not impossible, for foreigners to get mortgages 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 property taxes. Below I’ve included the taxes you need to pay when buying property.

Stamp duty

The stamp duty is 0.5% and paid by the buyer. The Stamp duty is the same as ‘registration fee’.

VAT

The VAT is 10% when you buy first hand condominiums.

Rental income tax

The rental income tax increase progressively, depending on your yearly or monthly rental incomes. Below I included a list with the different rates.

Taxed income per year (in million dong):
  • Up to VND 60 million (~ USD 2600): 5%
  • VND 60 – 120 million (~ USD 2600 – 5200): 10%
  • VND 120 – 216 million (~ USD 5200 – 9370): 15%
  • VND 216 – 384 million (~ USD 9370 – 16,600): 20%
  • VND 384 – 624 million (~ 16,600 – 27,071): 25%
  • VND 624 – 960 million (~ USD 27071 – 41,649): 30%
  • Over VND 960 million (~ USD 41,649): 35%

Capital gains tax

The capital gains tax is 2% and paid by the seller.

Land tax

Foreigners can normally not buy land, but the tax is 0.03 – 0.15%, just for your personal information. Consult with your agent or lawyer if needed, to confirm how to deal with the tax payments.

The best places 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 (Saigon)

ho-chi-minh-city-real-estate

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 makes this place one of the most interesting place to invest in the coming years.

Da Nang

da-nang

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 the 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.

Nha Trang

nha-trang-beach

Located between Ho Chi Minh City and Danang, Nha Trang is probably the most well-known tourist destination in Vietnam.

A large amounts of Chinese people and Russians have chosen Nha Trang as their favourite 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

hanoi

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 this cozy 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 over a longer time period 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.

What should I include in the rental agreement?

Be sure to include the following items in your rental agreement:

  • Your’s and the tenant’s name and residence address
  • The rent to be paid and how the tenant will pay you
  • The rental period (usually 6-36 months)
  • When the property will be available to the tenant
  • Make an inventory list (what furnitures and appliances that belong to the property)
  • What rights and responsibilities that you and the tenant have (for example, keeping down the noise level after certain times, right to use your parking space)
  • Signatures and date

FAQ

vietnam-real-estate

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.

Still, a preferred choice can be to use the unit(s) as investment vehicles to earn rental incomes. Many new projects and condotels give you the opportunity to stay in your units, or other units, for a couple of weeks every year.

Is Vietnam a good place to retire?

Both yes and no. Sure, Vietnam has a nice climate and offers very low living costs and a nice cuisine.

Still, places like Thailand, Malaysia, or the Philippines, are preferred among retirees as you can easily obtain retirement- and long-term visas.

Can a foreigner buy a house in Vietnam?

You can buy houses in new projects or from foreign sellers. But keep in mind that you need to lease the land for up to 50 years, as foreigners can’t own land in Vietnam.

How high are property prices in Vietnam?

Prices differ a bit where district 1, 7, and 2 tends to be more pricey. But don’t let this scare you. Vietnam property prices are some of the cheapest in Asia.

On average, prices are USD 2269 per square meter in the central areas, while property in suburban areas averages at USD 1083 per square meter.

In projects like Metro Star (district 9) the starting price was as little as USD 1500 per square meter prior to completion. Metro Star is located in the upcoming district 9 and is close to Thao Dien, directly connected with the MRT.

Conclusion

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 prior to 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 decision.

I hope this article has been useful to you and wish you good luck with your property purchase in Vietnam.

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One Response to “Buying Property in Vietnam: The Ultimate Guide”

  1. l leung February 15, 2019 at 7:53 am #

    thx

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