Better ownership rights for foreigners

The new laws may improve property ownership rights for foreigners

According to Nguyen Manh Ha, head of the Ministry of Construction’s Housing and Real Estate Market Management Department, foreign firms will have almost the same rights as domestic developers

One of the outstanding changes in the revised laws, Ha said, would permit foreign developers to lease properties and then re-lease it to end-users.

However Ha further explained that this regulation would be permitted for foreign invested companies only, not for individuals. This means that any foreigner who wants to re-lease their property must set up a legal institution.

The draft laws also expanded home-ownership rights for foreigners in Vietnam.

Individuals eligible to buy houses in Vietnam would be expanded for include all foreigners who have a longer than three month visa.

In the current regulations, foreigners are allowed to buy one apartment only in a residential project with a lifespan of 50 years.

This permission would be expanded to include houses, but there is only a potential extension of an additional 50 years to the lifespan of the ownership. Foreigners are also given the same rights as Vietnamese in terms of mortgages, inheritance, transfer or granting of their properties. In the current regulation, foreigners are currently only allowed to own one piece of property, but this limit was so far unmentioned in the revised laws, which Ha took to mean that foreigners could be permitted to buy more than one property in Vietnam.

However, it remains to be seen if this will prove enough to tempt foreigners to buy property. Talking with VIR, Hong Sun, genneral secretary of the Korean Chamber of Commerce and Industry in Vietnam said that apart from ownership rights, there were many things that people consider before buying a house.

Sun said that real estate prices were unreasonable when compared to the scale of Vietnam’s economy.

“Vietnam’s land procedures are too complicated for foreigners. Vietnam also doesn’t offer any incentives for foreigners to buy property,” Sun said.

Moreover, except for some special cases, the majority of real estate projects in Vietnam are not attractive because of their low quality, poor management and inferior value for money compared even with some developed countries.

Meanwhile Mauro Gasparotti, executive director of Alternaty said that main reason hindering him from buying a house in Vietnam was the limited possibility of bank financing, which implied full equity commitments in the acquisition.

 “The main discouragement, I think, is not in the regulations but in the lack of liquidity for real estate investments in the country. Certainly a more transparent and easier ownership regulation would provide an incentive to foreign investors but don’t forget that the majority of the buyers are and always will be locals,” he said.

Cheong Ho Kuan, general director of Gamuda Land Vietnam said there was minimal interest in buying property in Vietnam, because many foreigners did not know what they would do with the property if they left the country.

“Current regulations are still confused and unclear, that’s why hardly any foreigners are interested in buying property in Vietnam, except for those who are married to a Vietnamese,” Kuan told VIR.

Kuan agreed that if the revised Housing Law and Law on Real Estate Business are passed later this year, the number of foreigners buying houses in Vietnam would increase, but it would have minimal impact on the market.