LEGAL CONDITIONS FOR PARTICIPATION IN HOUSING TRANSACTIONS FOR FOREIGNERS AND OVERSEAS VIETNAMESE FROM PRACTICE IN HỒ CHÍ MINH CITY
Nguyễn Thị Hồng Nhung
Associate Professor, PhD. Head of the Faculty of Law, University of Economics and Law, Vietnam National University Hồ Chí Minh City
Ngô Minh Tín
Master of Laws, Faculty of Law, University of Economics and Law, Vietnam National University Hồ Chí Minh City
Abstract:
Currently, the demand for buying housing in Vietnam by foreign individuals and overseas Vietnamese is increasing, especially after the Government approved the Project “Promoting the resources of overseas Vietnamese to serve the development of the country in the new situation”. In order to clarify the conditions for participating in housing transactions for foreigners and overseas Vietnamese according to legal regulations from the practice in Hồ Chí Minh City, in this article, the authors focus on analyzing Vietnamese legal regulations on housing transactions of foreigners and overseas Vietnamese from the practice in Hồ Chí Minh City, thereby proposing some recommendations to improve the law in order to attract foreign investment, as well as ensure the housing ownership rights of Vietnamese citizens.
Keywords: housing ownership subjects, housing ownership conditions, buying housing, foreign individuals, overseas Vietnamese
I. INTRODUCTION
The demand for housing is a basic human need. In Vietnam, this right is recognized by the 2013 Constitution: “Citizens have the right to lawful housing.” However, as a fundamental human right, the need for housing is not only for Vietnamese living in Vietnam but also an urgent need for non-Vietnamese nationals when they live and work in Vietnam.
In practice, as foreign investment in Vietnam grows, the demand for buying and owning housing by foreigners also increases, serving the purpose of stabilizing their lives, as well as being a channel for legal asset accumulation in Vietnam. Allowing foreigners and overseas Vietnamese, whether they still have Vietnamese nationality or not, to buy housing in Vietnam is seen as one of the right policies and regulations to promote economic growth in line with the spirit of the Project “Promoting the resources of overseas Vietnamese to serve the development of the country in the new situation” approved by the Prime Minister.
Meeting the above basic needs and ensuring the implementation of constitutional principles and general policies of the Party and State, the 2023 Law on Housing (Article 8) of Vietnam has clearly stipulated the subjects entitled to own housing in Vietnam, including overseas Vietnamese and foreign organizations and individuals with specific conditions. However, it must be acknowledged that there are still legal issues that need to be discussed and clarified during the implementation of these legal provisions to ensure the realization of this fundamental human right.
Within the limited scope of this article, the authors focus on analyzing the current Vietnamese legal regulations related to housing transactions of foreign individuals and overseas Vietnamese from the practice in Hồ Chí Minh City, thereby proposing some recommendations to improve the relevant legal provisions to enhance foreign investment attraction, as well as ensure the housing ownership rights of Vietnamese citizens.
II. VIETNAMESE LEGAL REGULATIONS ON CONDITIONS FOR BUYING HOUSING, TRANSFERRING COMMERCIAL HOUSING PURCHASE CONTRACTS FOR FOREIGN INDIVIDUALS, OVERSEAS VIETNAMESE
To buy housing or transfer commercial housing purchase contracts in Vietnam, the law requires that the subjects must be eligible to own housing and meet the prescribed conditions to exercise this right. Specifically, as follows:
Firstly, regarding the subjects eligible to own housing in Vietnam.
As mentioned above, the 2023 Law on Housing stipulates the subjects eligible to own housing in Vietnam, including domestic organizations and individuals; overseas Vietnamese according to the provisions of the nationality law; foreign organizations and individuals as stipulated in Clause 1 Article 17 of this Law. Compared to the 2014 Law on Housing, the subjects eligible to own housing under the 2023 Law on Housing have been more specifically and appropriately stipulated in accordance with current relevant laws. However, generally speaking, the 2023 and 2014 laws share a common spirit, which is to allow foreign individuals and overseas Vietnamese to own housing in Vietnam, in line with the consistent general policy of the Party and the State.
So, who are foreign individuals and overseas Vietnamese?
Foreign individuals, as defined in Clause 5 Article 3 of the 2008 Law on Nationality and Clause 1 Article 3 of the 2014 Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam, as amended and supplemented in 2019 and 2023, are foreign citizens, persons holding documents identifying foreign nationality, and stateless persons. In other words, these are individuals without documents identifying Vietnamese nationality.
Meanwhile, overseas Vietnamese are defined in Clauses 3 and 4 Article 3 of the Law on Nationality as Vietnamese citizens and individuals of Vietnamese origin residing and living long-term abroad. Specifically, individuals of Vietnamese origin living abroad are Vietnamese who once held Vietnamese nationality, whose nationality at birth was determined by the principle of descent, and their children and grandchildren who are residing and living long-term abroad.
From these provisions, it can be understood that overseas Vietnamese include (i) individuals still holding documents identifying them as Vietnamese citizens and (ii) individuals of Vietnamese origin who once held Vietnamese nationality according to the principle of descent, but currently hold foreign nationality or are stateless (this is the case of overseas Vietnamese who no longer have Vietnamese nationality). In the case of subjects (i) participating in housing transactions, they will be treated as Vietnamese citizens and therefore will apply the same housing transaction conditions as domestic individuals. In the case of subjects (ii) participating in transactions, they must meet specific conditions that will be presented below.
Secondly, regarding the conditions for owning housing in Vietnam.
The 2023 Law on Housing recognizes that foreigners and overseas Vietnamese are eligible to own housing in Vietnam and have the right to participate in housing transactions. However, to enjoy these rights, these subjects must meet certain legal conditions as follows:
First, the condition of legal entry into Vietnam.
Foreign individuals must be permitted to enter Vietnam and not be entitled to diplomatic or consular privileges and immunities according to the law (Clause 1 Article 17, Clause 3 Article 18 of the 2023 Law on Housing).
Overseas Vietnamese must be permitted to enter Vietnam (Clause 2 Article 8 of the 2023 Law on Housing). Additionally, these subjects are allowed to own housing associated with land use rights as prescribed by the Land Law when permitted to enter Vietnam. This new provision, along with the 2024 Law on Land (Article 4), has better ensured the right to own housing associated with land use rights for overseas Vietnamese, creating conditions for them to connect more with their homeland, thereby attracting investment and developing the country. This is also a very humanitarian policy that the Party and State are aiming for as mentioned above.
Regarding documents proving eligibility to own housing in Vietnam for overseas Vietnamese who no longer hold Vietnamese nationality, Vietnamese law requires a foreign passport or documents valid for international travel according to the law on entry and exit, and documents confirming Vietnamese origin according to the nationality law.
Second, the condition of civil act capacity.
These subjects must have full civil act capacity according to the provisions of Vietnamese civil law to conduct civil transactions related to housing (Article 161 of the 2023 Law on Housing).
Third, limitations on areas where housing ownership is permitted in Vietnam.
Foreign individuals are only allowed to own housing (including condominiums and separate houses) in commercial housing construction investment projects, except for areas ensuring national defense and security as prescribed by Vietnamese law. This restriction also applies in cases where foreign individuals buy or lease-purchase housing from foreign organizations or individuals who already own housing according to general regulations. However, this regulation does not apply to overseas Vietnamese.
Fourth, limitations on the number of housing units.
Similar to the area limitations mentioned above, the limitations on the number of housing units also only apply to foreign individuals permitted to own housing in Vietnam. In other words, overseas Vietnamese enjoy rights quite similar to Vietnamese citizens living domestically if they still hold documents proving Vietnamese nationality or can present documents proving Vietnamese origin.
Accordingly, foreign individuals can only buy, lease-purchase, receive as gifts, inherit, and own no more than 30% of the total number of apartments in a condominium. If it is a separate house, including villas and adjacent houses, in an area with a population equivalent to a ward they can only buy, lease-purchase, receive as gifts, inherit, and own no more than 250 houses.
Specifically, for a condominium (including those built with mixed-use purposes), foreign organizations and individuals can own a maximum of 30% of the total number of apartments intended for living in that building. In case a condominium has multiple blocks or sections sharing a common podium, foreign organizations and individuals can only own a maximum of 30% of the total number of apartments intended for living in each block or section.
For separate houses in an area with a population equivalent to a ward, if there is only one housing construction investment project, foreign organizations and individuals can only own up to 250 houses. In case there are two or more housing construction investment projects in an area with a population equivalent to a ward, foreign organizations and individuals can own housing in all projects but not exceed 250 houses.
Fifth, regarding the duration of housing ownership in Vietnam.
The limited duration of housing ownership only applies to foreign individuals, while overseas Vietnamese, whether still holding Vietnamese nationality or not, enjoy indefinite housing ownership similar to Vietnamese citizens residing domestically.
Accordingly, foreign individuals can own housing based on agreements in transactions such as purchase contracts, lease-purchase, gifts, inheritances, but for a maximum of 50 years from the date of issuance of the Land Use Rights Certificate, ownership of housing, and other assets attached to the land and can be extended further according to the Government’s regulations if there is a need; the housing ownership duration must be clearly stated in the Certificate.
In case foreign individuals marry Vietnamese citizens or marry overseas Vietnamese, they are entitled to stable and long-term housing ownership and have the same rights as Vietnamese citizens. This regulation truly aligns with human needs in the context of globalization that Vietnam has been participating in.
III. IDENTIFYING SOME LIMITATIONS IN LAW ENFORCEMENT FROM PRACTICE IN HỒ CHÍ MINH CITY
Currently, in Hồ Chí Minh City, many housing project investors have carried out transactions with foreigners and overseas Vietnamese who no longer hold Vietnamese nationality. However, in practice, while transactions with overseas Vietnamese are conducted smoothly and conveniently as with domestic Vietnamese, there are still some issues in transactions with foreigners.
- Limitations in determining areas ensuring national defense and security
As mentioned above, foreign individuals are only allowed to own housing in commercial housing construction investment projects, except for areas ensuring national defense and security according to Vietnamese law. This regulation does not apply to overseas Vietnamese.
On March 28, 2018, Mrs. W, holding a Chinese passport, signed a purchase contract for an apartment in a project located in District 2, Hồ Chí Minh City. However, to date, although the apartment has been fully handed over, Mrs. W has not yet been granted a Certificate because at the time of signing and up to now, this project has not been determined by the competent authority to be in an area ensuring national defense and security. This issue is not only present in the project Mrs. W purchased but also in many other projects because Hồ Chí Minh City has not yet issued a list of commercial housing projects that foreigners are allowed to own.
According to the regulations, transactions to purchase housing in housing construction investment projects where foreigners are not allowed to own housing have no legal value and are not granted Certificates by the competent authority. In this case, the housing seller must compensate the housing buyer.
However, in this situation, Mrs. W is still eligible to buy the apartment according to the regulations. The reason she has not been granted a Certificate is that the competent authority has not determined whether the project is in an area where foreigners are allowed to own housing, rather than identifying it as the fault of the investor requiring compensation. As such, Mrs. W’s housing ownership rights are still “pending” as the issue has not been resolved.
Given this reality, to address the issue, Decree 95/2024/NĐ-CP detailing some articles of the 2023 Law on Housing has clearly defined the areas that need to ensure national defense and security according to Clause 1 Article 16 of the 2023 Law on Housing, and clearly specified the responsibilities of the Ministry of National Defense and the Ministry of Public Security in identifying areas that need to ensure national defense and security as a basis for the provincial People’s Committee to determine the list of housing construction investment projects that foreign organizations and individuals are allowed to own with specific timeframes.
However, for this regulation to be truly effective, additional specific requirements are needed, which we will present in the recommendations section.
- Limitations on the purpose of buying and reselling housing
According to Articles 20 and 21 of the 2023 Law on Housing, foreign individuals who meet the conditions for owning housing in Vietnam and are permitted to enter Vietnam have the rights to sell, transfer purchase contracts, lease, lease-purchase, gift, exchange, inherit, mortgage, contribute capital, lend, allow others to stay, and authorize the management of housing.
Decree 99/2015/NĐ-CP guiding the 2014 Law on Housing strictly prohibits foreigners from buying housing to resell for business purposes to make a profit, but it does not provide specific guidance. Currently, this regulation is no longer mentioned in Decree 95/2024/NĐ-CP guiding the 2023 Law on Housing.
According to Clause 21 Article 4 of the 2020 Law on Enterprises, business activities are the continuous performance of one or several stages of the process from investment, production to consumption of products or the provision of services in the market for profit-making purposes.
Thus, here the purpose of business is the profit-making purpose of an enterprise as an organization. Additionally, profit-making purposes are also carried out through commercial activities found in the 2005 Law on Commerce: “Commercial activities are activities for profit purposes, including the purchase and sale of goods, provision of services, investment, trade promotion, and other profit-making activities”. Accordingly, the subject performing commercial activities is a trader, including an economic organization legally established and an individual engaged in independent, regular commercial activities with business registration.
Therefore, regarding foreign individuals buying housing to live in or reselling for business purposes, it is difficult to control if they do not establish an enterprise or do not register for business. Especially with the regulation allowing foreign individuals to purchase up to 30% of housing units in a project area, the possibility of a foreign individual owning many houses not for living purposes but for resale to seek profit is entirely possible, but it remains beyond the control of housing laws.
This leads to the situation in Hồ Chí Minh City where, based on the rights of foreigners eligible to own housing in Vietnam, investors and notary offices easily accept notarizing the sale of housing or the transfer of apartment purchase contracts from foreigners to foreigners or to Vietnamese citizens, as exemplified by the transfer document of the apartment purchase contract in a housing project in Thủ Đức City, Hồ Chí Minh City, carried out between Mr. Y, Chinese nationality, and Mr. C, Swiss nationality, and certified by BT Notary Office on May 7, 2024.
With abundant financial and capital resources of foreign individuals, a single individual can own many housing units in a project (even within the maximum limit of 30%), to later sell or transfer them for higher profit. This can contribute to driving up housing prices, disadvantaging the implementation of housing policies for Vietnamese people, and hindering the constitutional rights of Vietnamese citizens in seeking affordable housing.
IV. CONCLUSION AND RECOMMENDATIONS
Through the analysis of Vietnamese legal regulations on conditions for participating in housing transactions for foreigners and overseas Vietnamese from practice in Hồ Chí Minh City, it can be seen that the demand for buying housing among this group in Vietnam, in general, and Hồ Chí Minh City, in particular, is very high with significant potential for further development.
However, to facilitate and remove difficulties for both investors and buyers, thereby increasing the attraction of foreign investment, as well as ensuring the housing ownership rights of Vietnamese citizens, Vietnamese law needs to clarify several issues regarding areas ensuring national defense and security, and the maximum number of housing units a foreign individual can own. Therefore, the authors propose several recommendations as follows:
Firstly, regarding the determination of housing construction investment projects that fall within the areas ensuring national defense and security as prescribed by Vietnamese law.
It is proposed to add more specific sanctions in Decree 95/2024/NĐ-CP guiding the 2023 Law on Housing for competent authorities in the delay of determining areas ensuring national defense and security, in order to increase deterrence and bind the responsibility of functional agencies in implementing legal provisions. These could be civil sanctions (compensating investors or buyers), administrative sanctions, or disciplinary sanctions for competent agencies and individuals.
Additionally, it is necessary to include in the standard housing purchase contract content about whether the project is within the list of housing construction investment projects that foreign organizations and individuals are allowed to own, so that buyers can easily access information, thereby limiting risks for this group, aiming to attract foreign investment into Vietnam’s real estate sector in particular and other industries in general when foreign individuals living and working in Vietnam are ensured housing ownership rights. This addition is necessary because foreign individuals have certain difficulties in accessing information and Vietnamese laws.
Secondly, regulations on profit-making purposes regarding the resale of purchased housing.
It is proposed to add to Decree 95/2024/NĐ-CP guiding the 2023 Law on Housing a maximum housing limit for a foreign individual in Vietnam. The current law only stipulates a maximum of 30% of the total number of foreign individuals in general, which may lead to a foreign individual buying too many houses for resale purposes, affecting the overall housing market and the right of Vietnamese citizens to access housing at reasonable prices.
REFERENCES
- The Civil Code No. 91/2015/QH13 was passed by the National Assembly of the Socialist Republic of Vietnam, XIII Legislature, 10th Session on November 24, 2015.
- The file of the apartment purchase contract transfer carried out between Mr. Y, Chinese nationality, and Mr. C, Swiss nationality.
- The apartment purchase contract signed between Real Estate Corporation A and Mrs. W, Chinese nationality.
- The Law on Enterprises No. 59/2020/QH14 was passed by the National Assembly of the Socialist Republic of Vietnam, XIV Legislature, 9th Session on June 17, 2020.
- The 2023 Law on Real Estate Business No. 29/2023/QH15 was passed by the National Assembly of the Socialist Republic of Vietnam, XV Legislature, 6th Session on November 28, 2023.
- The Law on Real Estate Business No. 66/2014/QH13 was passed by the National Assembly of the Socialist Republic of Vietnam, XIII Legislature, 8th Session on November 25, 2014.
- The 2023 Law on Housing No. 27/2023/QH15 was passed by the National Assembly of the Socialist Republic of Vietnam, XV Legislature, 6th Session on November 27, 2023.
- The Law on Housing No. 65/2014/QH13 was passed by the National Assembly of the Socialist Republic of Vietnam, XIII Legislature, 8th Session on November 25, 2014.
- The Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam No. 47/2014/QH13 was passed by the National Assembly of the Socialist Republic of Vietnam, XIII Legislature, 7th Session on June 16, 2014.
- The Law on Vietnamese Nationality No. 24/2008/QH12 was passed by the National Assembly of the Socialist Republic of Vietnam, XII Legislature, 4th Session on November 13, 2008.
- The Law amending and supplementing several articles of the Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam No. 51/2019/QH14 was passed by the National Assembly of the Socialist Republic of Vietnam, XIV Legislature, 8th Session on November 25, 2019.
- The Law on Commerce No. 36/2005/QH11 was passed by the National Assembly of the Socialist Republic of Vietnam, XI Legislature, 7th Session on June 14, 2005.
- Decree 30/2021/NĐ-CP dated March 26, 2021, of the Government amending and supplementing several articles of Decree 99/2015/NĐ-CP.
- Decree 95/2024/NĐ-CP dated July 24, 2024, of the Prime Minister detailing several articles of the Law on Housing.
- Decree 99/2015/NĐ-CP dated October 20, 2015, of the Government detailing and guiding the implementation of several articles of the Law on Housing.
- Circular 19/2016/TT-BXD dated June 30, 2016, of the Ministry of Construction, guiding the implementation of several contents of the Law on Housing and Decree No. 99/2015/NĐ-CP.
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