PURCHASING HOUSES FOR FOREIGN INDIVIDUALS IN VIETNAM 2025

REGULATIONS ON CONDITIONS FOR PURCHASING HOUSES AND CERTIFICATION OF LAND-ATTACHED ASSET OWNERSHIP FOR FOREIGN INDIVIDUALS IN VIETNAM

Nguyễn Thị Thanh Xuân

Ph.D., University of Economics and Law, Vietnam National University, Hồ Chí Minh City

Abstract:

Housing law stipulates that foreign individuals are allowed to own houses in Vietnam, but land law does not stipulate that they are land users. The discrepancy in laws regulating house ownership and land use rights creates legal gaps in ensuring the rights of foreigners owning houses in Vietnam; at the same time, there is a lack of regulations ensuring the economic rights of landowners. This article focuses on clarifying the regulations on determining foreign individuals owning houses, the conditions for house ownership, the recognition of house ownership rights, and the issues related to the implementation of these regulations.

Keywords: foreign individuals, individual houses, ownership rights

I. INTRODUCTION

Resolution No. 50-NQ/TW dated August 20, 2019, of the Politburo on the Orientation for Completing the Institution, Policy, Enhancing the Quality and Efficiency of Foreign Investment Cooperation until 2030 affirmed that the foreign-invested economic sector is an important part of the Vietnamese economy, encouraged and facilitated for long-term development. The state respects and protects the legitimate, legal rights and interests of investors.

Besides attracting investment, the Government has also issued regulations on attracting Vietnamese overseas and foreign experts to participate in scientific and technological activities in Vietnam (Government, 2020). With an open policy, Vietnam is currently implementing a visa exemption policy for citizens from 13 countries for three years from December 15, 2022, to March 15, 2025. From 2019 to now, about 8,813,509 foreigners have entered Vietnam, issued 165,081 temporary residence cards, and extended temporary residence for 567,075 cases. In 2022 alone, there were 3,601,809 foreign entries (Ministry of Public Security, 2023, p.3).

Although housing and real estate business laws stipulate that foreigners are allowed to own houses in Vietnam since 2014, as of March 2023, only 3,035 foreign organizations and individuals have purchased and owned houses (Ministry of Construction, 2023, p.11). With current regulations, a portion of foreigners is facing difficulties in having their house ownership rights recognized by competent state agencies and have established house use rights through sham contracts rather than actual sales as stipulated by law. This can create significant risks for these subjects in case of disputes.

II. CONCEPT OF FOREIGN INDIVIDUAL

The housing law stipulates that foreign individuals are allowed to own houses in Vietnam. The Law on Housing only stipulates the conditions for ownership without explaining what constitutes a foreign individual, instead listing the identifying criteria for ownership eligibility.

According to the current nationality law, “The State of the Socialist Republic of Vietnam recognizes Vietnamese citizens as having only one nationality, which is Vietnamese nationality, unless otherwise stipulated by this law.” Thus, compared to the 1998 regulation, the single nationality principle is now more flexible. Vietnamese citizens can acquire foreign nationality and hold multiple nationalities, including Vietnamese nationality. Similarly, foreign individuals who have acquired Vietnamese nationality but still retain their foreign nationality (Clause 3, Article 19 of the 2008 Nationality Law) are classified as foreigners or Vietnamese citizens. In dealings with competent Vietnamese authorities, both cases are recognized as Vietnamese citizens because “citizens of the Socialist Republic of Vietnam are those who hold Vietnamese nationality.”

According to the 2008 Nationality Law, “foreigners…are foreign citizens and stateless persons…”. Foreigners are understood as those holding the nationality of a country other than Vietnam or stateless persons. Therefore, individuals holding foreign nationality without Vietnamese nationality, but who once held Vietnamese nationality, are considered foreigners from a citizenship perspective.

In land use relations and regulations on house ownership, foreign nationals who no longer have Vietnamese nationality but once held Vietnamese nationality according to the principle of descent (Clause 4, Article 3 of the 2008 Nationality Law, point b, Clause 1, Article 8 of the 2023 Law on Housing) can be identified as Vietnamese residing abroad or of Vietnamese origin residing abroad (Clause 6, Article 4 of the 2024 Law on Land).

Persons of Vietnamese origin residing abroad can prove their status with a valid passport stamped with an entry stamp into Vietnam or internationally recognized travel documents stamped with an entry stamp into Vietnam. However, if they use foreigner status, they must have a valid passport stamped with an entry stamp into Vietnam or equivalent legal documents for entry into Vietnam (Decree 95/2024/ND-CP).

Thus, it can be seen that a foreign national in house ownership relations may not necessarily be a foreign individual. If they hold dual nationality, including Vietnamese nationality, and in housing transactions, they use documents proving their Vietnamese citizenship, the house ownership rights are determined according to the chosen status. Similarly, if they are of Vietnamese origin, even if holding foreign nationality, they still establish house ownership rights under this category and are not subject to regulations for foreign individuals. Furthermore, persons of Vietnamese origin are allowed to use land according to land law.

Generally, foreign individuals owning houses in Vietnam are those who, when participating in transactions to establish house ownership rights, only use documents proving their foreign citizenship with a valid foreign passport stamped with an entry stamp into Vietnam or equivalent legal documents for entry into Vietnam.

III. REGULATIONS ON CONDITIONS FOR PURCHASING HOUSES FOR FOREIGN INDIVIDUALS

Conditions for Foreign Individuals to Purchase Houses

Foreign individuals “permitted to enter Vietnam” is the condition to be eligible for house ownership. This regulation was established in the 2014 Law on Housing and is inherited by the 2023 Law on Housing. This condition must be proven by foreign individuals through a valid passport with an entry stamp from the Vietnamese immigration authority and not subject to diplomatic immunity or privileges under the Ordinance on Privileges and Immunities for Diplomatic Missions, Consular Posts, and Representative Offices of International Organizations in Vietnam (Article 3 of Decree 95/2024/ND-CP).

Regarding the Type of Houses and Areas Foreign Individuals Are Permitted to Own

The 2023 Law on Housing stipulates that foreign individuals are allowed to purchase “commercial houses from the investor of a housing construction investment project” (Point b, Clause 2, Article 17). This differs from the regulations in the implementation guidance of the 2014 Law on Housing, which states that “”oreign individuals are only allowed to own houses (including apartments and individual houses) within a commercial housing construction investment project” (Clause 1, Article 74, Decree 99/2015/ND-CP).

It is necessary to distinguish between “commercial houses” and houses within a “commercial housing construction investment project.” Commercial houses are those built for sale according to market mechanisms. In the Vietnamese real estate market, there has been a phenomenon where individuals build and sell individual houses in a turnkey manner without the intention of personal use. Houses built and sold by individuals in this way are entirely based on market mechanisms, without profit margin restrictions, thus bearing the nature of commercial houses. Similarly, there are houses within a housing construction investment project sold according to market mechanisms but not within a commercial housing construction investment project.

Both the 2014 Law on Housing (Clause 4, Article 62) and the 2023 Law on Housing (Point e, Clause 1, Article 89) stipulate that buyers of social housing, after 5 years from the time of full payment, are “allowed to resell this house according to market mechanisms.” Regardless of the regulations in the 2014 or 2023 Law on Housing, foreigners are not allowed to buy houses in the above cases because they are only allowed to buy houses in “commercial housing development projects” (Decree 99/2015/ND-CP) or from “the investor of a housing construction investment project” (Article 17, 2023 Law on Housing) and not from previous buyers.

Additionally, areas where foreigners are not permitted to purchase houses related to national security and defense have been stipulated since the first Law on Housing (2005) and are continued in the 2024 Law on Housing. The Ministry of National Defense issued Document No. 10328/BQP-TM dated October 19, 2016, and the Ministry of Public Security issued Document No. 786/BCA-TCAN dated April 19, 2017, to the People’s Committees of provinces and centrally-run cities regarding the identification of areas that need security and defense assurances, serving as a basis for localities to publish lists of projects where foreign organizations and individuals are not allowed to own houses.

The Department of Construction must publicly announce the list of housing construction investment projects in the area where foreign organizations and individuals are not allowed to own houses. In practice, informing commercial housing project investors in some localities has been carried out on a case-by-case basis and has not been publicly announced as prescribed by law. In addition, some localities have publicly announced on their electronic portals the housing projects allowed to be sold to foreigners, ensuring transparency (Ministry of Construction, 2023, p.11).

In Hồ Chí Minh City, according to statistics from the Department of Natural Resources and Environment, out of a total of 30,061 apartments eligible for issuance of certificates to home buyers, some are pending guidance from the Ministry of National Defense and the Ministry of Public Security, so the issuance of certificates has not yet been implemented (Giang, 2023).

Currently, Decree No. 95/2024/ND-CP stipulates that within a maximum of six months from August 1, 2024, the Ministry of Public Security and the Ministry of National Defense must specifically identify areas that need security and defense assurances, in line with the protection of state secrets, as a basis for provincial People’s Committees to identify projects where foreigners are permitted to own houses.

Regarding the Quantity and Duration of House Ownership for Foreign Individuals

Both the 2014 Law on Housing and the 2023 Law on Housing stipulate that foreign individuals are only allowed to own no more than 30% of the apartments in a condominium building or no more than 250 individual houses in an area with a population equivalent to a ward. The housing law does not specify the number of houses per foreign individual (Official Letter No. 5027/BXD-QLN of the Ministry of Construction dated November 8, 2022) but provides general regulations for all subjects collectively referred to as foreign individuals.

The demand for house purchases by foreigners in many condominiums in major cities exceeds the legal limit. This issue has led to real estate businesses directing foreign customers to sign and execute long-term lease contracts when the foreign ownership rate has reached the maximum of 30%.

Since rental apartments are not registered for sale to foreigners by the investor, they cannot sign a purchase contract but switch to a long-term lease contract. The rental contract value is established to be equal to the apartment’s sale price, and the lease term corresponds to the foreigner’s house ownership term, which is 50 years. In the long-term lease contract, the investor commits to support the lessee in selling the lease rights to a new buyer.

Circumventing the 30% apartment ownership limit for foreigners through long-term lease contracts poses many risks for foreign customers. The nature of the two types of contracts (sale and lease) is entirely different. The subjects of the two legal relations have significant differences, so the buyer’s rights in such sham transactions will not be guaranteed.

IV. ENSURING THE RIGHTS OF FOREIGN INDIVIDUALS TO PURCHASE HOUSES THROUGH REGULATIONS ON CERTIFICATION OF LAND USE RIGHTS AND OWNERSHIP OF LAND-ATTACHED ASSETS IN VIETNAM

Issues Regarding House Ownership for Foreign Individuals

To meet the housing needs, facilitating foreigners to settle and stay long-term in Vietnam for investment and labor, the housing policy for foreigners has significantly changed in the past 15 years. From Resolution 19/2008/QH12 piloting the purchase and ownership of apartments by foreign organizations and individuals, the 2014 Law on Housing and the 2023 Law on Housing have expanded house ownership rights for this group. However, land law does not stipulate that foreigners are land users. The differences in housing and land laws for foreign individuals create inconsistencies in legal implementation because these assets and property rights are inherently inseparable.

Firstly, the house ownership rights of foreigners are recognized through the issuance of a Land Use Rights Certificate, which includes ownership of land-attached assets.

According to the 2023 Law on Housing, individuals who meet the conditions for legal house ownership are recognized by the state through the issuance of a “Land Use Rights Certificate, ownership of houses, and other assets attached to land.” Foreign individuals who meet the conditions for house ownership are also recognized for their ownership of houses through the inclusion of these assets on the certificate according to the procedures of the land law and are only recorded for existing houses (Article 9, 2023 Law on Housing).

However, the documents on land use rights and assets issued under the 2024 Law on Land are titled “Land Use Rights Certificate, ownership of land-attached assets.” The competent authority to issue this certificate to foreign individuals is the Land Registration Office.

Secondly, foreign individuals owning houses do not have land use rights for the residential land parcel attached to the house.

Whether it is an individual house or an apartment, it is a construction work “connected and positioned with the land” (Clause 1, Article 1 of the amended 2020 Construction Law) and has either separate or undivided joint land use rights. Additionally, the principle of house sale in real estate business is “must be attached to land use rights” (Article 13 of the 2023 Law on Real Estate Business).

A commercial housing construction investment project is allowed to sell houses or apartments if it is a project using residential land in the form of land allocation with land use fee payment or receiving land use rights transfer. When selling houses or apartments, the selling price includes both the house and land use rights, as house sale must be attached to land use rights. Apartment owners have undivided joint land use rights. Currently, the proportion of land use rights is calculated by the proportion of the apartment’s area divided by the total floor area of apartments in the condominium (Clause 3, Article 49 of Decree 43/2014/ND-CP).

Individual houses are built on “separate land parcels under the land use rights of organizations or individuals” and must be built on residential land (Decree 01/2017/ND-CP). The implementing document of the 2024 Law on Land continues to stipulate that the land area for condominium construction is under the joint use rights of apartment owners. The use and disposal of this land use right are decided by those with joint rights (Article 92 of Decree 95/2024/ND-CP).

Although the housing construction investment project has a limited duration, when the investor sells houses or apartments, the land use term for buyers will be long-term stability. Based on the principle of house sale in real estate business, it can be seen that foreign individuals owning houses indirectly have rights to the land use rights attached to the house. However, these rights are not recognized as they are not land users according to land law and do not have legal capacity in land use.

Thirdly, the inconsistency between the aforementioned laws raises issues regarding the recognition of land use rights for foreigners and their financial obligations to the State when they have purchased houses in Vietnam. According to the Ministry of Construction’s report, since the implementation of the 2014 Law on Housing, there have been 2,863 foreign organizations and individuals, including 2,610 individuals, who have purchased and owned houses in Vietnam, primarily concentrated in major provinces and cities such as Hà Nội, Hồ Chí Minh City, Bình Dương, Bắc Ninh, Bà Rịa-Vũng Tàu, and Đà Nẵng (Ministry of Construction, 2023, p.11).

Article 11 of the 2023 Law on Housing only stipulates “financial obligations to the State when recognizing house ownership rights and when conducting housing transactions during the use of the house.” For individual domestic house owners, they are required to pay annual non-agricultural land use tax for residential land use rights attached to the house. It remains unclear whether foreign individuals owning houses need to fulfill this financial obligation, as this type of land is subject to non-agricultural land use tax.

The law needs specific regulations to prevent loss of land-based revenue to the state budget while ensuring the legitimate rights and interests of foreigners purchasing houses in Vietnam. These assurances contribute to effectively implementing the policy of attracting foreign experts and investors to Vietnam by the Party and the State.

Fourthly, not recognizing and recording land use rights for foreign individuals owning houses in Vietnam means that there is no compensation for land when the state recovers the property. Although houses are positioned on land, not all houses have the same owner for both the house and the land. In practice, there are cases where land users lease land to others to build houses or build houses on borrowed land. If the state recovers the land, the legally established assets belong to their creator and are entitled to compensation.

When investors sell houses or apartments, the selling price does not distinguish between domestic buyers and foreign individuals. The project’s cost includes the land price allocated into the selling price. Therefore, foreign individuals purchasing houses without land use rights, even though they pay the same as domestic buyers, face disadvantages. Not recognizing land use rights for foreign individuals owning houses requires regulations to determine who is entitled to the land use rights attached to the house, whether they are entitled to land compensation, and who fulfills the obligation of paying land use tax.

Proposals for Supplementing Regulations to Ensure House Ownership Rights for Foreign Individuals Purchasing Houses in Vietnam

Firstly, the regulation of property tax on houses owned by foreigners.

According to the regulations on issuing Land Use Rights Certificates and ownership of land-attached assets in Clause 5, Article 148 of the 2024 Law on Land, foreign individuals owning houses in Vietnam fall under the category of “house owners without land use rights.” The issue arises if foreign individuals only have house ownership rights without land use rights, then to whom the land use rights corresponding to individual houses or the shared land use rights corresponding to condominium apartments belong.

Since land belongs to public ownership and foreign individuals are not recognized as land users, it is necessary to stipulate property tax on houses owned by foreigners to ensure the economic rights of landowners and avoid budget revenue loss.

Secondly, the regulation of determining the compensation value for assets, which is the house when it is recovered, must include the land use rights value.

land area or part of the land use rights corresponding to houses and apartments has been paid for by the investor, and this cost is included in the project’s total cost, forming the selling price. Essentially, the house buyers have already borne this cost, so they should be compensated for the additional value when the state recovers the house because the essence is that the entire land area of the house is also being recovered.

V. CONCLUSION

The Party and State have policies to attract foreigners to Vietnam for investment, business production, scientific, technological activities, and usage of provided services in Vietnam. Facilitating high-skilled workers to have stable housing in Vietnam is essential. There are still legal gaps, inconsistencies between laws, and sham transactions in the current implementation of the law on apartment ownership rates, including:

(i) Inconsistencies in land rights attached to houses between land law and housing law;

(ii) Areas and types of houses that are permitted to be owned;

(iii) Long-term lease transactions replacing sale contracts.

Ensuring the rights of foreign individual house owners requires specific procedural regulations alongside substantive law provisions. The regulations on content and presentation of information on certificates in cases where Land Use Rights Certificates and ownership of land-attached assets are issued to foreign individuals also help safeguard their legitimate rights when owning houses in Vietnam.

REFERENCES

Bộ Chính trị (2019). The 2019 Resolution No. 50-NQ/TW of the Politburo on the Orientation for Completing the Institution, Policy, Enhancing the Quality and Efficiency of Foreign Investment Cooperation until 2030. Retrieved from: [Link](https://thuvienphapluat.vn/van-ban/Dau-tu/Nghi-quyet-50-NQ-TW-2019-dinh-huong-chinh-sach-nang-cao-hieu-qua-hop-tac-dau-tu-nuoc-ngoai-422030.aspx)
Bộ Công an (2023). The 2023 Report No. 456/BC-BCA dated April 1, 2023, of the Ministry of Public Security on the Summary of the Implementation of the Law on Exit, Entry of Vietnamese Citizens and the Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam.
Bộ Xây dựng (2022). The 2022 Report No. 42/BC-BXD on the Summary of the Implementation of the 2014 Law on Housing and the Orientation for Amending the Law on Housing.
Chính phủ (2020). The 2020 Decree No. 27/2020/NĐ-CP dated March 1, 2020. Retrieved from: [Link](https://thuvienphapluat.vn/van-ban/Lao-dong-Tien-luong/Nghi-dinh-27-2020-ND-CP-sua-doi-Nghi-dinh-40-2014-ND-CP-va-Nghi-dinh-87-2014-ND-CP-435899.aspx)
Giang, Đ.T. (2023, June 16). Laws Clash, Foreigners Weary of Waiting for Pink Books. Retrieved from: [Link](https://dttc.sggp.org.vn/luat-da-nhau-nguoi-nuoc-ngoai-mon-moi-cho-so-hong-post105447.html#lg=1&slide=0)
Quốc hội (2023). The 2023 Law on Housing. Retrieved from: [Link](https://thuvienphapluat.vn/van-ban/Bat-dong-san/Luat-Nha-o-27-2023-QH15-528669.aspx)
Quốc hội (2023). The 2023 Law on Real Estate Business. Retrieved from: [Link](https://thuvienphapluat.vn/van-ban/Bat-dong-san/Luat-Kinh-doanh-bat-dong-san-29-2023-QH15-530116.aspx)

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