Hanoi has begun granting land use right and house ownership certificates to foreigner from May 4, a move that is intended to improve the frozen real estate market, however, businesses remain sceptical.
Representatives from real estate companies said the move was unlikely to provide a breakthrough for the property market, but it was really necessary to ease complicated procedures and expand the list of foreigners eligible to buy housing in Vietnam.
Complicated procedures
In 2008, the National Assembly issued Resolution 19 on allowing foreign individuals to buy accommodation in Vietnam in a 5-year trial period.
Under the resolution, foreigners who directly invest in the country or were employed by Vietnamese firms as managers were allowed to buy apartments.
Other foreigners who have at least a university degree or skills on a tightly restricted list of occupations, people married to a Vietnamese citizen or those are granted medals or certificates of merit from the President or Prime Minister could also qualify. Moreover, foreigners who want to buy housing in Vietnam also needed to be granted a residency permit.
Foreigners were also restricted to only buying an apartment and were further banned from either leasing or trading the property. In addition the owner could only own the property for no more than 50 years. Within 12 months of the ownership certificate expiring, foreign home-owners must sell or donate their property.
Vu Cuong Quyet, General Director of the Northern Dat Xanh Joint Stock Company, said many foreign individuals and organisations wanted to buy his company’s apartments, but they faced difficulties due to the complicated procedures. The company itself also found it difficult to define who was eligible to buy an apartment.
Economist Nguyen Tri Hieu said a foreigner who bought an apartment often also wanted to give it to their children as an inherited asset, therefore the 50-year use time was unrealistic.
Truong Van Hieu, head of the National Committee for Overseas Vietnamese’s economic board, said, “A great number of Vietnamese overseas want to buy houses in Vietnam, however, complicated procedures discourage them. Most of them face difficulties in proving their overseas Vietnamese origin because they don’t possess the correct papers.”
According to statistics of the Ministry of Natural Resources and Environment, as of February 2013, only 427 foreigners had bought homes in Vietnam.
Government to loosen foreign property ownership rules
Under Hanoi’s new regulation, as of May 4, 2013, overseas Vietnamese and foreigners in Hanoi will be granted land use rights and house ownership certificates if they satisfy all conditions required for users of land or property.
Overseas Vietnamese will have to submit their papers to and receive related certificates from the local people’s committee (ward, commune or town level) where their property is located. These committees will then refer the case to the district-level Departments of Natural Resources and Environment no later than 15 business days on receipt of the papers.
Other foreigners are required to submit their files to the Land Registration Office in Hanoi at No 10 Dang Dung Street, Ba Dinh District.
Professor Dang Hung Vo, Former Deputy Minister of Natural Resources and Environment, said, “The decision is expected to increase real estate transactions once foreigners become aware that Vietnamese laws protect them. It should also mean that land use and house ownership issues should be resolved more quickly. This also will help to spur the frozen real estate market.”
This has also strong supported from economists and real estate experts. Nevertheless, the policy still includes some restrictions for foreigners’ property ownership as mentioned above.
To improve the situation, the government will propose the National Assembly some amendments to expand the list of foreigners eligible to buy houses in Vietnam.
To date, besides the grant of the land use right and house ownership certificates, foreigners still face difficulties in buying houses in Vietnam due to restrictions outlined in National Assembly Resolution No. 19.