Currently, Vietnam is a developing country and attracts many foreign investors as well as foreign labors into Vietnam. This makes the demand for the residence of Foreigners and the demand for owning houses and apartments in Vietnam also become more active.
Under the provisions of Clause 2, Article 14 of the Law on Real Estate Business 2014, Foreigners are permitted to lease all real estate types of real estate for use; to purchase, rent, or lease-purchase houses in accordance with the law on residential housing. However, Vietnamese law creates conditions for Foreigners with the right to buy, rent, or lease-purchase houses but does not mean that Foreigners can buy houses and apartments in large quantities for storage and buy it, resell.
Under the provisions of Clauses 2 and 3, Article 76 of Decree 99/2015/ND-CP guiding the law on residential housing, foreign organizations and individuals is only permitted to purchase or hire purchase a residential house from the investor [developer] of a project for the construction of residential housing, or to purchase a residential house from a foreign organization or individual that own houses in Vietnam. Moreover, Moreover, Foreigners are only permitted to own no more than thirty (30) percent of the total number of apartments in any one apartment building; if anyone geographical area with a population equivalent to one administrative ward level has multiple apartment buildings for sale or hire purchase, then Foreigners are permitted to own no more than thirty (30) percent of the number of apartments in each apartment building and no more than thirty (30) percent of the total number of apartments in all such apartment buildings.
This is also a barrier for Foreigners to limit the ownership of an apartment in Vietnam and restrict foreigners’ behavior of collecting and buying apartments in Vietnam.
Therefore, when buying an apartment, foreigners should pay attention to the above issues.
In addition, the issue of buying apartments to be formed in the future is also a form chosen by many Vietnamese as well as Foreigners to save costs.
According to the provisions of Clause 4, Article 3 of the Law on Real Estate Business 2014, defines House or building to be formed in the future means a house or building which is currently in the course of construction and has not been tested and accepted for commissioning. Therefore, when a foreign individual buys a house / apartment to be formed in the future, it means that the house / apartment will not be used and live when the Investor has not completed the construction and accepted for commissioning.
In the process of waiting for the Investor to complete the construction and put the house / apartment into use, Foreigners can seek buyers for this house/apartment to be formed in the future if the foreign individual does not want to own the house apartment and want to find new buyers to have a source of income and can choose a new, more convenient house/apartment.
When transferring an apartment to be formed in the future, foreigners should note:
- In accordance with Article 59 of the Law on Real Estate Business 2014, The buyer may transfer the contract for purchase and sale of a house to be formed in the future if the application for the Certificate of land, ownership of land and property on land granted to the buyer has been not sent to competent agencies. The transfer of a contract for purchase and sale of a house to be formed in the future must be made in writing, with certification by the investor on the transfer document.
- The transferee of the contract is permitted to continue performance of the rights and obligations of the purchaser or hire purchaser of the residential house to the investor. The investor is responsible to facilitate the parties in the transfer of the contract and must not collect any costs relating to the transfer of the contract.
- Currency used for this transfer transaction is VND. Because according to Article 4 of Circular 14/Vbhn-NHN on Guidance on Implementation of Regulations on Limiting the Use of Foreign Exchange in the Vietnamese, this contract transfer transaction is not subject to the use of foreign exchange. Therefore, the parties should be attentive of this so that the payment can be made without difficulty.
- The individual transferring this Contract must declare and pay personal income tax of 2% of the transfer price as prescribed in Article 17 of Circular 92/2015/TT-BTC.
In addition, a foreigner, before transferring the contract for purchase and sale of a house to be formed in the future must prepare the following documents:
- The Authorization Contract between the foreigner and another individual is notarized, legalized in case the foreigner is not present in Vietnam to sign the Transfer Agreement at the Notary Public;
- Notarized and legalized documents certifying the single status in case foreigner owning apartments is single;
- A notarized copy of the house/apartment sale and purchase agreement with the Investor;
- The notarized Copy of Passport of foreigner;
- A notarized Copy of ID card/Passport of authorized individual under authorization contract;
- Written approval of the Investor for transferring the contract for purchase and sale of a house to be formed in the future;
- Notarized copies of red invoices issued by Investor recording the amount paid of each payment by the Foreigner to the Investor.
The above are the basic contents for foreigners to have an overview for the purchase/transfer of the contract for purchase and sale of a house to be formed in the future.
If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.
This article is for general information only and is not a substitute for legal advice.