New Law on Housing

New Law on Housing

The National Assembly has just adopted the Law on Housing No. 65/2014/QH13 on November 25, 2014 (“New Law”).

This Law takes effect from July 1, 2015 replacing the Law on Housing No. 56/2005/QH11, Law No. 34/2009/QH12, Law No. 38/2009/QH12 (portion relating to Law on Housing), and Resolution No. 19/2008/QH12 providing a pilot guideline for foreigners to own residential houses in Vietnam. The major amendments are discussed below.

1. The New Law creates new groups of buyers for residential houses by revising the right to own houses by overseas Vietnamese, foreign organizations and individuals

Overseas Vietnamese, who are permitted to enter Vietnam, have the right to own houses in the same way as local Vietnamese citizens without further residency requirements or any limitation on the type or quantity of houses to be owned.

The group of ‘foreign organizations’ allowed to own houses is also expanded from foreign invested companies to now include branches and representative offices of foreign enterprises, foreign investment funds and foreign bank branches.

Foreign individuals, who are permitted to enter Vietnam, will have the right to own houses without further requirements on residency, investment in Vietnam, work permit, social contribution and/or marriage to a local Vietnamese person or limitation on the type or quantity of houses that may be owned individually. The number of houses that foreign individuals and foreign individuals may own collectively, however, is limited to 30% of the total number of apartments in an apartment building or not more than 250 separate houses in an area where the population is equivalent to a “ward”.

The ownership term of foreign individuals is 50 years and may be extended, although the actual term of extension is not yet known. Foreign individuals married to either local Vietnamese or overseas Vietnamese are entitled to long-term ownership in the same manner as local Vietnamese.

2. Foreign individuals and overseas Vietnamese are permitted to exercise the rights and obligations with respect to ownership of houses in the same way as local Vietnamese, subject to the limitation discussed in Item 1 above, and with the exception that before foreign individuals may lease out their houses, they must first notify the housing administration authority of the district where the houses are located

Foreign organizations’ right with respect to their houses, however, is not changed. They can use the houses for residence purpose for their personnel, but are not allowed to use the houses for an office or other purposes, and may not lease out the houses.

3. Echoing the Land Law, the New Law confirms that organizations can mortgage their houses only at credit institutions operating in Vietnam but expands the right of individuals to mortgage their houses. Individuals may obtain a mortgage not only from a credit institution, but also from other economic organizations operating in Vietnam, and from other individuals

It is noted, however, that if the houses are ‘future properties’, the mortgage can only be made at a credit institution operating in Vietnam.

4. The New Law allows the transfer of ownership of a house for a definite term. At the end of such term, the ownership of the house will revert back to the orginial owner

5. The New Law changes, in a number of circumstances, the time when the house ownership is transferred

The New Law provides that ownership will transfer from developers to buyers at the time of house hand-over or at the time the buyer pays the purchase price in full, but is silent about who has the right to make this determination if time of hand-over is different from the time of full payment.

The New Law refers to the Law on Real Estate Business (“LREB”) to determine the time of ownership transfer in the sale of houses from other real estate business enterprise. The LREB provides that ownership is transferred when the buyer pays the purchase price in full, unless otherwise agreed by the relevant parties.

In transactions between individuals for sale, hire purchase, gifting, capital contribution or exchange of houses, the ownership transfer is no longer the time of notarization.  In house sale transactions (including, without limitation, those between individuals) other than the cases mentioned in preceding paragraph, ownership is transferred when the buyer pays the purchase price in full, unless otherwise agreed by the relevant parties. In transactions for capital contribution, gifting, exchange of houses (including, without limitation, those between individuals), ownership is transferred at the time of house hand-over.

6. The New Law has several amendments that may affect the developers of commercial houses and operations of apartment buildings. Salient amendments are discussed below

  • Circumstances in which commercial housing projects are approved seem to be more limited. If the investors have not yet acquired land use rights, they must go through auction of land use rights or tender for selection of investor. This may have significant impact on foreign investors who may not be able to obtain the land use rights before obtaining the license for the project.
  • The New Law echos the new Law on Investment which requires investors to put up escrow as security for implementation of the project where the State allocates or leases land to investors or allows the investors to change the land use purpose to match the project purpose. The New Law also echoes the new LREB in requiring the developer to provide a guarantee for housing transactions.The New Law repeats the new LREB requiring developers of commercial housing to carry out the procedures for the authority to issue ownership certificates to purchasers or hire-purchasers within 50 days from hand-over of the houses.
  • The New Law is silent about the maximum amount that developers of commercial housing may collect from buyers before hand-over and before the issuance of an ownership certificate. However, developers would need to refer to new LREB which is very thorough on this regard.
  • Instead of giving developers the option to determine whether the automobile parking spaces in an apartment building is private or common ownership, the New Law provides that automobile parking spaces in an apartment building are under private ownership of the developer but the buyer will have the right to request the developer to sell or lease automobile parking spaces to them.
  • The New Law requires that the Management Committee in an apartment building be organized and operated as a board of management in joint stock company or management committee in a cooperative. The Management Committee in an apartment building shall have juridical person status with its own seal. An apartment building must engage a qualified management company to mange and operate the building if the building has elevator(s).
  • The New Law also has a few tweaks to the requirements regarding management fees and contributions to maintenance fund in apartment building and mixed-use buildings.


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.

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