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Vietnam needs to simplify property laws for foreigners

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Foreigners receive consultation on buying a house in Vietnam. VIET NAM NEWS/baoxaydung.com.vn

Vietnam needs to simplify property laws for foreigners

VIETNAM NEWS/ANN: VIETNAM’s real-estate market must solve many difficulties to increase the number of foreigners buying property, experts said.

“To promote foreigners’ trading of real-estate products on the local market, Vietnam should increase the portion of property products available for foreigners in each project,” CBRE Vietnam’s Hanoi branch director Nguyen Hoai said.

“It is necessary to complete legal documents, circulars, procedures and support for foreigners in buying property products in Vietnam,” she said.

“The nation needs to complete the process of issuing pink books and certificates of ownership for property belonging to foreigners.

“Meanwhile, banks need to increase support for foreigners in property transactions,” she said.

Existing projects that want to attract more foreign customers should develop professional customer care processes for foreigners, she said.

Foreign buyers have often faced barriers to buying real estate in Vietnam, including the limitation of the law on the foreign ownership portion of each property project, An said.

“For apartment projects, foreigners can only own up to 30 per cent of the apartment volume, while for townhouse projects the portion is not to exceed 10 per cent or 250 units,” An said.

According to Nguyen Manh Ha, former head of the construction ministry’s Housing and Market Management Department and deputy chairman of the Vietnam Real Estate Association, Vietnam has many laws, decrees and circulars related to property trading. Foreign buyers often do not know all of the country’s laws.

The state should have a handbook for buyers to provide guidance on all steps and the state agencies implementing those steps, Ha said. That would make it easier for foreign buyers to navigate the property purchasing process.
“Vietnam has a legal framework allowing foreigners to buy and own property in the country,” An said.

“However, the process has obstacles in the form of the language and laws for implementing legal documents.

“In addition, foreign buyers have also had trouble getting support with money transfers from banks.

“Most projects of local investors have not had customer support teams to help foreign buyers during property transactions, making it hard for foreigners to buy from those projects.

“Moreover, many foreign customers receiving houses or apartments have had problems getting certificates of ownership.”

JLL Vietnam country head Stephen Wyatt agreed and added that some projects in Ho Chi Minh City reported foreign buyers were interested in their projects but there were no available units for foreign buyers due to the legal limits.

“The number of foreign buyers has totalled thousands of units, versus a few hundred recorded before the new law was introduced,” Wyatt said.

“However, the issuance of pink books continued to be a challenge for foreign buyers.”

Since the law that allows foreigners to purchase property in Vietnam came into effect in 2015, the number of enquiries and transactions from foreign buyers increased significantly, Wyatt said.

JLL recently carried out an international marketing campaign for residential projects in Vietnam and received a considerable amount of interest and feedback from foreign investors from Singapore, Hong Kong, mainland China, South Korea and Japan, Wyatt said.

“Vietnam has many opportunities for real-estate market development,” he said. “Some positive changes have taken place to the legal structure surrounding residential transaction activity, which will lure more foreign developers and investors into the local market, and to Vietnam’s law allowing foreign buyers to purchase and own residential property.”

The rights of foreigners over the property are the same as the rights of the locals – the property can be leased out, sold, inherited and used as collateral. In addition, tenure shall be for 50 years and can be renewed for another 50 years.

A safe and stable political situation and economic growth rate are also advantages for the market. Therefore, foreign real-estate investors should be aware of Vietnam as a new market for investment, he said.

Foreign direct investment (FDI) is increasing, contributing to surge in number of foreigners living and working in Vietnam. Attention to investment in property from foreign buyers will continue to increase, according to An.

On the market, the supply and quality of products are continuing to increase, bringing more options for buyers, including those buying for investment purposes.

In the near future, foreign buyers will continue to play a role in the market because they are able to buy property at a lower price than in their home countries.

According to CBRE, at projects that were offered by CBRE on the market, the number of foreign buyers in the 2017-18 period more than doubled in comparison with the number of transactions in the 2016-17 period. Many of the projects had sold their full quota of units for foreigners during their first market offering.

The Virtnamese Housing and Market Management Department reported that as of last year there were 800 foreigners with certificates of ownership for properties in Vietnam.

Meanwhile, there are 400,000 foreigners living and working in Vietnam. This number will increase in the future as Vietnam integrates further in the global economy, meaning foreigners’ demand for Vietnamese property will continue to rise.

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