Land and Housing

Land, under Vietnamese Constitution, belong to all the people of Vietnam, are under collective ownership of the people and administered by the State. 

1. Land use right
 

Land Use Right
Land, under Vietnamese Constitution, belong to all the people of Vietnam, are under collective ownership of the people and administered by the State. The State grants land use rights (LUR) to people, evidenced by land use right certificates also known as Red Books or “Sổ đỏ” in Vietnamese, through the form of land allocation, land lease. Otherwise, individuals and organization can obtain LUR by way of purchasing from an existing land user or capital contribution by an existing land user.
 
Term of Land Use
LUR may be granted only for the specific purpose with definite term or indefinite term.
 
All land areas used by households and individuals for the residential purpose or business construction are regarded as land for stable and long-term use and subject to no given use term.
 
Meanwhile, foreign invested enterprises can lease land for the purpose of implementing investment projects in Vietnam from the State or infrastructure developers. The determination of the term will be based on the scope and duration of the project. However, it cannot exceed 50 years (and 70 years in special cases) but it may be renewed at the discretion of the State.
 
Fee and Rent

As to land lease, foreign investors may choose to pay land rental on an annual basis or a lump sum basis and in case of allocated land, the fee payable by the land user must be paid in a lump sum.
 
The land use right price can be determined on a case by case basis by or apply the land price table issued by the provincial people’s committees.
 
Transfer and Capital Contribution

FIEs and foreign nationals cannot receive assignments of land use rights from existing land users, apart from capital contributed by Vietnamese nationals or enterprises, as part of the residential housing transfer, or real estate projects transfers.
 
The users of transferred land shall bear all obligations and have all rights of the transferring users.
 
Land use rights can be used as capital to invest in business in Vietnam. An exemplary case is where a Vietnamese party to a business cooperation contract contributes her rights as capital to operate the project.
 

Management
Land in Vietnam is classified as 2 main types: land for agriculture or land for non-agriculture. However, for planning and investment purpose in accordance with master plan and plan of the State, the types of land can be alternated. The LUR certificate must be amended accordingly but before the land site can be used with the changed type.
 
For example, first land is used for rice cultivation then for the purpose of socio-economic development, it may be changed to residential land.
 

2. Housing Ownership 
Pursuant to the Law on Housing 2014 effective from July 1st, 2015, any household or individual is entitled to have residence through investment in housing construction, purchase, lease, lease purchase, receipt of gift, receipt of inheritance, receipt of capital contribution, exchange, borrowing, stay, or authorization for housing management and other transactions prescribed in regulations of law. Any organization, household, or individual having legitimate housing through the following methods is entitled to acquire ownership of houses:
 
  • Vietnamese entities who invest in housing construction, purchase, enter into lease purchase agreements, receive gifts, receive inheritance, receive capital contribution, exchange houses, or make other transactions;
  • Overseas Vietnamese who enter into agreements on commercial housing purchase, lease purchase with enterprises or cooperatives conducting real estate trading (hereinafter referred to as real estate enterprise); agreements on housing purchase, gifting, exchange, inheritance with households or individuals; agreements on residential land transfer in the project on commercial housing construction which is permitted to divide the piece of land into smaller lots/plots for sales;
  • Foreign entities who invest in project-based housing construction in Vietnam; or buy, rent and purchase, receive, inherit commercial housing including apartments and separate houses in the project for housing construction, except for areas under management relating to national defense and security.
 
Foreign entities eligible for the house ownership in Vietnam including:
  • Foreign entities who invest in project-based housing construction in Vietnam;
  • Foreign-invested enterprises, branches, representative offices of foreign enterprises, foreign-invested funds and branches of foreign banks operating in Vietnam, provided they have investment registration certificate;
  • Foreign individuals who are allowed to enter Vietnam and they is not granted diplomatic immunity and privileges.
 
Nevertheless, in the second point above, the foreign entities in the second case, must use the houses for their employees’ accommodation only.
 
Ownership Duration
Foreign organizations (including foreign invested enterprises) are only permitted to own a residential house for a period not exceeding the duration recorded in their investment registration certificate and the State may consider extending the duration.
 
The maximum duration of house ownership of foreign nationals is 50 years as from the date of ownership certificate issuance and may be extended under the consideration of the State. Otherwise, 12 months from the expiry date, such foreign nationals must sell or donate their house.
 
Foreign Owners’ Rights
Foreign owners may have the same rights as those of Vietnamese owners in general, including the rights to sell, mortgage, lease, contribute as capital, donate and bequest other than the ownership term.
 

3. Real Estate Business 
Real estate business in Vietnam means capital investment in building, purchasing, and receiving real estate for sale, for transfer, for lease, for sublease, or for lease purchase; provision of real estate brokerage services; real estate trading floor services; real estate counseling services or real estate management for profit purposes.
 
Permitted Activities of Foreign Invested Enterprises
Foreign-invested enterprises may conduct real estate trading in forms, such as rent buildings for sublease; build houses on the land which is leased by the State for lease; build houses or constructions other than houses on such land for sale, for lease, or for lease purchase; receive total or a part of real estate project from investors to build buildings on it for sale, for lease, or for lease purchase; build houses on land which is allocated by the State for sale, for lease, or for lease purchase and build buildings on land which is leased out or transferred in industrial parks, industrial complexes, export-processing zones, hi-tech zones, or economic zone for trading for the proper land use.
 
Off- the-plan Property for Sale

Residential housing can be sold during the construction and development stage, but the foundation construction of the building must be completed. Before selling, the developer must notify to provincial authority in charge of housing matters and obtain the approval from the authority. Likewise, a bank guarantee to secure its obligation under the off-the-plan trading agreement, for advance payments refund purpose.
 
Capital
Any organizations or individuals wish to conduct real estate trading shall set up enterprises and have legal capital not smaller than VND 20 billion, excluding cases which organizations, households and individuals conducting small-scale or irregular transactions of real estate sale, transfer, lease-out, and lease purchase.
 
Real Estate Trading Agreement
A real estate trading agreement must be made in writing compliance with the template issued by the Government. Parties can add other contents and provisions but no violation of regulations of law.
 

4. Construction 
Over 60 years of construction industry development, along with the development of construction projects, the construction law system has been increasingly improved and promoted the management efficiency of the State.
 
The Construction Law 2014 – prime legislation governing the construction activities, clearly stipulates the basic principles of construction investment activities to ensure standards and technical of building materials, ensure the quality, schedule, safety of works and prevent corruption, loss in construction investment activities.
 
Stages of Construction Investment
Construction investment projects shall be classified by size, characteristics and type of construction work and funding source and including three stages: project preparation, project implementation and construction completion to put the project’s work into exploitation and use, except for the construction of separate houses.

Management and Assessment
Upon construction investment, developers shall make construction investment feasibility study reports, except the cases which construction works used for religious purposes, small construction works prescribed by the Government (only construction investment economic-technical reports shall be required for these construction investment projects) and separate houses construction (project owners are not required to formulate projects nor construction investment economic-technical reports). Construction investment projects shall be assessed before investment decision. The assessment of a construction investment project covers the assessment of the basic design and other contents of the construction investment feasibility study report.
 
Regarding the management of implementation of construction investment project, based on the sizes, characteristics, funding sources and implementation conditions of projects, investment deciders shall decide to apply one of the following organizational forms of project management: specialized construction investment project management, regional construction investment project management unit, single-project construction investment project management unit or hired project management consultant.
 
Construction investment project management contents include management of the scope and plan of tasks; work volume; construction quality; implementation schedule; construction investment costs; safety in construction; environmental protection in construction; selection of contractors and construction contracts; risk management; management of the work information system and other necessary contents.
 
Construction Permit
Construction permit must be obtained, except for some specific cases, prior to works construction commencement. The application dossier includes in particular: application, land use right certificate, drawing designs showing horizontal surface, sectional section, main vertical sections and foundations of the works; diagram of the position or route of the construction works; diagram of the technical system and connecting points for power supply, water supply and rain water or sewage discharge. The competent authority to issue construction permits for projects with foreign-invested capital is the People’s Committee of the province or city where the construction project is located.
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