Inconsistent rules hinder home ownership for foreigners
Inconsistent rules hinder home ownership for foreigners
Foreigners can, by law, buy a home in Vietnam, but inconsistent regulations make it hard for expatriates to realise their dream of living in or retiring to Vietnam, and discourage foreign property investors choosing the country as a venue for development.
The Law on Real Estate Business 2014 and the Law on Housing 2014 take effect from July 1, which should drive up local demand and foreign investment in the property sector.
But David Lim, head of the land working group at the Mid-term Vietnam Business Forum 2015, said the recent addition of some regulations will likely discourage investment and make it harder for anyone who is not a Vietnam national to buy property.
Lim said the Law on Housing stipulates that foreign individuals or organisations are allowed to own a collective maximum of 250 houses in a ward.
However, the fourth draft of the law suggests more limits on foreign ownership of homes, to 10 percent of total accommodation in a housing project.
“This means that foreigners are allowed to own fewer houses and is inconsistent to the Law on Housing,” Lim said.
The draft decree also stipulates that foreign people and organisations are not allowed to own house in areas where foreigners are banned from residing and travelling. This is inconsistent with the regulations in the Law on Housing: that they are only banned from owning houses in areas relegated for national defense and security.
Lim’s group proposed the Vietnam government remove recently added regulations as they prevent foreign investors from buying real estate in the country, diminishing Vietnam's competitiveness in the region.
Further, the Law on Real Estate Business says trading on houses in projects already under construction must be guaranteed by an authorised Vietnamese commercial bank before a deal can be completed.
“Such regulation is expected to protect buyers in cases where the project’s investor is compelled to halt construction due to a financial shortage," Lim said. "However, there have yet been any regulations guiding the implementation, and late issuance of relevant regulations may wipe out the investor’s right to sell houses."
Lim said foreign investors are worried about the regulation requiring them to increase their legal capital in a real estate project to VND50bn from earlier VND20bn.
“This would discourage real estate firms from investing in small-d real estate projects,” he said.
The law requires investors to contribute capital within 30 days of receiving a business registration license.
Lim said this deadline is too short for a large-scale long-term project.
He said the regulation is impractical as it may hinder investors from implementing major projects, leading to inefficient use of capital.
