By Lawyer Le Phuong Thanh – UniLaw LLC

Property Purchase Policies for Foreigners in Vietnam – Unilaw

Investing in the Vietnamese real estate market has become a significant interest for international investors. However, the legal landscape is intricate and requires the guidance of an experienced vietnam corporate lawyer to navigate the “bottlenecks” of ownership, quotas, and administrative compliance. At Unilaw, we prioritize the protection of our clients’ interests through rigorous legal analysis and strategic representation. To illustrate the complexities of real estate transactions in Vietnam, we begin with a significant case handled by our firm involving a foreign investor and a major developer.

The Case of a Failed Title Issuance: Ms. Qin and the Ascent Lakeside Project

A recent matter handled by Unilaw involved a client, referred to as Ms. Qin, a foreign investor represented by Guozun Cathay Associates. Ms. Qin had purchased residential units at the Ascent Lakeside project in Ho Chi Minh City from the developer, Tien Phat Sanyo Homes (TPSH). The client had fulfilled her payment obligations according to the Sales and Purchase Agreement (SPA). However, a significant legal dispute arose when the developer remained unable to facilitate the issuance of the Certificate of Land Use Rights, House Ownership, and Other Assets Attached to Land (commonly known as the “Pink Book”) for her specific units.

The core of the issue was that the project, while initially opened for sale to foreigners, encountered administrative hurdles that blocked the final certification of ownership for foreign buyers in that particular location. Ms. Qin sought to recover her investment. Unilaw, acting as the legal representative, engaged in extensive negotiations with TPSH. We analyzed the breach of contract regarding the developer’s failure to hand over a legally “clean” title. The outcome was successful: Unilaw facilitated a settlement agreement and a “Minute of Refund and Termination of Obligations.” The developer agreed to refund a total sum of 3,447,522,349 VND to Ms. Qin, effectively terminating all contractual obligations and returning the client’s capital due to the legal impossibility of issuing the ownership certificate. This case highlights that even with a signed SPA, the finalization of ownership for foreigners in Vietnam is never guaranteed without continuous legal monitoring.

Entities Eligible to Own Housing in Vietnam

Under the current legal framework, not all foreign individuals or organizations have the same rights. The Law on Real Estate Business 2023 and the Housing Law 2023 categorize eligible entities specifically. A vietnam corporate lawyer must first verify the status of the purchaser to ensure they fall within the legally recognized categories.

According to Article 15 of the Law on Real Estate Business 2023:

“Article 15. Objects entitled to purchase, rent, or lease-purchase existing houses and construction works of real estate enterprises:

1. Domestic organizations and individuals, Vietnamese people residing abroad who are Vietnamese citizens, and foreign-invested economic organizations as prescribed in Clause 5, Article 10 of this Law are entitled to purchase, rent, and lease-purchase houses, construction works, and floor areas in construction works for use or business.

2. Foreign organizations, foreign individuals, and Vietnamese people residing abroad who are not Vietnamese citizens are entitled to purchase and lease-purchase houses in accordance with the law on housing. Vietnamese people residing abroad who are not Vietnamese citizens are entitled to purchase, rent, and lease-purchase construction works and floor areas in construction works for use according to the proper utility of the construction work.”

This article clarifies that while domestic citizens have broad rights, foreign individuals and organizations are strictly governed by the “law on housing.” This means a foreigner cannot simply buy any property on the market; they are limited to specific types of residential housing within approved projects.

To further detail the evidentiary requirements for these entities, Decree 95/2024/ND-CP, which guides the Housing Law, specifies the necessary documentation in Article 3:

“Article 3. Documents proving the object and conditions for owning houses in Vietnam:

2. Documents proving the object is an individual entitled to own a house in Vietnam are prescribed as follows:

a) For individuals who are Vietnamese citizens, they must have an identity card or passport or other documents valid for proving Vietnamese nationality;

b) For people of Vietnamese origin residing abroad, they must have a foreign passport or papers valid for international travel in accordance with the law on entry and exit and papers confirming they are of Vietnamese origin in accordance with the law on nationality;

c) For foreign individuals, they must have a foreign passport and a written commitment that they do not belong to the category of being entitled to diplomatic or consular incentives and immunities.”

For a foreign individual, the simple possession of a passport is not enough; they must also formally declare that they do not hold diplomatic immunity, as diplomats are governed by different international treaties and are generally restricted from private real estate ownership in the host country. This is a foundational step that a vietnam corporate lawyer will facilitate during the due diligence phase.

Restricted Areas and National Security Concerns

Vietnam maintains strict control over land that is considered vital for national defense and security. Foreigners are prohibited from owning property in these designated zones. Identifying these areas is a critical task for any vietnam corporate lawyer before advising a client to sign a deposit agreement.

Article 4 of Decree 95/2024/ND-CP details these requirements:

“Article 4. Requirements for areas needing to ensure national defense and security:

1. Areas needing to ensure national defense and security as prescribed in Clause 1, Article 16 of the Housing Law include:

a) Areas adjacent to key areas needing to ensure national defense and security;

b) Areas adjacent to barracks, headquarters of the armed forces, and areas located within the planning of national defense and security land;

c) Areas adjacent to the headquarters and working houses of state administrative agencies and Party agencies from the provincial level or higher;

d) Areas belonging to communes, wards, and towns in land border, sea border, and island areas in accordance with the law on national defense and security;

dd) Areas of the protection corridor for important works related to national security;

e) Areas where foreigners are not allowed to temporarily reside in accordance with the law on entry, exit, transit, and residence of foreigners in Vietnam.”

Essentially, if a project is located near a military base, a government headquarters, or in a border commune, it is highly likely that the Ministry of National Defense and the Ministry of Public Security will bar foreign ownership. Provincial governments are required to publish lists of “eligible projects” where foreigners can buy, but these lists are often updated, and a vietnam corporate lawyer must verify the latest status with the Department of Construction.

The Ownership Quotas: The 30% Rule

One of the most significant limitations for foreign investors is the quota system. Vietnam limits the total number of units that can be owned by foreigners in any single development. This is often referred to as the “Foreign Quota.”

Article 5 of Decree 95/2024/ND-CP stipulates:

“Article 5. Criteria for converting population equivalent to a ward and the number of houses that foreign organizations and individuals are entitled to own:

2. The number of houses in a housing construction investment project that foreign organizations and individuals are entitled to own is determined as follows:

a) For an apartment building (including apartment buildings built for mixed-use purposes), foreign organizations and individuals are entitled to own a maximum of 30% of the total number of apartments intended for residential purposes of that building. If an apartment building has multiple units or multiple blocks sharing the same base block, foreign organizations and individuals are entitled to own a maximum of 30% of the total number of apartments intended for residential purposes of each unit or each block.”,

In practice, this creates what our lawyers call the “SPA Bottleneck.” As seen in the matter of Ms. Zhu (Source), a foreign investor may have the funds, but if the 30% quota for a project has already been reached, the developer cannot legally sign a Sales and Purchase Agreement (SPA) with another foreigner. Investors are then forced to look for “secondary market” units—units already owned by a foreigner that are being resold—which often command a premium price.

Types of Real Estate Business Activities Allowed for Foreigners

Foreign-invested enterprises (FIEs) and individuals have restricted scopes of business compared to domestic entities. This is governed by Article 10 of the Law on Real Estate Business 2023. Understanding these limits is essential for a vietnam corporate lawyer when structuring a project.

“Article 10. Forms and scope of business of houses, construction works, and land use rights with technical infrastructure in real estate projects, transfer of real estate projects of domestic organizations and individuals, Vietnamese people residing abroad, and foreign-invested economic organizations:

3. Vietnamese people residing abroad who are not Vietnamese citizens allowed to enter Vietnam are entitled to engage in real estate business in the following forms:

a) Investing in the construction of houses and construction works attached to land use rights for sale, lease, or lease-purchase through real estate projects implemented in accordance with the proper form, purpose, and term of land use as prescribed by the law on land;

b) Investing in the construction of technical infrastructure in real estate projects for transfer, lease, or sub-lease of land use rights with technical infrastructure implemented in accordance with the proper form, purpose, and term of land use as prescribed by the law on land;

c) Forms of real estate business prescribed in points d and g, Clause 1 of this Article.”

This means that while a foreigner can invest in building a project for sale, they cannot simply buy land and wait for it to appreciate (land speculation) or buy existing houses to “flip” them like a domestic trader. They must typically operate through a structured investment project approved by the state. This distinction ensures that foreign capital is directed towards development and value-add activities rather than mere speculation.

Rights of Foreigners Over Land Use

A common point of confusion is the difference between owning a house and owning land. In Vietnam, land belongs to the entire people, represented by the state. Individuals and organizations only hold “Land Use Rights” (LUR). For foreigners, these rights are even more specific.

Article 28 of the Land Law 2024 (amending previous versions) lists the recipients of land use rights. Clause 185 clarifies the position of foreign entities:

“Article 28. Land use right recipients:

c) Foreign-invested economic organizations, people of Vietnamese origin residing abroad who are allowed to enter Vietnam are entitled to receive the transfer of land use rights in industrial parks, industrial clusters, and high-tech zones;

d) Foreign-invested economic organizations are entitled to receive the transfer of investment capital which is the value of land use rights according to the Government’s regulations;

dh) Economic organizations, foreign-invested economic organizations receive capital contributions in the form of land use rights;

i) …foreign-invested economic organizations are allocated land by the State to implement housing construction investment projects for sale or for sale in combination with lease.”

For an individual foreign buyer, the land use right is typically “shared” with other owners in an apartment block and is limited to the duration of the house ownership term (usually 50 years, extendable). Domestic citizens, conversely, enjoy “stable and long-term” use for residential land. A vietnam corporate lawyer will ensure that the contract clearly states the term of the land use right to avoid future surprises during the “Pink Book” application process.

Administrative Procedures for Ownership Certificates

The developer is legally responsible for obtaining the Pink Book for the buyer. This is often where delays occur, as seen in the Ascent Lakeside case. The Law on Real Estate Business 2023 places heavy obligations on the developer.

According to Article 17 of the Law on Real Estate Business 2023:

“Article 17. Responsibilities of real estate project investors:

3. Within 50 days from the date of handing over the house to the purchaser or from the time the house lease-purchaser has paid enough money as agreed, the investor must submit a dossier to the competent state agency to request the issuance of a certificate of land use rights, ownership of houses, and other assets attached to land in accordance with the law on land for the purchaser or lease-purchaser, except where the purchaser or lease-purchaser voluntarily performs the procedure for issuance of the certificate.”

If the developer fails this 50-day window, they are in violation of the law. A vietnam corporate lawyer can assist buyers in issuing formal notices to the developer or filing complaints with the Department of Natural Resources and Environment (DONRE) to expedite the process. Furthermore, Article 13 emphasizes the principle of the “Linkage” between the house and the land:

“Article 13. Principles of business of existing houses and construction works:

1. The purchase and sale of houses, construction works, and floor areas in construction works must be attached to land use rights, except where the Land Law and Housing Law provide otherwise.”

This “attachment” principle means that a foreigner cannot own the building structure without having the corresponding (albeit limited) land use right. Any attempt by a developer to sell just the structure or “long-term lease” the structure without registering the land use right is a significant red flag for legal non-compliance.

Conditions for Future-Formed Properties (Off-plan Purchases)

Most foreign investors buy “off-plan” or “future-formed” properties. This is a high-risk area that requires strict adherence to legal conditions. Article 24 of the Law on Real Estate Business 2023 sets out the “Conditions for houses and construction works formed in the future to be put into business”:

“Article 24. Conditions for houses and construction works formed in the future to be put into business:

1. Houses and construction works have been started for construction in accordance with the law on construction.

2. Having one of the types of papers on land use rights… [such as Land Allocation Decision, Land Lease Decision, or Land Use Right Certificate].

3. Having… [the Construction Permit and technical infrastructure acceptance papers].

4. Before selling or lease-purchasing houses formed in the future, the project investor must have a written notice sent to the provincial-level state management agency in charge of real estate business regarding the fact that the houses are eligible to be sold or lease-purchased.”

A crucial document that a vietnam corporate lawyer will verify is the “Notice of Eligibility for Sale” issued by the Department of Construction. Without this, the developer is legally prohibited from collecting more than a 5% deposit. Collecting large sums (e.g., 30% or 50%) under “Deposit Agreements” before this notice is issued is a common, though illegal, practice in the market that puts the buyer’s capital at risk.

Financial Compliance and Repatriation of Capital

Purchasing the property is only half the battle. If a foreign investor eventually sells the property, they must be able to move their money back to their home country. This is governed by strict foreign exchange controls.

Article 12 of the Law on Investment ensures the right to transfer assets, but only after fulfilling financial obligations:

“Article 12. Guarantee of the right to transfer assets of foreign investors abroad:

After fulfilling all financial obligations to the Vietnamese State in accordance with the law, foreign investors may transfer the following assets abroad:

1. Investment capital, investment liquidation amounts;

2. Income from business investment activities;

3. Money and other assets under the lawful ownership of the investor.”

However, a critical mistake many individual investors make is failing to register the initial inflow of funds. In the case of Mr. Steeve Petit (Source), the investor wished to sell his apartment and return the funds to France. The major obstacle was that his initial investment was not correctly registered through a Capital Account in accordance with foreign exchange laws. Without this paper trail, Vietnamese banks are restricted from allowing large outward transfers of foreign currency. A vietnam corporate lawyer at Unilaw always advises clients to open a dedicated investment account and keep all bank transfer records (stating the purpose of “real estate investment”) to ensure a smooth exit strategy.

Ownership Duration and Extension for Foreigners

Foreign individuals are generally granted ownership for a period of 50 years. This can be extended once for another 50 years. The procedure for this must be initiated well before the expiry of the initial term.

Article 6 of Decree 95/2024/ND-CP outlines the extension process:

“Article 6. Dossiers, order, and procedures for extending the house ownership term in Vietnam for foreign organizations and individuals:

2. The order and procedures for extending the house ownership term are implemented as follows:

a) At least 03 months before the expiry of house ownership, the foreign organization or individual… sends a dossier… to the provincial-level People’s Committee where the house is located for consideration and resolution;

b) Within a maximum of 30 days… the provincial-level People’s Committee… shall have a written approval to extend the house ownership term once according to the proposal of the owner but for a maximum of 50 years from the expiry of the first ownership term.”

It is important to note that if an individual is subject to an expulsion order or an organization’s activities are terminated by the state, the extension will be denied. In such cases, the owner must sell or donate the house to an eligible person in Vietnam. Failure to do so within a set timeframe may result in the state taking over the management of the property.

Common Pitfalls and the Role of a Vietnam Corporate Lawyer

Real estate in Vietnam is not just about the bricks and mortar; it is a complex intersection of land law, housing law, investment law, and tax regulations. A vietnam corporate lawyer provides several layers of protection:

• Verification of the Developer: Checking the “Notice of Eligibility” and ensuring the developer has paid the Land Use Fees to the state. If the developer owes money to the state, the Pink Book will be blocked indefinitely.
• Quota Checking: Confirming that the specific unit falls within the 30% foreign quota.
• Contract Review: Standard SPAs are often drafted by developers to favor themselves. We ensure clauses regarding compensation for delayed handovers and title issuance are robust.
• Anti-Money Laundering (AML) Compliance: Ensuring all payments are made through the correct banking channels to avoid future problems with capital repatriation.
• Secondary Market Due Diligence: When buying from another foreigner, verifying that the seller actually has a Pink Book and that there are no pending disputes or bank encumbrances on the unit,.

As seen in the case of Mr. Bui Viet Anh (Source), even simple deposit disputes can escalate. The seller in that case tried to cancel the transfer because family members disagreed with the sale after the deposit was paid. Unilaw had to issue formal legal demands for the return of the deposit and the “deposit penalty” (double the deposit) as stipulated in the agreement. Having a lawyer involved from the very first signature prevents these “he said, she said” scenarios from turning into long-winded court battles.

Conclusion

Vietnam’s property market offers immense potential for growth, but the policies governing foreign ownership are a patchwork of strict quotas and administrative requirements. The transition from the Land Law 2013 to the Land Law 2024 has introduced new nuances that only a specialized vietnam corporate lawyer can effectively interpret. Whether it is ensuring a developer fulfills their “50-day” title application duty or structuring a multi-million dollar investment project, professional legal oversight is the only way to turn a “Sales and Purchase Agreement” into a secure, registered asset. At Unilaw, we are dedicated to bridging the gap between foreign investors and the complex Vietnamese legal system, ensuring that your investment is built on a foundation of legal certainty.