Proposal to Loosen Regulations on Foreigners’ Ownership of Houses in Vietnam: Opportunities for Real Estate Market

According to the latest statistics of the Ministry of Construction, as of this moment, the country has only 126 foreign individuals and organizations (in which individuals account for 80 percent and organizations account for 20 percent) buying houses in Vietnam. This number is quite low compared to the demand for house ownership in Vietnam of this customer segment. Therefore investors in real estate business are expecting on the proposal to extend conditions for foreign customers to purchase house. If this proposal of the Ministry of Construction is approved, this will be an opportunity for the market to warm up after a long time of freezing.

 

Talking about this opportunity, many real estate experts said that the current house policy applied to foreign organizations and individuals who want to own houses in Vietnam is too tight, which is a barrier that makes Vietnam’s real estate market lose opportunity to receive a huge amount of capital from potential customers from outside.

 

Of the 126 organizations and individuals owning houses in Vietnam, 108 cases of foreigners buy houses under the condition of marrying citizens of Vietnam, while other cases are very few.

 

The reason given is because the price of real estate products in Vietnam is very high compared with the average price in the region, making organizations and individuals working in Vietnam choose to rent house instead of buying one. In provinces with several industrial zones and large number of foreigners such as Binh Duong, Dong Nai, Bac Ninh, Vinh Phuc, etc., the infrastructure is poor; there are no products convenient for daily life activities of foreigners.

 

The Ministry of Construction also admitted that the current strict policy is a limitation which leaves potential customers from outside. According to Decision No.19/2008/QH12 on the criteria for foreign individuals and organizations to own houses in Vietnam, only five objects are eligible to buy houses. The Decision lets many foreign objects who need to own house in Vietnam such as foreigners working in branches, representative offices operating in Vietnam, foreigners who work for less than 1 year, do research or teach for private education facilities, etc., pass unnoticed.

 

 At the same time, foreign organizations and individuals are also allowed to buy only apartments in commercial housing development projects, not individual houses and villas while this is segment in which foreign demand is the second greatest. Besides, regulation on restriction of the rights of house owners such as no use for rent and for private business like their counterparts the country is one of the causes which narrows the door to buy house in Vietnam of foreigners.

 

Along with that, regulations on foreign individuals and organizations eligible to own houses in Vietnam stipulates that they are allowed to own only one apartment, which is said to reduce the excitement of those with huge financial capability and in need of more than one house.

 

There are also other regulations that are barriers which are said to have to be soon lifted by real estate professionals. Particularly, foreign individuals should be allowed to enter Vietnam and to stay in Vietnam for at least one year; foreign individual can only own apartment in at most 50 years. Enterprises with foreign capital can own house in the corresponding period stated in the certificate of investment.

 

According to a leader of a real estate enterprise, Vietnam's economy is developing under an open mechanism. Real estate market itself should also follow the rules of supply and demand of the market. The introduction of regulations limiting foreign individuals and organizations to own houses in Vietnam is invisibly limiting the source of foreign investment into the country. The difficulty of owning a house in Vietnam will also become the cause for foreign investors to consider twice before investing in Vietnam market. Therefore easing the current regulations is necessary.

 

Proposal to loosen conditions for foreigners to purchase house in Vietnam by the Ministry of Construction which was submitted to the government gets sympathy and great support from professionals and investors in real estate business.

 

Mr Tran Duc Dien, Director of Maxland real estate transactions floor said that if the proposal of the Ministry of Construction is passed by the Government, this will impact positively on the real estate market which has "frozen" in long time, especially in the segment of luxury apartments, villas, adjacent villas, resort villas, etc.

Many real estate experts said that although the time Vietnam extends conditions for foreigners to buy houses is a bit slow, this is still also a good signal to the market. If capital flow from foreigners is cleared, the opportunity for the market to recover is huge.

 

Dr Pham Si Liem, Vice Chairman of the Vietnam Construction Association also expressed support for the proposal of the Ministry of Construction. Dr Liem said that Vietnam should loosen the conditions for foreigners to buy home. In many countries in the world such as France, Italy, the U.S., regulations for foreigners to buy houses is also open. However in many countries, those regulations are still quite tight.