There’s big news on the “Are we really welcome here?” front this month: foreigners can now buy real estate.
Over the years, we have bemoaned the fact that the vast majority of non-Vietnamese (except for naturalised Viet Kieu and a few other exceptions) cannot purchase houses or apartments in this country. From this month it all changes.
So excited are the real estate companies that the emails have been flying out. One we received read as follows:
From the new laws, foreigners will have the biggest opportunity to possess real estate assets in Vietnam, both to live and to invest. We would like to suggest some attractive projects: Sala (District 2), Villa Park (District 9) and in particular Vinhomes Central Park (Binh Thanh, which will be merged into District 1 in the future).
A Step Back
We first picked up on the new law in December. Here’s an excerpt of what we wrote — the piece was published on wordvietnam.com.
According to the new amended housing law, non-Vietnamese citizens will be able to own the property for a maximum of 50 years and enjoy the same rights to lease, transfer or sell the property as Vietnamese citizens.
The law will also extend the rules that currently apply only to apartments. Now, foreign individuals and entities will be allowed to buy, receive or inherit apartments and houses in commercial projects, although not in areas that limit or ban foreigners. They will be able to buy a maximum of 30 percent of apartments in a block and 250 houses in a given ward.
Individual foreigners will be able to extend their home ownership after 50 years, according to their need, and they may lease their property for any “purpose that is not banned by law”. However, foreign property owners will also be subject to Vietnam’s property taxes.
The change is expected to give a well-needed boost to Vietnam’s real estate market. Although according to the Savills Property Price Index, residential real estate prices have stabilised over the past 12 months — in Hanoi they are only 2 percent above their level in the first quarter of 2009; in Ho Chi Minh City, prices are still 10 percent down on what they were five years ago.
At the same time, restrictions — particularly the ‘commercial project’ restriction — means that foreigners still cannot freely buy property in Vietnam.
When this article was re-posted on social media in May, the naysayers stepped in and got negative. They missed the wider ramifications of opening up the property market to foreigners.
With the imposition of restrictions — leasehold purchase only, a maximum amount of properties per ward or apartment building — Vietnam is protecting itself from the rampant capitalism of the West.
In the UK, for example, anyone can buy property, regardless of nationality. There are no restrictions. With swathes of non-British investing in bricks and mortar in London, this has led to a house price boom in the country’s capital. The premium paid for living in London is now so high that a property there costs between five and seven times as much as its equivalent in Birmingham, the country’s second-largest city.
By having their hands on the reins, Vietnam will avoid this. They will also avoid something else they dread — the loss of land to foreigners.
What is clear is that this law change does offer an opportunity. But with foreigners encountering increasing issues with visas and work permits, it is unclear how many will bite. — Nick Ross