A new law currently under review by the Vietnamese government could see many of the cumbersome foreign property buying restrictions removed as early as next year.
The new law, which focuses on allowing foreign individuals to buy accommodation in Vietnam, would remove some of the issues that foreigners and foreign companies face if they want to buy property in Vietnam.
The proposal also contains two options for the duration of ownership: the first option will allow ownership for 50 years with the possibility of a 50-year extension, or 70-years with no extension.
The government is also recommending that foreign individuals and organisations be allowed to purchase and own both apartments and landed property in Vietnam with a maximum land plot area of 500 sqm.
The number of properties that a foreigner can buy is proposed to be either two or unlimited. The properties can be leased if their foreign owners are not living in them.
Under current law, persons who are allowed to buy houses in Vietnam face numerous restrictions and have to follow very complicated procedures with the local government. The current law also regulates that a foreign buyer can only buy one apartment as a primary residence, not for financial investment or other purposes. They must pay tax in Vietnam and cannot sublease the property.
By widening the asset classes open to foreigners to condos and landed houses and by extending the tenure to up to 70-years and by eliminating the sub lease prohibition, coupled with the sharp fall in prices since early 2008, this new legislation may well open new opportunities to support the slow and depressed property market.
In a research report Dung Duong, Associate Director, CBRE Research and Consulting in Vietnam, said: “Obviously, removing the restrictions on foreign ownership of a house in Vietnam is very positive news, but that is not the only solution to the problems that have been current in the real estate sector for the last five years.
“The amended law, if approved, would help attract a strong foreign cash flow to the real estate market, but it would not serve as a major big capital source for Vietnam.
“Foreign buyers have been, and will be, following the market carefully. They will be keen to buy when they see the market turning round; and not before.”
Andrew Batt, International Group Editor of
PropertyGuru Group, wrote this story. To contact him about this or other
stories email andrew@propertyguru.com.sg
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