Legal Considerations for Expats in Vietnam

Renting vs. Buying Property in Vietnam

Renting Property:

• Rental Agreements & Lease Terms: Renting is the most common and easiest option for expats. Lease agreements usually last between 6-12 months, but shorter or longer terms can be negotiated. The required security deposit is typically 1-3 months' rent, along with the first month’s rent upfront.

• Lease Contracts: Contracts should clearly outline rent terms, payment schedules, renewal conditions, and maintenance responsibilities. It’s advisable to have the lease in both English and Vietnamese to avoid misunderstandings. A reputable landlord or property agent can make the process smoother.

• Tenant Rights: Vietnamese tenancy law protects tenants' rights, covering issues like rent increases, eviction terms, and landlord obligations. However, expats should still be diligent in understanding local norms and ensuring their lease covers all potential concerns.

Buying Property:

• Foreign Ownership Rights: The 2015 Housing Law allows expats to purchase and own property in Vietnam, but there are restrictions:

  • Condos: Foreigners can own up to 30% of the units in a condominium building.

  • Landed Property (Houses, Villas): Expats can own a landed house in a development project, but foreign ownership is capped at 10% of all units in any given housing project.

• Ownership Term Limits: Foreigners can buy property with a 50-year leasehold. The lease can be renewed or transferred to another foreigner, and in some cases, extensions can be granted upon request.

• Legal Process: Foreigners must have a valid visa and sign the purchase agreement with a notary to finalize the transaction. Ownership will then be recorded on a “pink book” (the official property ownership certificate).

Key Legal Considerations & Things Expats Need to Know:

• Land Ownership Restrictions: While expats can own property (a house or condo), they cannot own the land itself. Instead, the land-use rights are leased from the government or a developer for a defined period.

• Leasehold vs. Freehold: Properties purchased by foreigners are held on a leasehold basis (50 years), with the potential to extend. Vietnamese citizens, on the other hand, can have freehold ownership.

• Inheritance & Selling Property: Foreign-owned properties can be sold, transferred, or inherited. If the inheritor is not eligible to own property in Vietnam (e.g., a foreigner without residency rights), they must sell the property within 12 months.

• Legal Fees & Taxes: When buying property, expats need to account for taxes and fees, such as the 2% registration tax on the property's sale price and additional costs like notary fees and maintenance fees. These can vary depending on the type of property and location.

• Due Diligence & Title Verification: It is essential to perform thorough due diligence before purchasing, which includes verifying the pink book title, ensuring there are no legal issues with the property, and confirming that the property is part of the foreign quota limit. Hiring a real estate lawyer is highly recommended for expats to guide them through the process.

Renting vs. Buying – Pros & Cons for Expats:

• Renting:

  • Pros: Offers flexibility for short-term stays, especially if unsure about the length of stay or commitment to a specific city or region. It also avoids the complexities of property ownership laws.

  • Cons: No equity is built over time, and long-term rental payments may exceed the cost of purchasing in some markets.

• Buying:

  • Pros: Ideal for long-term expats or those looking to invest in property. There is potential for rental income if you decide to lease out your property, and condo ownership provides stable housing for long-term residents.

  • Cons: Ownership is limited to 50 years leasehold, and the process can be legally complex due to the restrictions on foreign property ownership. Expats must carefully manage the renewal process and other legal obligations.

For further guidance on the legalities of renting and buying property in Vietnam, including step-by-step instructions, lease terms, and practical tips for expats, [click here].