Conditions for foreign investors doing real estate business in Vietnam

Conditions for foreign investors doing real estate business in Vietnam

Doing real estate business in Vietnam is the investment of capital to carry out construction activities, purchase, receive assignment for sale or transfer; lease, sublease, lease purchase of real estate; real estate brokerage services; real estate trading floor services; real estate consulting or real estate management services for profit.

I. General conditions of organizations and individuals doing real estate business.

1. Organizations and individuals do real estate business must meet the following conditions:

a. It must set up a company in accordance with the law on enterprises or cooperatives in accordance with the law on cooperatives, having real estate business;

b. It must be disclosed on the company”s website, at the head office of the Project Management Board (for real estate investment projects), at the real estate trading floor (for business cases). through the real estate trading floor) information about the business (including name, head office address, contact phone number, name of the legal representative), information about real estate put into business According to the provisions of Clause 2, Article 6 of the Law on Real Estate Business, information on mortgages of houses, construction works, real estate projects put into business (if any), information on the quantity and types of real estate products being traded, quantity and types of real estate products sold, transferred, lease-purchased and the remaining quantity and types of products that are still being traded.

For publicly available information specified at this point that subsequently changes, it must be promptly updated after such changes are made;

c. Only trade in real estate that fully meets the conditions specified in Article 9, Article 55 of the Law on Real Estate Business.

2. In case an investor is selected to be the investor of a real estate project in accordance with law, such investor must have an equity capital of not less than 20% of the total investment capital for the project. projects with a land use scale of less than 20 hectares, not less than 15% of the total investment capital, for projects with a land use scale of 20 hectares or more. When conducting real estate business, the project investor must satisfy the conditions specified in Clause 1 of this Article.

The determination of equity specified in this Clause is based on the results of the most recent audited financial statements or the results of independent audit reports of the operating enterprise (made in the year or immediately preceding year); in the case of a newly established enterprise, the equity shall be determined according to the actual contributed charter capital as prescribed by law.

II. The forms of doing real estate business of foreign-invested companies in Vietnam:

Foreign capital companies in Vietnam can do real estate business in the following forms:

1. Renting houses and construction works for sublease;
2. For land leased by the State, it is allowed to invest in the construction of houses for lease; invest in the construction of houses and construction works other than houses for sale, lease, or lease-purchase;
3. Receive transfer of the whole or part of real estate project of the investor to build houses, construction works for sale, lease, lease purchase;
4. For land allocated by the State, they may invest in the construction of houses for sale, lease, or lease-purchase;
5. For leased land in industrial parks, industrial clusters, export processing zones, hi-tech parks and economic zones, they may invest in building houses and construction works for business in accordance with the land use purposes.
6. Housing and urban area construction investment projects specified at Point g, Clause 1, Article 31 of the Law on Investment fall under the Prime Minister”s authority to approve investment policies.

III. Market access conditions for foreign investors doing "Real estate business" in Vietnam

Foreign investors who want to invest in  "Real estate business" need to meet the following market access conditions:

1. AFAS is open for the following services:
- Rental/rental services related to self-owned or rented residence (CPC 82101): unlimited
- Rental or rental services relating to self-owned or leased non-residential locations (CPC 82102): unlimited
- Services of management of residential properties on a contract or fee basis (CPC 82201): unlimited
- Services of management of residential properties on a contract or fee basis (CPC 82202): unlimited

2. EVFTA: No commitment to land ownership, recovery of land use rights, land lease, land use, land planning, land use term, rights and obligations of land users .[first] The natural resources found in the land belong to the State of Vietnam. Cultural heritage of undetermined owner was found in land belonging to the State of Vietnam. No commitment to measures related to the purchase, sale, ownership and lease of residential real estate by foreigners.
3. CPTPP:
a) Appendix NCM I-VN-34: Real Estate
Regarding the construction, leasing, purchase, lease purchase, and transfer of real estate, the Law on Real Estate Business provides more limited rights to foreign entities than to Vietnamese entities. Foreign-invested companies can do only:

About residential real estate:
- Construction of residential real estate for sale, lease, or lease-purchase on land allocated by the State;
- Building residential real estate for lease on land leased by the State;
- Buy, rent-purchase or lease commercial residential real estate in housing construction investment projects
- Rent residential real estate for sublease
- To receive the transfer of residential real estate projects, in part or in whole, for the construction of residential buildings for sale or rent.
About commercial real estate
- Construction of commercial works for sale, lease or hire-purchase on land leased by the State;
- Construction of commercial works on leased land in industrial parks, industrial clusters, or economic zones to do business in accordance with land use purposes.
- Purchase or lease purchase of commercial real estate for their proper use.
- Lease of commercial real estate for use or sublease;
- Receive the transfer of commercial real estate projects, in whole or in part, to build commercial buildings for sale or rent.

For greater certainty, foreign investment companies can provide real estate brokerage services; real estate exchanges, real estate consulting services, and property management services, for both residential and commercial properties.

To be more clear, foreign-invested companies, foreign organizations and individuals are only allowed to carry out the above-mentioned activities.
b) Appendix NCM II – Sub-Appendix A: Real Estate Services:
Including owned or leased property (CPC 821): Unlimited
Paid or on a contract basis: Unlimited

Sources:
- AFAS, EVFTA, CPTPP
- Law on Investment 2020.
- Law on Real Estate Business 2014.
- Decree 02/2022/ND-CP guiding the Law on Real Estate Business
- Decree No. 43/2014/ND-CP dated May 15, 2014 of the Government detailing the implementation of a number of articles of the Land Law.
-https://fia.mpi.gov.vn/Detail/CatID/80a3a429-cc68-4621-94a8-9ebecf86aae6/NewsID/605792ef-671c-40c6-b152-4e690549c07f

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