The regulation on allowing foreigners to own a house in Vietnam under the 2014 Housing Act has been in effect for nearly two years, but so far there are obstacles that make it difficult for foreigners to access home policies.
The contract is “suspended” because of congestion
The 2014 Housing Act, which took effect in July 2015, has expanded the scope of home ownership in Vietnam. This is a new regulation to create conditions for foreign organizations and individuals to invest, work and live in Vietnam to have housing, contributing to creating a good investment environment, attracting foreign investors as well as stimulating the development of the economy, in accordance with the policy of the State and the current trend of globalization.
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However, in practice, this policy did not create the wave of buying houses of foreigners as expected. The reason comes from shortcomings in the implementation process and one of the inadequacies comes from the stipulation that the Ministry of Defense, Ministry of Public Security is responsible for specifying areas to ensure security and defense. In each locality, the provincial/municipal Construction Services shall base on it to determine the list of investment projects on construction of commercial houses in their respective localities which do not permit foreign organizations or individuals to own houses.Mr. Kim DaeWoo (South Korea) said that from January 2016, he has submitted registration certificate forforeign organizations or individuals to own houses.
Mr. Kim DaeWoo (South Korea) said that from January 2016, he has submitted registration certificate for an apartment in Hiep Binh Chanh Ward, Thu Duc District, Ho Chi Minh City by the transfer from a Vietnamese citizen at the Thu Duc District Office of Land Use Rights Branch. According to Mr. Kim DaeWoo, the appointment notice to receive the result was on February 29th 2016, but until August 12th 2016, after 7 months applying, he received the official correspondence of Ho Chi Minh City land registration office responding with the main content is that it is currently unable to solve the dossier for registration of fluctuations for foreigners transferred. “The reason that the Office of Land Registration gave is because the Ministry of Defense, Ministry of Public Security has no document to determine which areas in the city allowing foreign individuals and organizations to own houses (According to the provisions of Articles 75 and 76 of Decree 99/2015 / ND-CP detailing the implementation of some articles of the 2014 Housing Act, there are effective from December 2015) and the Department of Construction has not released this information to the portal of the Department. As a result, over a year has passed, my certification dossier is still unresolved and I don’t know when I will receive the result” said Kim DaeWoo.
According to Kim DaeWoo, up to now, after more than one year of the decree came into effect, there has not yet been any document from the Ministry of Defense, Ministry of Public Security on the identification of areas where the foreign organization or individual being allowed to own in the area of Ho Chi Minh City. This makes it difficult for both State agencies and foreign organizations and individuals who wish to buy houses, contrary to the spirit of the Housing Law and the State’s policy. At the same time, the delay in answering administrative procedures for registration of land changes has caused confusion for investors, losing confidence in the law and investment environment of Ho Chi Minh City in particular and Vietnam in general.
In this regard, Mr.Le Hoang Chau, Chairman of the HCMC Real Estate Association, said that the Housing Law allows foreigners to buy houses outside the relevant area, affecting the country’s defense and security but the fact that no area has been identified as a defense or security area because there are no criteria to do this. Not to mention, the disclosure of these areas may reveal the secrets of security and defense. This problem has not been solved yet, so it has made it difficult for local authorities to determine whether the area is allowed or not allowed to sell houses to foreigners. Due to this regulation, local authorities cannot grant sovereign rights to foreigners to buy houses, leading to the suspension of house purchase contracts.
If need to amend the law
Actually, realizing this regulation in the Housing Law has created bottlenecks for localities in the process of implementation, from September 2016, the Ministry of Construction has sent a letter to the Ministry of Public Security, Ministry of Defense, People’s Committees of provinces and cities under central authority on the implementation of regulations on the ownership of houses in Vietnam by foreign organizations and individuals that are provided in the Housing Law No. 65/2014 / QH13.
According to the Ministry of Construction, the Ministry of Defense and the Ministry of Public Security have not yet issued documents detailing the areas in need of national defense and security affirmed by the government. As a result, localities face difficulties and lack legal basis to publicize the list of investment projects to build commercial houses that do not allow foreign organizations and individuals in the locality to own. Accordingly, the Ministry of Construction requested the Ministry of Defense and the Ministry of Public Security to soon issue documents defining the areas to ensure national defense and security in the localities to create conditions for the provincial People’s Committees have guiding grounds to direct The Construction Department publicize a list of investment projects on construction of commercial houses in their localities where foreign organizations or individuals are not allowed to own houses.
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In addition to requesting the Ministry of Defense, the Ministry of Public Security too soon announce “no-zone” in the purchase of housing for foreigners, many opinions said that the Government can authorize the Ministry of Defense, Ministry of Public Security publish a list of these areas, shouldn’t set more process that these ministries “notify the provincial-level People’s Committees in order to direct the provincial / municipal Construction Services to determine in detail each investment project on construction of commercial houses in their respective localities and not permit the foreign organizations or individuals to own houses” as in Clause 2, Article 75 of Decree 99, as this increases unnecessary administrative procedures.
About the issue of foreigners buying houses, Mr.Greg Ohan, general director in Vietnam of the real estate services consultancy JLL, said that there are more than 80,000 foreigners living and working in Vietnam and more than 4 million overseas Vietnamese, so the Housing law with regulations allowing foreigners to own homes in Vietnam is very interested, but this is not easy. According to Greg Ohan, it has been nearly 20 months since the Housing Act officially allowed foreigners to invest in real estate in Vietnam but this law still lacks detailed guidelines and other administrative procedures. Therefore, the implementation is limited as well as implementation process is unclear. According to Quang, this is because the procedures involved are relatively complex, time-consuming, costly …, such as the proof of legal income derived from the rental of the house under the law to transfer money back to the State, procedures to certify the purchase of a house in Vietnam… “Although the market is very promising in 2017, if you buy a house and are considering selling or renting it, just make sure that you have a local consultant ready to help you – otherwise it’s quite complicated” said Greg Ohan.
These obstacles have caused the number of foreigners, overseas Vietnamese own houses in Vietnam have not been as expected. On this issue, Le Hoang Chau said that we should not be too much-expecting foreigners buying houses will make a hit for the real estate market. The reason is that the mechanism for foreigners to buy houses shows lack of consistency, lack of uniformity, lack of transparency. According to Mr.Chau, the Ministry of Construction should overcome these three restrictions in the regime for foreigners to buy houses and if necessary, must amend the Housing Law.Real estate expert Huynh Anh Dung:“The 2014 Housing Act allows foreigners to buy houses as one of the positive signals for the property market. However, until now it has not been implemented and achieved as expected that we would expect a large number of foreign guests poured into buying houses in Vietnam projects. There are a number of factors that affect the decision to invest in buying a home from a foreigner: Is Vietnam a land for them to choose to buy a home? In addition, time-limit ownership is a major obstacle for homebuyers”.
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