The Ministry of Construction recently removed the regulations on the apartment ownership period in the draft housing law (amended) according to the opinion of the National Assembly Standing Committee. Vietnam desperately needs a large number of highly qualified personnel, and one of the suitable sources is foreigners coming to work in Vietnam. To achieve that, they must have a good life here, which means they must be able to buy a house. Foreigners buying houses are mainly condominiums, while individual houses are not in demand. Because so far, the Land Law 2013 is inconsistent with the Housing Law on selling houses to foreigners.
Overview
The real estate sector plays an important role in the socio-economic development of countries. In Vietnam, along with the renovation and development of a socialist-oriented market economy and proactive international integration, the real estate market has made strong developments. On average, the contribution of the construction and real estate industries to GDP in recent years accounted for about 11% of the total budget revenue (of which the real estate industry directly accounted for about 4.5%).
Foreign investment in the real estate sector has continuously increased and made an important contribution to the development of the market. Accumulated up to now, FDI in real estate has reached 66.4 billion USD, accounting for 15.1% of total FDI into Vietnam. Real estate is the second sector to attract FDI, only after the manufacturing and processing industry. However, in the last few years, the real estate market has faced many difficulties, challenges and problems that need to be solved.
(Reference data of articles from Tuoi Tre Newspaper dated 19/06/2023)
Accompanying businesses and investors to promote sustainable development of the real estate market
Within the scope of its authority and responsibility, the Ministry of Construction has presided over the drafting of the Draft Law on Housing (amended) and the Law on Real Estate Business (amended). Two Law projects have been submitted to the National Assembly for comments at the 5th session, the XV National Assembly will take place from May 22 to June 23, 2023, are continuing to be completed and are expected to be approved in the 6th Term. The 15th National Assembly in November 2023. These are two Laws of great significance, attracting the attention of people and the business community at home and abroad.
The amendment and completion of these two Laws will have a positive impact on the housing and real estate market, drastically improving confidence in the investment environment, creating transparency and stability for the housing market. housing and real estate in Vietnam. This is especially necessary for the recovery and sustainable development of Vietnam’s real estate market. New policies, when adopted, will also help Vietnam’s real estate market become more attractive to foreigners living and working in Vietnam and foreign investors.
Encourages foreigners to buy houses
This draft (amended) Housing Law inherits the provisions of the 2014 Housing Law, clearly stipulating conditions, organizations and individuals, foreigners can buy and own houses in Vietnam. In addition, the draft Law on Housing (amended) strictly regulates the type of house, the area to be purchased, the number of houses allowed to buy and own in a housing project. For example, foreign organizations and individuals are only allowed to buy commercial houses in projects that are not in areas that need to ensure security and defense. individual houses on an administrative unit with a population equivalent to the ward level.
Therefore, the Ministry of Construction assessed that the regulations allowing foreigners to buy houses do not affect the implementation of other housing policies of the State such as policies on social housing, resettlement housing, housing for the elderly and low income urban areas.
Solutions to attract FDI into the real estate sector
Firstly, continue to review and complete legal regulations on the real estate market, especially new types of real estate (smart city, resort real estate, real estate combined with real estate, healthcare, condotel, officetel…) in line with international practices.
Second, actively attract investment selectively, targeting investors with good financial capacity, with solutions associated with the model of green and sustainable economic transformation; at the same time, uphold the responsibility of investors towards the environment and society during the investment process in Vietnam.
Third, urgently and flexibly and synchronously operate monetary policy tools to meet the demand for credit capital for development of the real estate market. Creating conditions for businesses, home buyers and investors to quickly access credit capital. Reducing loan interest rates, supporting the real estate market also support for apartment ownership in Vietnam.
Fourth, continue to improve and improve the quality of infrastructure in general and transport infrastructure in particular to create a foundation for the development of the real estate market.
Fifth, continue to improve an attractive, competitive and open business investment environment, promptly remove difficulties and obstacles in policy to create the most favorable conditions for investors, especially is for large land-use projects but slow implementation.
Solutions for foreign investor invest in the real estate sector in Vietnam in terms of the drafting the Housing Law (amended)
In terms of the drafting of the amended Housing Law in Vietnam, there are several solutions for foreign investors looking to invest in the real estate sector. These solutions are aimed at creating a more favorable environment for foreign investment in the Vietnamese real estate market. Here are some key provisions that may be relevant for foreign investors:
Expansion of Eligible Investors:
The amended Housing Law may broaden the categories of foreign investors eligible to invest in the real estate sector. This can open up more opportunities for foreign individuals and entities to participate in real estate projects and apartment ownership in Vietnam.
Eased Restrictions on Ownership:
The amended law may relax restrictions on foreign ownership of residential properties in Vietnam. This could include an increase in the allowable percentage of foreign ownership in apartment buildings or the removal of certain restrictions altogether.
Facilitating Real Estate Transactions:
The revised law may introduce measures to simplify and expedite the process of buying, selling, and transferring real estate properties in Vietnam. This can streamline the transaction process and make it more efficient for both domestic and foreign investors.
Enhanced Transparency and Investor Protection:
The amended law might include provisions to improve transparency in real estate transactions. Furthermore, it could strengthen investor protection mechanisms. As a result, this can provide a more secure and predictable investment environment for foreign investors.
Clarification of Land Use Rights:
The revised law may provide clearer guidelines on land use rights for foreign investors. In addition, it could include longer lease terms or options for lease renewal. Consequently, this can provide investors with more certainty and confidence in their investment in Vietnam’s real estate market.
Conclusion
In conclusion, removing regulations on apartment ownership periods in Vietnam has the potential to attract foreign investors to the real estate sector. By easing restrictions, allowing for longer ownership periods, and implementing other favorable policies, the Vietnamese government can create a more attractive investment environment thereby encouraging foreign individuals and entities to invest in residential properties. This would not only stimulate the real estate market but also contribute to the overall economic growth of the country. It is important for the government to continue exploring measures to enhance transparency, streamline processes, and provide investor protection to further attract foreign investment in Vietnam’s real estate sector. By doing so, Vietnam can tap into the potential of foreign capital and expertise, ultimately fostering sustainable development and benefiting both investors and the local economy.
HMLF is always available to offer assistance in understanding the procedures with authorities.
Harley Miller Law Firm “HMLF”
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