Well! very important note to consider before deciding to buy property: legal ownership
In Vietnamese law system, there are some types of ownership certificates admited. Ownership of land and properties on the land. And, it is difference between local and foreigner.
1. Foreigner's rights, can and cannot
- Land:
Foreigners cannot buy land but lease in period of 50 years and be able to extended. Ownership is proved by Land use right certificate (LURC).
According to law, you do have almost same land rights prescribed to Vietnamese nationals subject to certain conditions. Only there is limitation in leasing areas that reserved to protect the national defense and security.
- Properties on land:
Foreigners are allowed to own properties on the land in Vietnam for a period of 50 years, at the end of which, this time limit can be extended according to the provisions of Article 77 of Housing law 2014. For reference, here is the link.
The limitation of number possessing less than 30 percent of the apartments and no more than 205 houses in an area where the population is that of a ward-administrative division.
2. Details of certificates
- The Red Book - Land use right certificate (LURC):
Issued by the Ministry of Natural Resources and Environment. Land use right certificate (LURC) shows the land user’s rights on the property.
In Vietnam, land is country's asset, even local citizen use land and pay land tax 0.03 – 0.15% annual, so do foreign user.
According to LURC, foreigner can lease the land for 50 years, while locals can have one indefinitely. The government can choose to grant a one-time extension of another 50 years or take the land back if the party has failed to use the land under the terms and conditions of the LURC.
NOTE: Because of certificate on land using, foreigners who primarily invest in condominium projects will not common on this certificate much.
- The Pink Book - Land use right, ownership of house and other land-attached assets certificate:
Official legal name indicates full function and purpose of certificate which includes land use rights, ownership of houses and other land-attached assets issued by the Ministry of Construction.
The Pink book is used for the title and to verify the ownership of property and you should receive after you purchased a property (such as: land, house or other properties on the land).
The book will give you the right to lease your property and declare information regarding inheritance, for example.
NOTE: For foreign owner, the pink would not be issued to but get the SPA (Sales and Purchase Agreement).
- The pink book is considered the strongest proof of ownership, though it’s not a legal requirement to have one.
- The SPA (Sales and Purchase Agreement) is equally, if not more, important.
- Selling property without the pink book has a bit more difficult than usual.
Here are some points to distinguish both certificates:
| Criteria | The Red Book | The Pink Book |
| Content | Name of the certificate of land use right, issued to land user to protect the legitimate rights and interests of the land users (according to Clause 20, Article 4 of the 2003 Land Law) |
Name of the certificate of house and ownership and residential land use right, issued to the owner in accordance with following regulations: - In case the house owner is also land user and the apartment owner in the apartmant building, a certificate of housing ownership and residential land use rights shall be issued; - In case the house owner is not concurrently the residential land user, a certificate of house ownership shall be issued. ( According to Article 11 of the 2005 Housing Law) |
| Update | Stop issuing from December 10, 2009. The issued one before the date, is still valid and does not have to be changed. |
Currently using one form of this certificate throughout Vietnam. |
| Issued Agency |
the Ministry of Natural Resources and Environment | the Ministry of Construction |
| Color | Red | Light pink |
3. What does the Pink Book declare?
The pink book mentions that you can:
- Use your house for residential and other purposes.
- Do transactions when selling, mortgaging or leasing the property.
- Demolish, maintain, renovate or rebuild your house, if complying with the conditions and procedures of laws on construction.
SUM UP
Despite an unequal competitive landscape, foreign developers continue to invest and acquire land rights in hopes that the government will change regulations. Foreign investors face some risk, but investors are positive about the growth of Vietnam’s property market.
Make sure that your prospective property can be owned by you as a foreigner, and confirm, before the purchase, that you will be able to receive the ownership certificate.