Door ajar for Viet Kieu house ownership

The Vietnamese government recently issued Decree 71/2010/ND-CP implementing the Law on Residential Housing (“Decree 71”), which took effect from August 8, 2010. The decree has stipulated more legislation for  overseas Vietnamese (Viet Kieu) to buy a house in Vietnam.

Mr Kevin Hawkins

VIR’s Bich Ngoc talks with Mayer Brown JSM (Vietnam) senior associate Kevin Hawkins about new decree’s advantages.

What is the progress in the legal framework between the Decree 71 and the old Decree 90 relating to the regulation to permit Viet Kieu to own houses and land in Vietnam?

The Law on Residential Housing of 2005 (as amended in 2009) (“Housing Law”) contains pertinent provisions regulating the right of ownership of houses in Vietnam by Viet Kieu.  

In particular, the amendments to the law taking effect back from September, 2009 provided more liberal rights to Viet Kieu. 

However, the amended law lacked specific provisions regarding the implementation of these rights.  At best, the law only provided the general and broad criteria for them to own houses in Vietnam, substantially leaving it to the government to provide guidelines.   Meanwhile, Decree 71 was recently enacted and is a significant step towards the development of a clearer legal framework implementing the housing ownership rights of Viet Kieu. 

Decree 71 recognises that ownership of houses by Viet Kieu for a stable and long-term duration. A house may be owned by way of purchase, acceptance of donation, inheritance, exchange of a residential house or acceptance from a transfer of land use rights in a development project where the house may be built. 

The methods of acquiring ownership have actually been expanded as these now include acceptance from a transfer of land use rights for the purpose of building a house. 

This equalises the rights of Viet Kieu with Vietnamese nationals residing in Vietnam.  As in the Housing Law, there are two categories of Viet Kieu in Decree 71.  The first category refers to those who have Vietnamese nationality and the second are those with Vietnamese origin.  To own more than one house in Vietnam, Viet Kieu must either be of Vietnamese nationality or of Vietnamese origin falling under a specific category such as those who return to make a direct investment in Vietnam or those whose work has contributed to the country or those whose spouse is a Vietnamese national living in Vietnam.  

Those who have Vietnamese origin but do not fall into a specific category yet possess the required legal identification proving such origin are entitled to own one house in Vietnam.  Those who are entitled to own only one house and are eventually recipients of an additional house(s) via inheritance or donation are permitted to transfer such house(s) to qualified purchasers. However, where such Viet Kieu who are entitled to only one house, forge documents or commit other illegal acts to own more than one house, they will lose the house(s) as penalty. 

So what are the outstanding differences?

The legal identification required as evidence to prove that one is a Viet Kieu qualified to own a house in terms of residential situation in Vietnam is also clearer than in the Housing Law. 

In the Housing Law, there was only a mention that a Viet Kieu must have resided in Vietnam for three months or more. Decree 71 sets out that a Viet Kieu holding a foreign passport must provide a temporary residence book and a document confirming temporary residence registration at the locality. For a Viet Kieu holding a Vietnamese passport, a temporary residence card and endorsement of temporary residance in the passport will be necessary. Issues were raised previously as to the lack of clarity in the Housing Law and under Decree 90.

In the legal framework, what should the government do to assist Viet Kieu to enjoy ownership in Vietnam?

We think that to improve the legal framework of housing ownership rights of Viet Kieu, there are certain legal aspects which the government may explore. 

These aspects are with respect to the legal limitations as these generally pose a hindrance to some, if not many Viet Kieu from taking advantage of the Housing Law.  One of these limitations, for example, is with respect to using the house as a capital contribution in an investment project. 

Under the Land Law of 2003, assets attached to land may only be contributed as capital by Vietnamese nationals residing in Vietnam.  This right is not available to Viet Kieu at the moment. 

As a house is an asset, the general notion is that it may be contributed as capital in an investment project in Vietnam, but this is not case as far as Viet Kieu are concerned.  Also, in the future, there may be a need to look into the still existing limitations to determine whether they may be removed altogether.