Opening door to foreign house ownership

Nguyet Nguyen, senior associate of Mayer Brown JSM Vietnam, Ho Chi Minh office

>> Foreign home buyers expanded to boost property market

VIR’s Bich Ngoc listened to Mayer Brown JSM senior associate Nguyet Nguyen’s suggestions on how foreigners could be encouraged to buy houses in Vietnam.

It is said that Vietnam has strict regulations relating to foreign and Viet Kieu property ownership than neighbouring countries. Why?

There is no denying that Vietnam remains a tricky place for foreigners and overseas Vietnamese to own residential property, but it would be unfair to say that Vietnamese laws are stricter than neighbouring countries. Many jurisdictions have been changing their tax regimes to minimise speculation from foreign investors as can be seen from recent changes in Hong Kong and Singapore.

According to statistics, there are now more than 10,000 foreigners and Viet Kieu living and working in Vietnam. However, only 300 have registered ownership with local authorities. Why such the low figure?

Admittedly, the figure is low but it should not be a sign to discourage ownership from foreign and overseas Vietnamese.  There is already in place a legal framework to structure such investments. In practice, there doesn't seem to be uniformity when it comes to the application of the law. This inevitably causes unnecessary frustrations for the buyer.

Vietnam’s real estate market has a giant surplus. Do you think expanding criteria to permit foreigners and Viet Kieu to buy house in Vietnam will reduce this stockpile?

Such flexibility will be welcomed and may help to reduce the stockpile in the current market to some degree. However, I do not believe that it will cause a significant positive change. We have to remember the main reasons for the real estate market freeze are macroeconomic management and monetary policies. Therefore, real steps need to be taken to address these issues. With time, the property market will hopefully regain its healthy growth momentum. This seems to be part of the cyclical nature of real estate investment in Vietnam.

Last week, the Ho Chi Minh City Real Estate Association also proposed the government to permit foreign organisations and individuals to buy high-end properties in Vietnam. Do you think that this proposal will be welcomed by foreigners?

Yes, we think so

What should the Vietnamese government do to open more access for foreigners and Viet Kieu to buy houses in Vietnam?

The law should be more open to allow foreigners to buy more than one apartment and all Vietnamese overseas can buy more than one house in Vietnam. This will improve purchasing power in respect of the current real estate market.

Also, there should be a consistent approach as to the application of the law and it should be streamlined across the country. Perhaps, a country wide seminar and training in ensuring that all provinces are on the same page could be organised. This will lead to clarity and the right to purchase will occur more easily.