Nguyen Tri Hieu returned to Vietnam six years ago after living in the US for 30, and has been unable to buy a house ever since.
He is now optimistic about buying a house after the amendments to the Law on Housing that took effect last July allowing foreigners and Viet kieu (overseas Vietnamese) to buy property in Vietnam.
But Hieu, who set up the first Vietnamese-owned bank in the US and is now a senior advisor to Vietnam Thuong Tin Commercial Bank (VietBank), has been unable to fulfill his wish because of various problems that still exist.
“The law is considered a great move by Vietnamese authorities. But foreigners and Viet kieu are still facing multiple difficulties in buying a house in Vietnam,” he told Thanh Nien News.
The hurdles were discussed intensively at a conference jointly organized in Ho Chi Minh City on Monday by Thanh Nien Newspaper and Thanh Nien Newspaper Joint Stock Company.
Nguyen Quang Thong, the newspaper’s Editor-in-Chief, nailed the problem down: “A lack of subsequent legal documents clarifying relevant procedures means the law is yet to be implemented practically.”
More than 80,000 foreigners have been living and working in Vietnam and more than 4 million Viet kieu have close links with their home country.
Property title insurance
According to Hieu, for foreigners and Viet kieu the main barrier to buying houses in Vietnam is the lack of property title insurance, which is common in many countries.
“Unlike many Vietnamese who buy a house with their savings, foreigners buy homes using bank loans and only pay 15-20 percent with their money,” he said.
“However, foreign banks only offer a mortgage if the customer has property title insurance, which is now unavailable in Vietnam.
“So they are unable to obtain loans.”
Almost all Viet kieu want to return after they are 50 years old. Viet kieu have a very strong wish to return home" -- Le Ngoc Long, an overseas Vietnamese in Japan.
Hieu estimates that 500,000-1 million Viet kieu want to buy houses in Vietnam
“Many older people want to buy a house back in their home country to spend the rest of their lives.
“Another potential buying group is young Vietnamese living abroad wanting to invest in real estate. They may also live in these houses when they are old."
Foreigners who want to buy houses in Vietnam include those who live and work in the country and people from neighboring countries, he said.
Ethnic Vietnamese living abroad annually earn the equivalent of half of Vietnam’s GDP, and they are major potential buyers, he said.
Robert Tran, a Vietnamese-Canadian business development strategy specialist, said clear regulations for foreigners and Viet kieu to buy houses is one thing and sellers’ service for international buyers is another.
Sellers should improve their strategy with respect to approaching potential customers, he said.
“The way local dealers have been approaching and explaining to buyers has not won their trust.”
Many foreigners and Viet kieu seek his company’s help to buy houses, but he has been refusing them because of the complicated procedures, he claimed.
Tran also called for to allowing larger scale of foreign buying, including purchase of entire buildings.
Ta Nguyen Ngoc of the State Committee for Overseas Vietnamese Affairs speaks at a conference on Monday to discuss solutions to encourage foreigners and overseas Vietnamese to buy houses in Vietnam. Photo: Minh Hung
“In 1997 when Hong Kong was handed over to China, many people from Hong Kong went to Canada to buy houses, which created chaos because Canada was vast but did not have many property markets then.
“Vietnam is different and is developed with many projects and should not be worried about such chaos.”
More to do
Nguyen Manh Khoi of the central housing and real estate management department, said 403 foreigners have been granted property titles in Vietnam so far, with the number increasing over the years.
Of them 203 got the titles after the Housing Law took effect, he said.
According to Vo Hoang Nam of Phu Long Real Estate Company, many foreigners have actually bought houses in Vietnam.
“However, the titles are in their Vietnamese spouses or relatives’ name.”
Nam said many foreigners and Viet kieu would be buying houses in Vietnam with loans they get from banks abroad.
“So there should be clear regulations allowing them to repatriate money when they sell a house.”
Foreigners visit a real estate project in Ho Chi Minh City. Photo: Diep Duc Minh.
Many experts also called for allowing foreigners to buy an unlimited number of houses.
According to the Housing Law, developers can only sell 30 percent of units in an apartment block to foreigners, and only a maximum of 250 foreigners can buy houses in a ward.
Nguyen Van Duc, CEO of Dat Lanh Real Estate Company, said the government should not set these limits since actual demand exceeds them.
“70 percent of apartments at Dat Lanh’s Thoi An 2 Apartments are leased by foreigners, mostly South Korean.
“Another apartment with 1,200 condos has more than 300 foreigners either renting or buying.”
He said authorities should not be afraid of unrealistic threats like a large number of foreigners living in a place would undermine social and national security.
“No one wants to sabotage their own houses. We are afraid of impossible threats.”
Le Ngoc Long, an overseas Vietnamese from Japan, said the law should categorize buyers and favor overseas Vietnamese before having more open policies for others.
“Almost all Viet kieu want to return after they are 50 years old. Viet kieu have a very strong wish to return home, including me.
“They want to be buried in their hometown. So there should be regulations allowing them to own a house easily.”