While a new law allowing foreign ownership of property in Vietnam has aroused plenty of interest among foreigners, analysts are calling for greater clarity with regard to bank mortgages and sending money into Vietnam.
Amendments to the Law on Housing, which took effect July 1, allow foreigners with valid visas and international organizations operating in Vietnam to buy up to 30 percent of an apartment building or 250 houses in a ward -- a subdistrict-level administrative area -- that can contain thousands of properties.
The old law restricted ownership to foreigners married to Vietnamese and those foreigners deemed to have made significant contributions to the nation’s development. Even they could only buy apartments, not landed property.
Many foreigners have welcomed the new law. Vingroup, Vietnam’s largest property developer, said on the first day of July 112 foreigners paid deposits for high-end apartments in its Vinhomes Central Park project now under construction in Ho Chi Minh City’s Binh Thanh District.
SGM, another developer, said 30 foreigners, or 10 percent of the total clientele, deposited on buy units in its GoldView apartments in District 4.
These figures are encouraging considering only 126 foreigners bought between 2009 and 2013.
“That’s a great start,” Marc Townsend, the Ho Chi Minh City-based managing director of CBRE Vietnam, said.
He said while some other developers did not release numbers about foreign customers, they were willing to reveal the “sources of interest.”
Most foreigners interested in buying homes are from Asian countries and territories like South Korea, Taiwan, Japan, and Singapore, he said, quoting the developers.
Only a few Europeans are excited, he said, explaining this is because “Asians tend to keep more money in cash while Westerners tend to rely very heavily on bank mortgages.”
He urged the government to make “clarifications on money in, money out” as well as on how it would keep track of foreign ownership of houses in a ward.
He wondered if the government would put out information about the number of houses in a ward that foreigners have bought or if foreigners can only know if they buy.
Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, agreed with Townsend.
“We call on the central bank and the construction ministry to give instructions on how foreign individuals and organizations can transfer money from overseas to buy homes.”
Chau said the central bank should also instruct foreign-owned banks operating in Vietnam on how to lend to foreign home buyers.
Foreigners are allowed to own a property for 50 years and can extend the period by another 50. But if they sell or gift that property to another foreigner, the latter can own it for the period left.
Chau suggested that the government should allow foreigners who buy homes from other foreigners to get the full 50-year title.
Townsend also said many foreigners are not comfortable with tax issues.
“As a foreigner who doesn’t speak Vietnamese, it’s not easy to pay tax.”
Tax agency workers cannot speak English and the tax payment procedures, which are yet to go online, take much time, he added.