Vietnam is a Southeast Asian country. It is not as big as other countries in the world, but it is one of the most visited countries in Southeast Asia.
Vietnam owns its pride in having stunning beaches and other tourists’ spots within premises. Besides, many opportunities wait for investors. That is the reason that many foreign investors want to buy or own land property in Vietnam for business purposes.
However, is it possible for a foreigner to buy a land property in Vietnam? It is a common question for every foreign investor planning to invest in Vietnam.
Can foreigners buy land in Vietnam?
A foreigner can’t own a property like land property in Vietnam. Like some of the countries in Southeast Asia, foreigners had not permitted to buy a property in the state. Land properties in Vietnam are owned by Vietnamese but controlled by the Vietnamese government.
It was in the national law of Vietnam that foreigner and foreign organizations are not permitted to own land or buy property in the state. However, foreign investors can lease a land property in Vietnam under terms and conditions.
The allotted time of lease or rent is about 50 to 70 years. However, the Vietnamese government is considering raising the term of lease or rent to 99 years instead of 50 years. However, extending the time of the lease after the allotted time is up to the decision of the Vietnamese government; it is upon negotiation.
Guillaume Rondan from Movetoasia illustrates how you can still invest in some rural locations even as a foreigner and trade lands on the behalf of your own company. You can learn how to incorporate such a company in Vietnam in this in-depth guide and also get knowledge about the property markets and opportunities on this full page.
Vietnam’s Land Use Right Certificate or LURC
Fortunately, the Vietnamese government imposes a LURC or Land Use Right Certificate that allows the foreign investor to lease a land property in the state. It makes foreign investors lease land at ease. However, it has twined with responsibility; every investor must have to comply with requirements and do whatever has stated in the agreement, or else the right to use the land property had withdrawn. Besides, if an investor complies with everything, then they will be given the right to control and use the land within the allocated terms and conditions by the Vietnamese government.
The LURC or Land Use Rights Certificate is essential in renting a land property in Vietnam. It is the very first thing to consider before renting a land property in Vietnam. Without it, it is impossible to invest land property, most especially if you are a foreigner in the country.
Buying the LURC direct from former developers
Yes, it is possible to buy the right to use the land property in Vietnam directly from the Vietnamese developers on the primary market, or from the foreigner like you who formerly owned the land property or even infrastructures developed.
However, there are limits to buying in the secondary market. Foreign investors who invest in the secondary market cannot purchase the property from the local citizens, most especially if the foreign quota has already filled. That is the reason that most of the foreign investors choose to be the primary market of land property.
The importance of the LURC or Land Use Right Certificate
The LURC or Land Use Right Certificate is important in leasing or renting a land property in Vietnam. It is the first requirement before having the right to use the land. Without LURC it is impossible to have the right to use land property or infrastructures. Whether the investor is the primary market or secondary market, LURC is required. That is the reason that if an investor wants a smooth transaction with the Vietnamese government in leasing the land property, everyone must know and learn about the law and know the importance of the LURC.
The type of investment a foreign investor in renting the land property in Vietnam depends on the payment schedule. Every foreign investor can lease a property in annual payment, or they call annual arrangement, or to pay the entire amount in one shot they called the one-off arrangement method.
In an annual arrangement method of renting a property, the foreign investor has permitted to use the land property for own purposes right after acquiring the LURC or the certificate of right. While the one-off arrangement method of leasing land property is allowing the foreign investor to mortgage or sublease the property to a secondary investor as well as involved assets after complying with everything. Besides, the Vietnamese government provides the opportunity to share capital in the form of the Land Use Right Certificate and assets to a joint-venture.
Why is it difficult for a foreigner to own land property in Vietnam?
Like some other countries in Southeast Asia, Vietnam does not permit foreigners or foreign investors to buy or control land properties and assets to protect the security of the country. Besides, even foreigner investors who had given the right to use land property are not permitted to use properties in areas reserved to protect the state defense and security.
It is the Vietnam government that will decide which property or land area an investor can use for whatever purpose they want for it. However, everything is upon negotiation with the state government. After all, the Vietnamese government’s decision will prevail.
The pink book
Every investor will receive an owner certificate, and this certificate was called the pink book. Its name has derived from the literal pink book that the investor acquires after purchasing the right to use properties in Vietnam. It is the title to verify the ownership of properties.
The red book
The red book is another title to verify the ownership of investors; however, it has used longer term than the pink book. It is a title for ownership of land properties instead of infrastructure like houses and condos.