Restrictions on foreign ownership in real estate are a legal mechanism designed to limit the quantity and duration of real estate ownership by foreign entities, including but not limited to foreign organizations and individuals. Through this article, NPLaw provides our valued clients with the essential legal information regarding foreign ownership limits in the real estate sector.
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Restrictions on foreign ownership in real estate are a legal mechanism designed to limit the quantity and duration of real estate ownership by foreign entities, including but not limited to foreign organizations and individuals. Through this article, NPLaw provides our valued clients with the essential legal information regarding foreign ownership limits in the real estate sector.
I. Role of foreign ownership limits in real estate
Restrictions on foreign ownership play a vital role in various aspects, including:
- Protection of national interests: Safeguarding national assets and the interests of local citizens, ensuring that land resources are not wholly controlled by foreign investors.
- Stabilization of the real estate market: Preventing speculation and price volatility, thereby maintaining a stable and sustainable market.
- Promotion of domestic investment: Encouraging domestic investors to participate in the real estate market, thus fostering local economic development.
II. Legal regulations on foreign ownership limits in real estate
1. What is a foreign ownership limit in real estate?
A foreign ownership limit in real estate in Vietnam refers to legal provisions that restrict the ratio and number of real estate properties that foreign individuals and organizations may own. The primary purpose of these restrictions is to regulate the real estate market, prevent excessive foreign ownership, and ensure national defense and social security.
2. Forms of foreign ownership limits in real estate
According to current regulations, the foreign ownership limits in real estate include:
- Quantity restrictions: Foreign individuals and organizations may own no more than 30% of the total number of apartments in a condominium building. Alternatively, they may own no more than 30% of apartments in each building and no more than 30% of all apartments across buildings in an area with a population equivalent to a ward. In areas with ward-level populations or along a street, foreign ownership is reached at a maximum of 250 apartments.
- Form of ownership restrictions: Foreigners are not permitted to own land in Vietnam. However, they may own residential properties (apartments or detached houses in projects) associated with land use rights on a leasehold basis.
- Time limits: Foreign individuals may own residential property for a maximum period of 50 years from the date of issuance of the Ownership Certificate. This period may be extended in accordance with the law.
- Geographical restrictions: Foreigners are prohibited from purchasing or owning property in areas restricted or prohibited to foreign activities for reasons of national defense or security.
3. Are foreigners allowed to own houses in Vietnam?
According to Article 17 of the Law on Housing 2023:
- Foreign organizations and individuals permitted to own residential houses in Vietnam include:
+ Foreign-invested economic organizations that invest in the construction of housing projects in accordance with this Law and other relevant regulations;
+ Foreign-invested economic organizations; branches and representative offices of foreign enterprises; foreign investment funds and foreign bank branches operating in Vietnam (hereinafter referred to as foreign organizations);
+ Foreign individuals legally entering Vietnam.
Thus, foreigners are legally entitled to own housing in Vietnam under the Law on Housing.
III. Questions on foreign ownership limits in real estate
1. What are the conditions for foreign individuals and organizations to own property in Vietnam?
According to Article 18 of the Law on Housing 2023, the conditions are as follows:
- For organizations:
+ Foreign-invested economic organizations investing in residential housing construction projects in accordance with the Housing Law 2023 and relevant laws must be designated as the project developer as per regulations.
+ Foreign-invested economic organizations; ; branches and representative offices of foreign enterprises; foreign investment funds and foreign bank branches operating in Vietnam must possess a valid Investment Registration Certificate, Enterprise Registration Certificate, or other legally recognized documents demonstrating the right to operate or establish in Vietnam, issued by a competent Vietnamese authority.
- For individuals:
+ Foreign individuals must be legally admitted into Vietnam and must not fall under the categories entitled to diplomatic or consular immunity under Vietnamese law.
2. How many properties can foreign individuals or organizations own in Vietnam?
According to Clause 2, Article 5 of Decree 95/2024/ND-CP:
- For condominium buildings (including mixed-use buildings): Foreign individuals and organizations may own up to 30% of the total number of residential apartments in a building. In the case of buildings with multiple blocks or towers sharing a common podium, the 30% limit applies to each individual block or tower.
- For detached houses in areas with ward-equivalent populations: If there is only one housing project in the area, foreigners may own no more than 250 houses. If there are two or more projects, foreign ownership across all projects is reached at 250 houses. If this quota is reached in the area, no additional ownership in other projects within the same area is allowed.
Hence, the ownership ratio for foreign individuals and organizations is no more than 250 housing units.
3. How are the foreign ownership limits in real estate legally defined?
Article 19 of the Law on Housing 2023 stipulates:
- Foreign individuals and organizations under points (b) and (c), Clause 1, Article 17 may purchase, lease-purchase, receive as gifts, inherit, and own no more than 30% of apartments in a condominium building. For detached houses (villas or townhouses), they may own no more than 250 houses in an area with a ward-level population.
- If there are multiple condominium buildings or projects in a single ward-equivalent area or along a street, foreign ownership is still limited to the aforementioned quantities.
Thus, foreign ownership is reached at 30% for condominiums and 250 detached housing within specified areas.
4. Can the limit on foreign ownership in real estate be increased?
According to Point (b), Clause 2, Article 20 of the Law on Housing 2023:
- In case a foreign organization or individual is gifted or inherits a house that is not in cases specified in Point b, Clause 2, Article 17 of this Law or exceeds the number of houses specified in Article 19 of this Law or is located in an area requiring national defense and security as specified in Article 16 of this Law, it shall only be entitled to the value of the house.
Therefore, even in exceptional cases leading to excess ownership, foreigners are not permitted to legally hold the property but are only entitled to its monetary value.
There is no legal mechanism currently in place to expand the foreign ownership limit in real estate.
5. Do foreign ownership limits apply to all business sectors?
The foreign ownership limits in real estate apply primarily to residential property (apartments, detached houses in projects) and do not extend to all business sectors.
For foreign-invested enterprises operating in other sectors (including real estate development), ownership of property for business purposes is governed by the Law on Investment and other specialized laws, and is not directly subject to the residential ownership restrictions applicable to individuals or organizations purchasing for residential use.
IV. Legal advisory services on foreign ownership limits in real estate
Understanding the need for legal insights into foreign ownership restrictions in real estate, NPLaw with extensive experience in diverse legal services offers comprehensive consultation on all matters related to foreign ownership limits.
For detailed guidance from our seasoned lawyers, please contact:
