I. The role and potential of investment in serviced apartments
Serviced apartments are a real estate model combining residential housing with professional accommodation services, meeting the increasing demand from long-term foreign experts, entrepreneurs, and guests. With the trends of urbanization and tourism growth, such a type of investment is attracting many individual and organizational investors due to its ability to generate stable cash flows, good profit margins, and potential for asset value appreciation.
Current law does not prohibit investing in serviced apartments (as provided in Article 6 of the Law on Investment 2020), as long as business activities comply with applicable business conditions (if any) and specialized laws such as the Law on Housing, the Law on Real Estate Business, and the Law on Land.
Serviced apartment investment is considered to offer better profitability than ordinary long-term rentals. The average return on investment ranges from 6% to 10% per annum, depending on location, and quality of management and operations. Such a model is also flexible in adjusting rental prices by season and market demand, well-suited to international tenants willing to pay a premium for quality services. Thus, It is increasingly attractive to individual investors and enterprises with free capital.
II. Legal regulations on investment in serviced apartments
1. What is investment in serviced apartments?
The law does not yet provide an official legal definition for “serviced apartment”, but it can generally be understood as a type of apartment fully furnished and offering services like a hotel (including housekeeping, reception, etc.), typically rented out on a short-term or medium-term basis, governed under the Law on Housing and the Law on Real Estate Business.
2. Conditions for investing in serviced apartments
According to the Law on Real Estate Business 2023, Individuals who rent out apartments on a private basis are not required to establish a business, as long as the activity is small and irregular. However, if the operating model is large-scale with an organizational nature, the investor needs to:
- Registering to establish an enterprise (under the Law on Enterprise 2020);
- Obtaining a Certificate of House Ownership (for the apartment intended to rent out);
- Meeting real estate business conditions (in terms of capital, legal documents, etc.);
- Fulfilling tax obligations under Circular 40/2021/TT-BTC.
The distinction between individual activities and organized business operations is a critical legal factor for investors to determine the appropriate investment structure.
3. Lease agreements and legal issues related to investment in serviced apartments
The lease contract for a serviced apartment is a crucial legal foundation governed by Article 398 of the Civil Code 2015. The contract should be made in writing and specify:
- Information of the lessor and the lessee;
- Description of the apartment, including status of furnishings;
- Lease term, cost, and payment method;
- Rights and obligations of the parties;
- Provisions on compensation and dispute resolution.
If the leasing activity is characterized as short-term accommodation services, the investor must register with the competent authority under the Law on Tourism.
III. Questions on investment in serviced apartments
1. Is investment in serviced apartments suitable for individual investors?
Serviced apartment investment is indeed suitable for individual investors. It is an investment model appropriate for individuals with small and medium capital who are capable of managing the apartment themselves or hiring professional operators. The investment does not require overly complicated procedures if leasing just a few small units. However, individuals must still fully comply with tax and related legal obligations to ensure long-term legal safety.
2. What laws govern investment activities in serviced apartments in Vietnam?
Investment and business activities involving serviced apartments are governed by multiple legal documents, including:
- The Law on Real Estate Business 2023;
- The Law on Housing 2023;
- The Law on Enterprise 2020 (if operating as an organization);
- The Civil Code 2015 (for lease contracts);
- The Law on Investment 2020 and other relevant regulations.
3. What are the regulations on quality and safety in serviced apartments?
According to the Law on Housing 2023 and Circular 03/2021 promulgating QCVN 04:2021/BXD – National Technical Regulation on Apartment Buildings, serviced apartments must meet all standards on construction quality, fire prevention and fighting systems, lighting, ventilation, water supply and drainage, and environmental requirements. If providing hotel services (food, laundry, reception), it is necessary to register the accommodation service business under the Law on Tourism and comply with relevant conditional business requirements.
4. What are the conditions for transferring ownership of a serviced apartment?
The transfer of serviced apartment ownership must meet the following conditions:
- A valid Certificate of Ownership;
- A sale contract notarized or authenticated;
- Completion of financial obligations (personal income tax, registration fee);
- Registration of change at the Land Registration Office under the 2024 Law on Land.
A lawful transfer serves as the basis for the buyer to be recognized as the legal owner and to exploit the asset lawfully.
5. What are the legal responsibilities when disputes arise in serviced apartment investment?
In the process of leasing or transferring, disputes are often unavoidable. In case of disputes:
- If there is a clear contract: resolution will follow the contract’s terms;
- If there isn’t a clear contract: general provisions of the Civil Code 2015 will apply;
- The breaching party may file a lawsuit at the Court under the Civil Procedure Code 2015.
It is advisable to keep all documents, contracts, and receipts as legal evidence in the event of disputes.
6. What are the legal conditions for a serviced apartment sale contract?
For a serviced apartment sale contract to be legally valid, it must:
- Be supported by the seller’s Certificate of Ownership;
- Be executed at a notary office;
- Be registered for transfer at the Land Registration Office;
- Fulfill tax obligations (personal income tax, registration fee).
These are mandatory conditions to avoid legal risks in ownership and exploitation of the apartment.
IV. Legal advisory services on investment in serviced apartments
To ensure that investment in serviced apartments is implemented in compliance with the law and to avoid potential risks, seeking professional legal consulting services is essential. NPLAW provides comprehensive advisory services, from contract drafting, answering legal questions, to supporting the procedural implementation. This all-round support will help you save time and secure successful transactions.
