It said there are only two major restrictions imposed on foreigners — a leasehold tenure of 50 years and a cap on the total number of units owned collectively by foreigners in one single condominium project or one administrative (or the equivalent of) ward.
There are no caps on the size or number of dwelling units a foreigner can buy, or additional tax.
The amendments make the market more attractive to Vietnam-based expats looking to invest in residential properties, and clears away barriers to achieving a level playing field. While the implications may not be felt immediately, it will definitely benefit the already improving residential market.
Generally, it will provide another boost to the strengthening of confidence and market sentiment, currently much needed after property investment lost its lustre since 2008.
Historically, the market has been dominated by local players — developers, contractors, buyers, and investors — partly due to foreign ownership restrictions. Other reasons are the lack of quality developers, a speculative bubble in 2006-08, a fallout of the 2009-13 speculative bubble, small size of the leasing market, limited home loan and mortgage market, and more transparent opportunities elsewhere in the region.
"This long-awaited change in the Foreign Ownership Law (you earlier call it housing law!) will help create a more balanced, transparent and sustainable residential property market in Vietnam and is expected to play a major role in correcting, to some extent, the above-mentioned issues, but the participation of the private sector players will also play a big role." The release said.
The new law, to take effect on July 1 next year, removes many of the previous restrictions on foreign individual buyers.
It allows all foreigners who are granted a Vietnamese visa to buy residential properties in the country. It also allows all foreign investment funds, banks, Vietnamese branches, and representative offices of overseas companies to buy.
Unlike earlier, when they could buy only condominiums, now they can also buy landed properties such as villas and townhouses.
There is no limit on the number of dwelling units a foreigner can buy, but the total number of units owned by foreigners must not exceed 30% of the total units in a condominium complex or 250 landed property units in one particular administrative ward.
Earlier an eligible foreigner could buy only one condominium in Vietnam.
Foreigners can sub-lease, trade, inherit, and collateralise their property. Previously, they could buy only for their own occupation.
The tenure allowed to foreign individuals buying homes is a 50-year leasehold with renewal possibility upon expiration, which condition remains unchanged. Foreigners married to Vietnamese citizens are entitled to freehold tenure.