Barriers freeze foreign buying frenzy
Despite the recent revision to the Law on Housing, which has created a more favourable legal system for foreigners to buy and own houses in Vietnam, there are still some barriers which should be removed to encourage foreign buyers.
According to Cosimo Jencks, chief representative of Hongkong Land, the government’s allowance of foreigners to purchase housing in Vietnam is a step in the right direction.
The revised law however should review the stipulation that only 30% of an apartment building in a commune and 10 per cent of housing development can be owned by foreigners.
“This should certainly be scrapped for second home developments. The process of documentation should be made quick and easy, and the financing options available should be improved,” Jencks told VIR.
Oliver Massmann, partner and general director of Duane Morris Vietnam LLC law firm agrees, adding that the restriction on the number of houses foreigners are allowed to buy in an area or in a building could ruin their expectations.
“In this regard, I would like to note that foreigners in Vietnam like living together in one community. Thus, such a restriction should be revisited in the implementing decrees of the Housing Law to reflect the positive purposes of the law,” he added.
Massmann added that a lack of legal framework for foreigners to mortgage assets, borrow money, register ownership, along with rising prices and complicated transfer procedures are the main hurdles for foreigners wishing to buy houses in Vietnam.
Meanwhile, Kenneth M Atkinson, executive chairman of Grant Thornton Vietnam, said that the current regulations on the repatriation of profits and uncertainty about whether owning a property entitles foreigners to a visa and the right to live in the property were concerns.
Other concerns were the continued devaluation of the Vietnamese dong which will reduce the opportunity to make capital gains in foreign currency.
The relaxation of foreign housing ownership regulations combined with promotional sales programmes offered by developers is reaping results after three months of implementation.
According to CBRE Vietnam, since the new law took effect, anecdotal evidence shows that some selected high-end projects with good locations, adequate facilities and were developed by prestigious investors have sold up to 15% of their properties to foreigners and overseas Vietnamese.
From July to October this year, Vingroup reportedly received deposits for 400 units from foreign buyers.
Singaporean developer CapitaLand confirmed that about 15% of the total transactions at Vista Verde have been bought by foreigners.
Keppel Land, another investor from Singapore also reported that foreign enquiries for their high-end condominium project Estella Heights have increased by 30%.