Circular 19 introduces a number of important articles on foreign ownership of residential houses, specifying limitations on number of residential houses foreigners are permitted to own and how a foreign individual may lease his house.

1.  Limitations on the number of residential houses owned by foreign organisations and individuals (“Foreigners”):

For condominium, Foreigners may own up to 30% of the total number of residential units in a condominium complex, and up to 30% of total number of units in each block where there are multiple blocks in a complex.

For residential house, in addition to the limitation of 250 separate residential houses to be owned by a Foreigner in one geographical area with population equivalent to a ward-level administrative unit (“Ward Area”) provided in the Housing Law, Circular 19 further sets out the following limitations:

(i)   if there is only one residential housing project in a Ward Area, the Foreigner is permitted to own a maximum of 10% of the total number of residential houses in such project; or
(ii)  if there are two or more residential housing projects in a Ward Area, the Foreigner may own maximum of 10% of the number of residential houses in each project; and a maximum of 250 residential houses in all projects located in such Ward Area.

We note that every housing transaction undertaken by Foreigners exceeding the limitations as referred to above and every housing transaction in which Foreigners are not eligible to be owners of the residential house are invalid and Foreigner will not be granted a Certificate of land use rights and of buildings and other assets attached to the land (“Ownership Certificate”). Accordingly, prior to purchasing a house, Foreigners should check the following information on the website of relevant Department of Construction:

(i)   the list of projects and number of houses in the areas where Foreigners are not permitted to own residential housing; and
(ii)  the number of houses (including apartment buildings and individual residential houses) permitted to be owned by Foreigners in each condominium or housing project.

2.  Management of residential leasing activities by Foreigners

Prior to entering into any residential lease agreement, lessor who is a Foreigner must send a written notice to Housing Management Office of the district in which his house is located. This notice must include the following information:

(i)   name of the owner;
(ii)  address of the house;
(iii) term of lease;
(iv) a copy of Certificate of ownership of the house; and
(v)  purposes of using the house.

In case there is any regulation on business registration for residential leasing activities by Foreigners, such lessors are required to apply for registration in accordance with the laws. Furthermore, Foreigners must send a written notice to the District Housing Management Office upon termination of the lease agreements.

It is not clear whether any regulations have been set out to govern the scope of business registration for residential leasing activities by lessors being Foreigners. Therefore, we will keep you posted on further clarifications.

Circular No. 19/2016/TT-BXD, dated 30 June 2016 (valid 15 August 2016)

DN Legal, 5 August 2016