Archive | Legacy RSS feed for this section

Land Lease – Another Business Hardship

27 Jul
VNREThe enforcement of the Government Decree No. 121/2011/ND-CP on amendments and supplements to some articles in the Decree No. 142 on the collection of land and water surface rents is causing more difficulties for businesses which are also being troubled by economic problems, high interest rates and manufacturing downscale.

At a recent workshop entitled “Solving land leasing problems for businesses and tax-related issues” held in Hanoi by the Vietnam Chamber of Commerce and Industry (VCCI), the Ministry of Finance, the Administrative Procedure Control Agency (APCA) under the Government Office, the Ministry of Natural Resources and Environment, and the Vietnam Business Forum Newspaper, many delegates complained about higher land rent in 2011 over 2010 and gave voice to regulations on land rent rates applied to businesses at tax offices.

According to this decree, land rent rates are determined on market prices of land-use rights transfer in an ordinary business condition instead of being fixed annually by the provincial or municipal People’s Committees. Currently, the percentage of land rent rates has been revised up from 0.5 percent to 1.5 percent of the total rent value, or a three-fold increase, while land rent rates also climbed from 1.5 to 5 folds from the previous rates, depending on locality and type of land.

A representative from the Economics and Land Development Department under the Ministry of Natural Resources and Environment said the ongoing reality showed that costs for land clearance are very high; market price-based compensations for non-farming land are also relatively high, and if rent rates are not hike to 1.5 – 2 percent, the State Budget will have “nothing to collect.” Moreover, Vietnam has eight or nine first-grade urban zones where land prices are extremely high and rising strongly.

Director of Hai Phong City-based Hong An Equipment Company said his company was shocked at the rent notice dispatched by the Hong Bang District Tax Office as the amount of rents soared to VND412 million in 2011, 18.5 times higher than in 2010. Not only Hong An Equipment Company, many other companies were also upset by new rent notices in 2011. For instance, Hai Phong Auto Company will have to pay VND3,185 million in 2011, a five-time fold increase from VND626 million in 2010; and the Construction Joint Stock Company No. 9 saw a more than 10-time increase in rent pay from VND55 million in 2010 to VND555 million in 2011.

A representative from Ha Long Small and Medium-sized Enterprise Association, Quang Ninh province said land rent rates in 2011 were 1.5 – 5 times higher than in 2006; and the rent rate was also raised from 0.5 percent to 1.5 percent, or a 3-fold rise over 2006. It is extremely irrational when land rent expenses jumped 4.5 – 15 times within just five years.

Therefore, most businesses agreed that the Decree 121 needs a proper enforcement roadmap and schedule. The change in rent rates must be based on specific conditions of each business and a sudden big change is unacceptable.

“The adjustment to land rent must be practicable. A careful study in the applicable time is essential to ensure harmonious benefits of businesses and the government and suit economic conditions of each locality,” said chairman of Ha Long Small and Medium-sized Enterprise Association.

Attending companies requested the government to reconsider land rent rates and allow a delay in land tax payment in 2011 to 2012 and subsequent years.

After hearing and recording opinions from businesses, Deputy Finance Minister Do Hoang Anh Tuan said the Finance Ministry and the VCCI will send their requests to competent ministries and government agencies to find best solutions to support companies to deal with new difficulties. He admitted that the time for enforcing the Decree 121 is not convenient and its contents are not sufficient. Therefore, companies can put forth proper rates of land rents for 2011 to cope with existing difficulties.

Reported by Trinh Hai | VCCI News

Buying a house in Vietnam?

23 Feb
VNREHousing is not only a great asset of individuals, households, housing is also considered a necessary condition ranks third after eating and wearing to help people can safely participate in labor, make wealth for society. For foreign investors need to do business, study and live in Vietnam, the housing is one of the top concerns when they enter Vietnam.
Currently, the number of foreigners entering Vietnam to work and live through many different paths. According to statistics from 2004 to the end of 2007 had more than 80,000 foreigners, of which nearly 25,000 people entered Vietnam in the way investment cooperation, about 1,600 people entered Vietnam to work for foreign representative offices, international organizations and over 54,000 foreigners entered Vietnam and worked in the fields of health, education, culture and sports,… By the end of 2007 had more than 60 embassies and 30 consulates general, based in Vietnam. Out of about 1,600 foreigners worked in the diplomatic field in Vietnam, nearly 1,400 people worked for the embassy and more than 200 people worked in the Consulate. Besides above numbers, there were more than 30 foreigners working for 16 international organizations are operating in Vietnam (including UN organizations such as UNICEF, UNPA, UNDP… the other world organizations such as the World Bank, Asian Development Bank, International Monetary Fund…).

In the field of foreign investment in Vietnam from 1988 to the end of 2007 there were about 9,500 projects with total registered investment capital of more than 98 billion dollars, of which more than 6,000 100-percent foreign capital projects, more than 2,000 joint-venture projects. The localities had many foreign investment projects are: Ho Chi Minh City had more than 2,000 projects with total registered investment capital nearly $16 billion, Ha Noi City had 800 projects with more than $10 billion; Dong Nai province had 800 projects with more than $9 billion dollars, Binh Duong had over 1200 projects with more than $6 billion…

The views of the Party and Goverment are reflected in the Resolution on the pilot for the organization or individual foreigners to buy and own houses in Vietnam:

a) To concretize the policy of the Party on the initiative of international economic integration in the direction of multilateralism, diversification, taking advantage of every opportunity to develop the country on the principle of maintaining independence and socialist orientation, national sovereignty and national cultural identity; creating the most favorable conditions for foreign investors doing business in Vietnam.

b) Creating favorable conditions for foreigner experts, scientists, managers have better living conditions for stable, peace of mind working long-term in Vietnam. Creating conditions for foreign enterprises operating in Vietnam have conditions to create stable accomodation for employees working in those enterprises (regardless of domestic or foreigner), contribute to social welfare policy.


The foreigner subjects have right to buy and own houses in Vietnam

The Goverment only allows 05 groups subject to buy and own houses in Vietnam, namely:

a) Individuals are investing directly in Vietnam in accordance with the law on investment or working in enterprises in Vietnam (including domestic enterprises and foreign capital enterprises).

b) Individuals have contributions to Vietnam and was offered medal by President Socialist Republic of Vietnam.

c) Individuals have graduated university or equivalent degree, who have the knowledge and special skills which Vietnam needs.

d) Foreign individuals married to Vietnam citizen.

e) The enterprises are operating in Vietnam under the investment law need of housing for people working in businesses. These enterprises include joint venture between foreign investors to domestic investors and enterprises with 100% foreign capital, enterprises have foreigner worked on the basis of business cooperation contracts.

Conditions to purchase and own house in Vietnam

Under the rules of Resolution No. 19/2008/QH12, the five subjects above are only allowed to buy and own house in Vietnam if they meet the following conditions:

– For individuals who must live and work in Vietnam, were lisenced to live in Vietnam for least 01 years. Diplomatic passports are not allowed to buy houses.

– For enterprises with foreign investment which must have investment certificates or documents equivalent to the investment certificates issued by the competent authorities of Vietnam.

– Housing is the apartment in the housing development project and not locating in prohibit or restrict areas.

Purchasing procedures and ownership housing certificate

– The buying and selling houses must through the purchase contract was signed under the provisions of the Housing Law. In case, foreigners buy houses of the real estate businesses the housing purchase contract must not be notarized; If the purchase house of individual in urban areas, the housing purchase contract must be authenticated by the district People’s Committee; If the purchase house in rural areas, the housing purchase contract must be certified by the commune People’s Committee.

– After signing the purchase contract, the parties must pay the financial obligations according to the State, after fulfilling financial obligations buyer must file the record to offer issuance of ownership housing certificate, including housing purchase contract, ownership housing certificate of seller and temporary residence paper of the buyer.

– Time issues ownership housing certificate for buyers in the 30 days.

Rights and obligations of housing owners

a) Foreign individual only owns 01 apartments in the same time. Duration owned apartment is maximum of 50 years and owner only use to stay, must not for lease, must not use the apartment for other purposes.

Owners can only sell or offer apartments after 01 years from the date of issuance of ownership housing certificate, unless special reasons that owners can not continue to reside in Vietnam such as sick must return home… is entitled to sell or donate the apartment before this deadline.

When the time limit expired own house in Vietnam, the owners have to sell or donate the apartment for someone else, otherwise the ownership housing certificate will be revoked.

b) Enterprises with foreign investment have rights to buy and own one or several apartments in the housing development for the employees are working in the business. The duration of ownership of the enterprise correlative to the time limit in the investment certificate issued. As for individual, enterprises can not use for be rented or use for other purposes. When the investment certificate expire or enterprise bankrupts, the apartment will be handled in accordance with the enterprise law, bankruptcy law and other regulations of Vietnam Law.

c) The obligations of owners: the owners have to fulfill the obligations according to regulations of Vietnam law such as: Environment law, social security, fire prevention, rules on residence, travel of foreigners, strict implementation of regulations on housing transactions…

Handling violations and disputes, complaints

The handling of violations: The organizations or individuals are the wrong subjects, unqualified or fake documents to own houses in Vietnam will not be granted ownership housing certificate. If after the issuance of certificates that are detected the certificate shall be revoked and purchased housing can not be used. In case foreigners use the house for illegal activities, foreigners will be expelled from Vietnam, the house will be resolved by decision of the Court and according to the provisions of the Vietnam law.

Reported by lawyer Victory Dang |
Photo Courtesy of Vu Ha Duy

Housing for overseas Vietnamese: open policy, closed market

26 Oct
VNRE Decree 71/2010/ND-CP has opened up opportunities for overseas Vietnamese to own house, but the housing market is expected no major change in the short term.
All overseas Vietnamese have right to buy house. This is one of the important contents of the Decree 71/2010/ND-CP of the Government has come into effect from August 8th 2010 and guided by the Circular issued on September 9th 2010. While the real estate market is groomy, the Government’s dynamic is expected to bring a new vatality to the market.

Opportunities for overseas Vietnamese to own house

The Circular guiding the implementation of overseas Vietnamese to buy houses under Decree 71, two overseas Vietnamese objectd will have right to to buy house in Vietnam, including the purchase unlimited and only buy a home. Accordingly, the object is not limited to buying overseas Vietnamese who are also hold citizenship in Vietnam, the Vietnamese origin directly invest in Vietnam, scientists, culturist, people have special skills that Vietnam’ agencies and organizations need and are working in Vietnam, people has husband or wife is Vietnam citizen who live in the country.

Vietnam origin are not under the subjects mentioned above, but have been granted visa-free and allowed to reside in Vietnam for 3 months or more will have right to owns a private house or apartment in Vietnam.

According to report of the Ministry of Construction, about 70% of nearly 4 million Vietnamese in foreign countries retain Vietnamese citizenship. This means the most of Vietnam expatriates will be bought and owned house in Vietnam with an unlimited number as people in the country.

In addition, according to the Circular guiding the implementation of Decree 71, overseas Vietnamese only own house or land in the project by the real estate development unit sales. For the land of individual, private, agricultural land (non-functional to reside), overseas compatiots are not allowed to own or buy. However, if the land is enclosed housing, certificate papers for land use rights and assets attached to land, overseas Vietnamese are still property.

Legalized house rather than buying

Mr.Tran Minh Hoang, Chairman of the Board – Vinaland Real Estate Company, said that this regulations the real estate market will be stimulated again after a long time frozen. “In 2009, economic decline, making remittances to Vietnam decreased. However, this amount is nearly US $7 billion. It shows that the financial capacity of overseas Vietnamese is very high. This will be an important capital channel for real estate market, “he said.

However, in remittances annually term, mostly used to buy a home (due to a relative’s name). That’s why Mr.Le Hoang Chau, Chairman of HCMC Real Estate Association, said that overseas will take advantage of the opening of the Decree 71 to legalize the property previously purchased rather than buying new house. Thus, the housing market will remain unchanged in the short term.

Mr.Ngo Duong Hoang Thao, a Vietnamese residents in The U.S, General Director of a big company in Vietnam, also said that these will have trend on the overseas Vietnamese to buy house, but in immediate, they will legalize the house by the relative’s name rather than buying a new home. He also said, he will soon legalize two houses bought in Vietnam since 2002.

On the other hand, many overseas Vietnamese are afraid of home prices in Vietnam are too high, while the economic situation is not through difficult yet in the country where they are living. At the seminar guide and answers about property, land use and housing for overseas Vietnamese and their relatives recently in Vietnam, Mrs.Nguyen Thi Vui, a Vietnamese residents in Canadian, said she plans to buy a house in Vietnam and was introduced a 150m2 apartment in Binh Thanh district – HCM City with price more than US $350,000.

“Living conditions, activities and transportation infrastructure in Toronto – Canada are higher than Hochiminh City, but no such price. Housing in Vietnam are too expensive!”, Mrs.Vui said. High price is one of the reasons makes overseas Vietnamese haven’t decided to buy houses at this time.

According to Mr.Tran Ngoc Nhat, Former head of marketing department of Novaland Real Estate Company, overseas Vietnamese often returns Vietnam during the Western New Year and Lunar New Year. On this occasion, they will review the information if they want to buy house in Vietnam. Thus, at least to wait through the Lunar New to see the impact of Decree 71 for the Vietnam real estate market.

Reported by Dang Hung/ NCDT

Post-Decree 71: Easy for Long Term, Hard for Short Term Investment

7 Sep
VNREThe Decree 71/2010/ND-CP guiding the implementation of the Law on Residential Housing, which officially took effect on August 8, 2010, has recently caught the high attention of real estate investors in Vietnam. How will this decree affect the real estate market in the upcoming time?

Difficult for short-term speculative projects

The transfer of project land in the form of capital-contributing investment contracts is quite easy before the Decree 71 came to effect. Most real estate companies liquidated old capital-contributing contracts and replaced the name of new buyers or set up contract appendices. Sellers pay a trading fee specified by project investors (usually less than 1 percent of total transaction value) and property transfer tax. It usually takes one week to complete this transaction.

In addition, in order to purchase this type of real estate, speculators only need to look at the design map to select products without having to pay field visit as other types of residential housing and land.

The facility of transactions in the form of capital contributing contracts makes this market segment have highest level of liquidity on the real estate market. In Ho Chi Minh City, most speculators tread water with this form of property. Meanwhile, to trade pink residence books, investors need at least two weeks (normally four weeks) for the notarization of contracts, tax payment and registration.

However, since August 8, 2010, the Decree 71 disallows the transfer of project land in the form of capital contributing contracts (details in Clause 1, Article 60). Hence, cooperation contracts signed before August 8, 2010 will not be allowed to transfer until purchase contracts are reached with investors. With this policy, the chance of “treading water” will become much more difficult than before.

The market of long-term investors

Under the impact of Decree 71, when the real estate market stops trading project land in the form of capital-contributing contracts, other market segments are expected to be more active. The demand will be switched to land and houses with ownership certificates instead of investing in project land. Besides, the supply in these segments will also increase.

For example, a man owns two types of real estate land, namely house and land with ownership certificate and a product-sharing contract, he can only sells the first one for money when he needs. With low liquidity, this market segment will attract medium and long-term investors.

Besides, on the primary market, there will be no longer much room for speculators to complete a deal in a very short term because the Decree 71 provides investors cannot use more than 20 percent of houses in each project to raise funds in the form of capital-contributing contracts. The transfer is not allowed until purchase contracts with investors are signed. For the rest of apartments, speculators hardly tread water, given longer time and higher cost than old-type investments.

Difficult to increase prices in the short term

In the short term, the real estate market in Vietnam will hardly increase prices following the enactment of the Decree 71 for the below reasons:

First, without speculators on the secondary market, the market lacks the ground for price hike.

Secondly, the State Bank of Vietnam (SBV) is likely to pursue tightened monetary policies in the coming time to stabilize the local dong. Besides, banks are discouraged to provide loans for real estate investors.

Thirdly, after a long period of price rise, property prices are not low in relation to other regional countries. The price rate in Ho Chi Minh City climbed 2-4 times since early 2006 while the inflation in Hanoi is even higher in the same period.

In the long term, the Decree 71 helps minimise risks for buyers. This strengthens the confidence of investors in long-term housing investments. Additionally, a brake on real estate speculation will make the market develop more sustainably.

The enforcement of the Decree 71 aims to weaken speculation and reduce market liquidity. Tight monetary policies and limited lending for real estate investments are the devastating news for the real estate market in the short term. In the long term, the government’s policy for the sustained real estate market development is necessary.

Source: VCCI News

Decree 71 Irons Out Real Estate Market

26 Aug
VNREThe real estate market will become more stable, open and transparent in the coming period, said Deputy Head of the Housing and Real Estate Market Management Agency, Nguyen Xuan Thien, after Governmental Decree 71/2010/ND-CP dated June 23, 2010 containing detailed regulations and guiding the implementation of the Law on Housing came into force.
The Ministry of Construction is now busy compiling a circular to guide the decree. Positive improvements were seen in the management of transactions made in the domestic real estate market thus far with support of the existing legal system, particularly the Law on Housing, the Law on Real Estate Business, the Land Law and relevant guiding decrees.

However, these guiding legal documents, particularly Governmental Decree 90/2006/ND-CP guiding the implementation of the Law on Housing, have exposed several problems as they have yet to all-inclusively cover housing issues and fail to keep up with the property markets rapid growth. Therefore, on June 23, 2010 the Government enacted Decree 71 to replace Decree 90/2006/ND-CP containing detailed regulations and guiding the implementation of the Law on Housing with a view to shedding more light on housing and real estate trading issues.

Phan Thanh Mai, MA, head of the Executive Committee of the Vietnam Real Estate Center Network in Northern Areas, said Decree 71/2010/ND-CP comprises open regulations on capital sources relative to the real estate market such as those covering bond issuances and loans from investment funds; regulations on the transfer of the land use rights with infrastructure to secondary investors after site clearance and the compensation phase – secondary investors, if raising capital for their projects, must get written approval from the primary investors after the primary investors obtain land use certificates; regulations on capital contribution for profits/products sharing, etc.

Decree 71 covers a wide range of issues, including the real estate market. Accordingly, clauses 4, 9, 43 as well as clauses 60-72 clarify grade 1 and grade 2 housing projects and independent housing projects and define and identify different types of property investors and traders in the market, including the developers of grade 1, grade 2 and independent housing projects, property businesses, individuals and organizations pooling capital on property projects and genuine buyers. Decree 71 also contains regulations describing ways the project developers raise capital from the buyers and concrete conditions to diverse capital-raising methods; regulations when individuals and family households transfer their land use rights to a buyer; regulations associated with property transactions via trading centers and those that are not required to take place at trading centers; regulations on mortgages and covering types of contracts in property transactions and time bases for the transfer of the ownership rights of land and housing transactions. Decree 71 also comprises regulations and detailed guidance concerning housing transactions of Vietnamese people residing abroad and foreigners owning or leasing houses in Vietnam.

With the presence of these regulations property transactions will certainly become more open and transparent, ensuring the legitimate rights of investors, property businesses and buyers, Thien said. The new decree is expected to gradually change former ways of making property transactions, thereby bringing more benefits to market players. Moreover, more open and transparent regulations concerning Vietnamese people living abroad and foreigners owning and leasing houses in Vietnam are expected to rev up the domestic property market.

Clause 9 in Decree 71 concerning capital mobilization to invest in housing construction draws particular attention from businesses, investors, credit organizations and local people.

In fact, there are two kinds of housing in the property market. One is finished housing with application and the other is properties that are being developed or will be in the near future. The property market is definitively subject to properties in the development phase, and therefore the demand for capital from project developers is tremendous; consumers are also active in investing into housing projects. Decree 71 will address the relationship between lenders and borrowers in property transactions as well as clearly define the obligations and responsibilities of parties involved in property transactions, as well as the responsibilities of state management organizations in ensuring capital raising regulations are adhered to by related parties.

Thien asserted that with the enactment of Decree 71, only capable investors will be in a position to handle housing and urban area development projects and give potential customers adequate confidence in projects for investment.

Reported by Viet Anh/ MONRE

Recognition home ownership is not required in the conditions on permanent residence

6 Jul
Vnre.blogspot.comIt is one of many specified regulations in Decree No. 71/2010/ND-CP dated 23/6/2010 of the Government detailing and guiding the implementation of the Housing Law.
Accordingly, organizations and individuals are eligible for home ownership in Vietnam and have legally proof of established house (new construction, purchase, receipt of donation, receive an inheritance, …) the State shall recognize property rights that are not required to have the conditions on permanent residence, business registration in where the house is, unless otherwise purchase, lease purchase society house.

In case, household and individual create housing through the transferee contract formation in the future in housing development projects before this Decree takes effect, the ownership of such houses is done under the guidance of the Ministry of Construction.

State agencies carry out reconizing the house ownership through the certificates of land use rights, ownership of houses and other assets associated with land for owner in accordance law.

According to this Decree, Vietnamese are residing abroad have right to ownership of house in Vietnam if under the subjects and meet the prescribled conditions in Clause 1 of Law No. 34/2009/QH12 on amendment, supplement Clause 126 of the Housing Law and Clause 121 of the Land Law. The duration of home ownership for Vietnamese who settled abroad are stable, long-term.

Organizations and foreign individuals when make investment in houses in Vietnam under the law of investment, they have right to own house under the Housing Law; in case, organizations and individuals buy houses in Vietnam, they have right to own house in accordance with Resolution No. 19/2008/QH12 on 03/6/2008 by the National Assembly pilot allows organizations and foreign individuals to buy and own house in Vietnam.

This Decree takes effect from 08/8/2010 and replace Decree No. 90/2006/ND-CP dated 06/9/2006 of the Government detailing and guiding the implementation of the Housing Law .

Source: CPV News

MOF proposes three solutions for tax on houses

21 Jan
The Ministry of Finance still has not decided whether to tax houses or let them be exempt.

As a result, it is collecting public opinion for the Housing Tax Bill before submitting it to the Government.

Following previous times when they have put the housing tax plan on the table at National Assembly’s meetings and failed to get support from National Assembly deputies, the Ministry of Finance is making amendments to the bill to make it more palatable.

Whether to tax houses has still been left open. However, the ministry has suggested has spelled out three different options.

In Option 1, the tax people have to pay will be calculated based on the taxable areas of houses. The area to be the threshold for taxation is 200 square meters.

The taxable areas of houses are the total areas of houses or apartments, including the areas of balcony and supplementary items. In cases where individuals own many houses, the taxable areas will be the total areas of all houses and apartments.

The tax sums on houses will be stabilized every 5-year commencing from the first year the Housing Tax Law takes effect.

With the Option 2, tax will be imposed on the houses valued at one billion dong and upwards. The taxable value of houses will be defined by the total area multiplied by the unit price

With the Option 3, MOF plans to collect tax only from the individuals who have two houses or apartments or more. In this case, the taxable area will be the area of the second, third and next houses.

MOF has also discussed proposed solutions on tax exemptions and reductions to be applied to some subjects.

If the new proposals get approval in the next sessions of the National Assembly, MOF hopes the law will take effect on January 1, 2012.

Source: VNE