Writers: Truc Nguyen, Thao Bui
The answer is YES. Foreign investors can invest in the business of real estate in one or both following: (i) directly engaging in house trading; and (ii) providing services on real estate. However, the scope of business in this field for foreign investors is not as preferential as the Vietnamese investors. In the short introduction of this article, BLawyers Vietnam would like to highlight some guidelines for foreign investors who intends to start a real estate business in Vietnam.
1. Establishing a company operating in real estate sector
Investors investing in real estate sector must obtain an investment registration certificate (the “IRC”). Vietnamese competent licensing authorities shall grant IRCs for investors if they comply with regulations of Vietnam’s law. The authorities shall not consider the investor’s ratio of capital contribution in such company but consider business lines to issue an official approval or rejection on the application for IRC obtainment. The business lines should be under a commitments of the Government for foreign investors to freely engage or be regulated by Vietnamese laws.
For the business of real estate in Vietnam, Vietnam has not committed in the Vietnam’s WTO Commitments about foreign investment. However, investors must comply with the regulations of Vietnam’s laws. They can set up a company specializing in real estate business without limitation on the ratio of foreign capital contribution.
After getting IRC, the real estate business must be implemented under the form of a legally established company. Investors must satisfy the separate requirements on the establishment of each kind of real estate business as follows:
(i) Directly engaging in house trading
The to-be-established company is not required to have a minimum charter capital after 01 January 2021. Investors just make sure that the form of enterprise complies with regulations.
(ii) Providing services relating to real estate
Some of services relating to real estate that investors can consider, including:
(a) Real estate brokerage service;
(b) Real estate trading exchange;
(c) Real estate consultancy; and
(d) Real estate management.
For the services of (a) and (b), founder(s) should satisfy or hire a managing person who meets statutory requirements. He/she must have the required certificates in real estate sector for a legal establishment and operation of enterprise.
For the other services, the investor having a duly-established-company with the business line of consultancy and/ or management of real estate can start its operation.
2. Scope of real estate business
The foreign-invested real estate enterprise (“FIE”) shall have scope of business complying with law as follows:
- Renting houses, buildings for subleasing;
- Using the land leased from the State for building houses for leasing, or building other constructions which are not housing for sale, for lease, or for lease-purchase;
- Using the land allocated from the State to build houses for sale, for lease, or for lease-purchase; and
- Being transferred total or a part of real estate project from other investors to build houses, constructions for sale, for lease, or for lease-purchase.
Accordingly, there are some restrictions for business of FIE such as:
- Purchasing houses or constructions from other organizations and individuals; or
- Building houses or constructions on land transferred from organizations and individuals.
The above-mentioned restricted scope of business of an FIE is to ensure that it shall not obtain the right of using land and own houses or buildings in Vietnam, unless otherwise approved by the State.
In conclusion, the investor please take the above-mentioned matters into consideration for drawing up your appropriate plans when investing in the field of real estate business in Vietnam.
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