The real estate market of Vietnam has experienced substantial development during the past years, attracting more investors and commercial entities to the sector. The combination of fast urbanisation patterns with economic growth results in advancing demand for all types of properties, including residential, commercial and industrial ones. Success in Vietnam’s current evolving real estate landscape requires a deep understanding of local rules and regional business opportunities. Together with market trend forecasts. Rapid economic growth, mixed with substantial urbanisation trends and an increasing middle-class population, has turned Hanoi, alongside Da Nang and Ho Chi Minh City, into thriving and lucrative metropolitan areas.
Investing in Vietnam
Recent government policy modifications regarding real estate trading together with other factors, resulted in a minor decline of the Vietnamese real estate industry. According to expert projections, the real estate sector will maintain its difficult operational environment over the entire year. The market analysts predict that the recovery process will begin in 2024. The State has begun addressing capital flow problems alongside legal framework issues, which creates this expectation. The economic recovery of Vietnam has become stronger because the country has successfully overcome both the COVID-19 pandemic challenges and the Russia-Ukraine conflict.
Foreign individuals who acquire properties in Vietnam need to obtain a Land Use Rights Certificate (LURC) for their ownership. A LURC defines both the temporary period and permitted activities for the land. The revocation of land use rights by the state government will occur when anyone violates the specified land use purpose recorded in the LURC. The factors of stamp duties, real property taxes, corporate income tax, personal income tax and notarization fees require additional detailed explanation in the following sections:
Taxation
The taxes include:
Notarisation fee and stamp duty
The legal process of real property document notarization in Vietnam depends on licensed public notary officers to perform this duty. The cost of notary service is based on the transaction amount. The maximum fee charged for real estate notarization in Vietnam equals VND 70 million or its equivalent value of US$ 3290 per transaction. The maximum fee payable for real estate leasing notarization amounts to VND 8 million (which equals US$ 376) per transaction. The law of Vietnam does not explicitly define which party should pay for the notarization fees. According to contractual agreements, the buyer/lessee or seller/lessor can be designated to cover payment expenses.
The stamp duty applies to land and houses which undergo Land Use Rights (LUR) registration. The stamp duty calculation depends on the land or house value and charges 0.5% of it. The stamp duty becomes payable by the transferee when he or she submits the LUR to the relevant authorities for registration. The transferor and transferee can mutually agree for the transferor to pay the stamp duty when it comes to this expense.
Real property tax
Land rental and land use fees for Land Use Rights (LUR) in Vietnam must be paid by foreign investors. The costs for these fees differ substantially depending on where the business operates, as well as its infrastructure setup and its industrial sector. Under the Law on Non-Agricultural Land Use, property owners must pay land taxes calculated from the precise land areas they utilise at predetermined price rates per square meter. The tax rates increase progressively from 0.03% to 0.15% across the system.
Corporate income tax and personal income tax
The profit from Land Use Right (LUR) transfers or house ownership goes to investors under corporate income tax or personal income tax, based on their business type. Corporate property owners need to pay taxes at a standard 20% rate, while individuals must pay a 2% tax on personal revenue from real estate dealings.
Conclusion
The real estate market of Vietnam presents abundant development and financial prospects to investors from within the country and around the world. An advanced legal structure and stable economic framework, together with improving infrastructure, have made Vietnam an attractive destination for real estate investment activities. The real estate market in Vietnam gives investors all the necessary elements to succeed, regardless of their investment choice between residential properties, commercial projects and industrial developments. The real estate market of Vietnam welcomes investors to discover its growth possibilities while exploring between Ho Chi Minh City vibrant crowds and the serene landscapes.
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