Is it possible for foreigners to rent rooms to open companies in Vietnam?

Is it possible for foreigners to rent rooms to open companies in Vietnam?

Question: My lawyer let me ask: I want to rent one room out of 11 rooms to foreigners to open a company (my house only has a certificate of land use rights with the purpose of using it as residential land, not owning a house yet), but the house has been granted a business registration certificate as an individual business household in which the business line is a rest room, and the certificate of land use rights (certificate) is mortgaged at a bank. Now, I want to rent out one of the 11 rooms to foreigners to open a company, what is notarization procedure?

Reply:

1. According to the provisions of Article 9 of the Law on Real Estate Business 2014 stipulates:

1. A building to be put on the market shall satisfy the following requirements:

a) The ownership of the building on land is registered in the Certificate of land use right (hereinafter referred to as Certificate of land). Regarding an off-the-plan building in the real estate project, it is only required to have the Certificate of land as prescribed in regulations of law on land.

b) There is no dispute about the land and ownership of the building on land.

c) The building is not distrained.

Thus, if you want to conduct rental activities, you must have a registration of home ownership to be able to conduct rental activities in Vietnam.

Procedures for registration of house ownership:

(Article 31 of Decree 43/2014/ND-CP guiding the implementation of the land law)

Dossier composition, including:

- An application form for a certificate of house ownership

Copy of one of the following documents:

+ Construction permits for houses subject to construction permits.

+ Certificate of land use right or name in the land registration book, cadastral book, for houses and construction works to be built;

+ Contract for sale and purchase of state-owned houses

+ Papers on handing over houses of gratitude, houses of compassion, houses of great solidarity;

+ Papers on housing and land issued by a competent agency;

+ Papers on purchase, sale, donation, exchange or inheritance

(Documents certified by the People's Committees of communes and towns)

- Drawing of the house plan

2. Regarding notarization procedures:

The rental contract must be made in writing, if the lease term is 06 months or more, it must be notarized or authenticated.

In which forms can foreign-invested enterprises do real estate business in Vietnam?

Question: In which forms can foreign-invested enterprises do real estate business? And what legal document regulates this? I am currently working in a real estate company in Ho Chi Minh City, due to job requirements, has only recently studied the law on this activity. I hope you will reply to me. Thank you! Pham Thai Nguyen, email address pham_thai****@gmail.com.

Reply:

Scope of real estate trading conducted by foreign-invested enterprises is specified in Clause 3, Article 11 of the Law on Real Estate Business 2014, whereby:

3. Domestic organizations and overseas Vietnamese implementing investment projects and foreign organizations and individuals must possess papers prescribed below:

a/ In case of building houses for commercial purposes, one of the papers on projects on commercial housing development (project approval decision, investment decision, investment license and investment certificate) is required;

b/ In case of purchase, donation, inheritance or ownership of houses in another form as prescribed by law, a paper on such transaction is required in accordance with the housing law;

c/ For houses which were built in contravention of the papers specified at Points a and b of this Clause, written opinions of the construction licensing agency certifying that the improperly built area does not affect the safety of the houses and is now compliant with the approved construction master plan (if any) are required.

Are enterprises with foreign capital that rent land to build houses allowed to sell these houses in Vietnam? 

Question: Ms. Nguyen Duong Nguyet Ngan's company (Ho Chi Minh City) has 60% foreign capital, specializing in real estate business. In 2012, the company was allowed to lease land for a term of 50 years, pay the land rent once and built and sold many houses in the project. Currently, her company is facing some problems in business activities related to the Land Law and the Law on Real Estate Business. Specifically, according to the provisions of the Law on Real Estate Business effective from July 1, 2015, foreign-invested enterprises can only build houses for lease, if the land is used for the project implementation. Point d, Clause 2, Article 183 of the 2013 Land Law also stipulates that foreign-invested enterprises that rent land with annual payment can only "To lease houses if they are permitted to invest in the construction of and trading in houses". So, In this case, it is not allowed to build houses for sale. But the case of land lease with lump-sum payment for the entire lease period is lumped together with the case of land allocation with land use levy and there is no similar regulation as mentioned above. Ms. Ngan asked, is it understandable that according to the Land Law, foreign-invested enterprises that are allowed to lease land with one-time payment can still sell these houses? If they are allowed to sell houses, it is contrary to the Law on Real Estate Business, if not, foreign-invested enterprises that are allowed to lease land to invest in housing projects or urban areas from before 2013 are allowed to continue to sell apartments in the project, or have to move to rent? At the same time, Ms. Ngan noticed, Clause 5, Article 60 of the 2013 Land Law stipulates that "Overseas Vietnamese and foreign-invested enterprises that lease land with full one-off rental payment for the entire lease period to implement investment projects on construction of houses for sale or for a combination of sale and rent prior to the effective date of this Law, may continue using the land for the remaining land use term...”. Ms. Ngan asked, "… may continue using the land for the remaining land use term..." is it construed to continue to have right to sell houses, or to comply with the new Law on Real Estate Business, that means continue to lease land, but only rent houses, not sell?

Reply:

According to the provisions of Point d, Clause 1, Article 56 of the Land Law 2013 (effective from July 1, 2014), households and individuals that use land for construction of public facilities for commercial purpose.

According to Clause 3, Article 11 of the Law on Real Estate Business 2014 (effective from July 1, 2015), foreign-invested enterprises are leased land by the State to invest in the construction of houses for rent, to invest in the construction of houses and constructions other than houses for sale, lease, or lease-purchase.

According to the above regulations in Vietnam, from July 1, 2014, the effective date of the Land Law, in case a foreign-invested enterprise is leased land by the State to implement a construction investment project. If you build a house, you can only rent out the house, not sell it.

In case a foreign-invested enterprise has been leased land by the State with one-time rental payment for the entire lease period from 2012 (before the effective date of the 2013 Land Law), it may continue to sold under the provisions of Clause 5, Article 60 of the 2013 Land Law on handling of cases of land allocation and land lease which are decided prior to the effective date of this Law.

Overseas Vietnamese and foreign-invested enterprises that lease land with full one-off rental payment for the entire lease period to implement investment projects on construction of houses for sale or for a combination of sale and rent prior to the effective date of this Law, may continue using the land for the remaining land use term, or change to land allocation with land use levy in accordance with this Law if they have demand.

However, for houses that investors deploy to sell from July 1, 2015, they must meet all the conditions prescribed by the Law on Real Estate Business 2014 and the Law on Housing 2014 in Vietnam.   

Best regards!