Eligibility requirements to engage in real estate business in Vietnam under the Law on Real Estate Business 2023

Eligibility requirements to engage in real estate business in Vietnam under the Law on Real Estate Business 2023 (Internet image)

Regarding this matter, LawNet would like to answer as follows:

1. What is real estate business under the law in Vietnam?

Real estate business refers to the practice of funding construction of housing or buildings or acquisition of rights to use land that already has infrastructure within real estate projects for sale or transfer; leasing, subleasing or offering lease purchase of housing or buildings; leasing or subleasing rights to use land that already has infrastructure within real estate projects; transfer real estate projects; and/or providing real estate business services for earning profits.

(According to Clause 1, Article 3 of the Law on Real Estate Business 2023)

2. Eligibility requirements to engage in real estate business in Vietnam under the Law on Real Estate Business 2023

- Any organization or individual that wishes to engage in real estate business must establish an enterprise, or cooperative or cooperative union, in accordance with the Law on Enterprises or the Law on Cooperatives respectively, whose business lines include real estate business (hereinafter referred to as “real estate enterprise”), except the cases in clauses 3 and 4 of Article 9 of the Law on Real Estate Business 2023.

An organization or individual providing real estate services shall comply with the provisions of clause 5 of Article 9 of the Law on Real Estate Business 2023.

- A real estate enterprise shall be required to meet the following requirements:

+ It is not subject to any court’s judgment or decision, or a competent authority’s decision, on prohibition or suspension of real estate business;

+ It must maintain safe ratios of outstanding credit balance and outstanding bonds to the owner's equity;

+ The real estate enterprise approving a real estate project must ensure that its owner's equity shall not be lower than 20% of total investment of that project, if the area of land used is less than 20 ha, or 15% of total investment of that project, if the area of land used is 20 ha or higher, and that it is capable of raising capital for implementing that project. If a real estate enterprise implements several real estate projects at the same time, its owner's equity must be sufficient to fund all of such projects at the abovementioned percentage.

- An individual engaging in a small-scale real estate business shall not be required to establish a real estate enterprise but must declare and pay taxes in accordance with regulations of law.

- An organization or individual that sells housing, building or its floor area for non-commercial purposes or conducts sale, lease or lease purchase of housing, building or its floor area of an ultra-small scale shall not be subject to the provisions of the Law on Real Estate Business 2023 but must declare and pay taxes in accordance with regulations of law. The organization or individual that sells or offers lease purchase of housing, building or its floor area must also follow certification or notarization procedures as prescribed in clause 5 Article 44 of the Law on Real Estate Business 2023.

- Any organization or individual that wishes to provide real estate services must establish an enterprise, or cooperative or cooperative union, in accordance with the Law on Enterprises or the Law on Cooperatives respectively (hereinafter referred to as “real estate service enterprise”), and meet relevant requirements laid down in the Law on Real Estate Business 2023.

- The Government shall elaborate points b and c clause 2 of Article 9 of the Law on Real Estate Business 2023; provide guidelines for determination of small-scale real estate business as prescribed in clauses 3 and 4 of Article 9 of the Law on Real Estate Business 2023.

(Article 9 of the Law on Real Estate Business 2023)

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