Vietnam real estate is flourishing, and everyone wants to get on the bandwagon. A rapidly growing economy with a GDP of 7%, an affluent middle class and an educated segment of young Vietnamese wishing to move away from traditional homes to live on their own have played their part in this growth. Besides that, foreign investment is making its way into the country after the July 2015 Property Tax amendment which allows foreigners to own property in Vietnam. A majority of the new homeowners are Chinese as they see the potential of Vietnam to grow as China.
It is not easy as a first-time property buyer, especially in a foreign land. Here are ten tips that will make the process relatively easy.
- It is crucial that one does research and choose only properties that will appreciate like those with great views, convenient location, and high-end construction.
- Do adequate research on developers’ previous wealth, their financial status and determine if they have the finances to complete a project.
- Ascertain beforehand who will manage the maintenance once the key is handed over.
- Keep in mind that the final cost of an apartment will include the 5% VAT and 0.05% registration fee. In addition to that, the buyer will have to pay capital gains tax amounting to 0.15% on the profit.
- Assess the property for structural damages, issues related to water seepage, etc. to ensure that you are not getting cheated.
- Engage the services of a reputed realtor to overcome the hassles of communicating in a foreign tongue which can lead to costly misunderstandings. One will have to pay a fee to the realtor, usually 3% of the total amount. In case, you don’t want any external help, an English version of the sale and purchase document will be available with the developer, which you can read before signing the agreement.
- The buyer must be aware that he or she is eligible for a one-year warranty on fixtures and fittings within the property and five years for external structure.
- Buyers must be aware of the net salable area or carpet area which is the livable area which is different from the total area of the property.
- Payment scheme is always decided by a developer for a project under construction. Local Developers usually collect 70% while foreign developers can take only 50%.
- One must necessarily have the pink book which is nothing but the ownership certificate and contains details on what how the property will be used, if it has been renovated according to the law and if it has been leased or mortgaged and other such details. Essentially, it is the most important document a foreigner must have to prove his ownership of a property.
It is not so morbid as it sounds, the Land Use Rights (LUR) ensures that the risk is minimized when foreigners invest in Vietnam. With the above certificate, which has to be submitted to the Government, one gets the right to control land on the lease even though they cannot own the property.