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On October 20th, 2015, the Government promulgated Decree No. 99/2015/ND-CP (“Decree 99”) detailing the Law on housing 2014 with several remarkable provisions.

Ban the distribution of housing products as profits when mobilizing capital

According to this Decree, the investors are only allowed to distribute the profits in money or shares, not housing products. Such provisions shall be applied to all of the capital raising forms made by the investors, except for the capital contribution for establishing a new legal entity to be allotted to act as the investor of the housing building project by the State. In cases where the parties enter into the capital contribution contract, the investment cooperative contract, the business cooperative contract (“Contract”) in which there is an agreement of housing product distribution before the effective date of Decree 99, such agreement will be still valid, but the discharge of the Contracts and entry into of the purchase contracts of such houses must be conducted in accordance with Decree 99 and the provisions on real estate trading.

Transfer of the fund for the maintenance of common areas of the apartment houses

It is the first time the Law on housing and the guiding Decree detail the transfer of the fund for the maintenance of common areas of the apartment complexes (“maintenance fund”). Accordingly, the investor must allot the maintenance fund including interests to the Management Board within 07 days from the date of the establishment of the Management Board. If not so, the Management Board may propose the provincial People’s Committee of the province in which the condominium is located to request the investor to transfer the maintenance fund or to issue an enforcement decision (i) to force the investor to transfer the maintenance fund to the Management Board’s account or (ii) to handle the investor’s assets.

Handling houses with an expired ownership period

For transactions of limited ownership duration residence, the seller and the buyer are entitled to agree on how to handle the house, the certificate of land use right, housing ownership right and other attached-land assets (“Certificate”) upon the expiration of the ownership. If not, the housing ownership and land use right must be re-assigned to the first owner and the Certificate issued to the current owner shall be withdrawn and re-issued to the first owner.

Naming of investment project of residential buildings

The name of the residential building project, sectors in the project (“Project”’) must be in Vietnamese, be decided by the competent authorities and be used during the process of investment, management and use after finishing. If the investor needs a foreign name, Vietnamese name must be recorded fully fist, then the foreign name.

In case, the sole name of the Project is in foreign language and has been approved prior to July 1st, 2015- the effective date of Law on housing and the investor wishes to change the name according to the new provisions, a written proposal for the change must be sent to the provincial People’s Committee of the province in which the project is located to be approved.

The name of the Project must be used exactly as approved by the competent authorities for all of the transactions related to the Project. If not, it is not recognized by law.

Housing ownership right of foreigners in Vietnam

The new provisions relax the restrictions of housing ownership of foreign organizations, foreigners in Vietnam. Accordingly, these entities are entitled to own both apartments and separate houses in the building investment project of trade houses, except for areas of importance to national defense and security in accordance with Vietnamese laws instead of owning only the apartments per previous regulation.

With regard to quantity of houses foreign organizations, foreigners are permitted to own: (i) up to 30%  of the total number of apartments in one geographical area with a population equivalent to one administrative ward level which has a number of the apartment buildings, but only 30% of the apartments in each building; (ii) up to 250 separate houses where any one geographical area with a population equivalent to one administrative ward level or 10% of the total separate houses in case of the number of  houses less than 2500.

Additionally, foreign organizations, foreigners not married to a Vietnamese citizen or being ethnically-Vietnamese foreigners are entitled to extend the period of the housing ownership in Vietnam up to 50 years. For houses bought prior to July 1st, 2015 the ownership period is determined from the date of issuance of the Certificate and is also extended in accordance with this Decree.

This Decree took effect on December 10th, 2015.