Posted 1.08. 2019 by Cekindo / Last update on 27.12. 2019
The land rights in Vietnam can be complex for many people, especially for first-time foreign investors. Unlike other countries, lands in Vietnam are often owned by people conjointly and regulated by the Vietnamese government. With that being said, people are not allowed to own land legally in Vietnam. In other words, if they are interested in buying land in Vietnam, they cannot do so. But, they can own the rights for using the land.
After you have established your legal entity in Vietnam, you need to know how you can obtain a land and use it without violating the land rights. A land use right certificate (LURC) is the first thing you should consider in this matter. This certificate is proof that you have the land use rights of property. In this article, we will dissect the land rights and how you can get a land, instead of buying it, in Vietnam.
According to the Vietnamese law, foreigners can hold the LURC for 50 years or 70 years for some special cases. It is also possible for foreigners to extend the LURC once, depending on the government’s decision. The authority also has the right to take the LURC back if foreigners violate the LURC terms and conditions.
Depending on the payment schedule, a foreigner can lease land and pay annual rent known as annual arrangement; or they can choose to pay in one shot for the entire lease known as one-off arrangement. The annual arrangement allows foreigners to use the land of stated purposes and transfer assets; and the one-off arrangement permits foreigners to sublease, transfer, or mortgage the assets and land.
There are four ways for investors to lease land with a LURC specified by the Vietnamese government:
The first method is through the allocation of LURC through an administrative decision by state. Land use fee to government is applicable and this method is for investments in cemetery’s infrastructure projects and residential housing projects.
The second method is that the land is leased by the government to land user with a fee. The total feel can be paid annually or through a one-time payment.
The third method is done via a lease or sublease with the landlord. Lands must be in an high-tech zone, processing zone, industrial zone, or economic zone. Typically the landlord has already obtained the land use rights of the first two options.
The fourth method of leasing land is through the agreements on the asset transfer attached to the land, the land use rights transfer and a capital contribution or lease agreement with the current land user. The investors will then become the user of the land after obtaining the land user rights.
These options are all doable for investors but the third option is the most common and the least complex one. For the third method, the landlord has already completed all required paperwork before renting the land.
Foreigners can lease lands from Vietnamese individuals overseas, Vietnamese companies, or foreign companies leasing lands from the Vietnamese government for infrastructure development purposes.
Cekindo offers expert consultancy of all aspects for your strategic business entry in Vietnam. We can also help you clarify the goals and expectations you have in leasing the right land for your business venture.
Contact our experienced consultant now to discuss the necessary steps and process by filling in the form below.