7 Common Risks of Real Estate Purchase in Vietnam for Foreigners

Posted 9.11. 2020 by Cekindo

Many foreigners are interested in buying real estate in Vietnam as a form of investment in Southeast Asia. The reasons are many folds, including Vietnam’s fast-growing economy, ease of foreign property ownership, increasing infrastructure investments, growing middle class with a large young population, booming tourism, and relatively inexpensive property with high-profit potential.

However, every investment has its fair share of risks and these risks can be avoided when investors have a clear picture of what they are. For foreigners interested in purchasing real estate in Vietnam, you must beware of these 7 common risks.

7 Common Risks of Real Estate Purchase in Vietnam

1. The property project developer insists on selling the property even if it has not fulfilled the legal conditions for sale

In Vietnam, the law indicates that project developers are prohibited to sell properties to buyers. For selling an off-the-plan property to buyers, project developers must first meet minimum requirements such as project completion, off-the-plan sale agreement approval, financial arrangements, among others.

Therefore, make sure to check if a project developer has fulfilled all the precedential requirements before buying real estate in Vietnam.

2. Obtaining the pink book as a foreigner is complex

You must understand the different eligible conditions for real estate purchase and pink book’ granting when going through a property purchase transaction in Vietnam. Buying real estate in Vietnam is easy but acquiring the pink book as a foreign buyer is significantly complicated.

3. The functions of the property in Vietnam are confusing 

Project developers may fail to indicate the clear functions of their properties, causing foreign buyers or investors to be confused. Some project developers even give deceiving owner information to buyers.

4. Assigning the sales and purchase contract when the new buyer hasn’t obtained the pink book

Foreign real estate buyers will encounter significant challenges during the process when there is a delay in the issuance of the pink book. Make sure that the project developer applies for the pink book before assigning the sales and purchase agreement to the new buyer.

5. Financial obligations when buying real estate in Vietnam

One of the most significant risks associated with a property purchase in Vietnam is the financial obligations. These financial obligations can be related to certain fees, land use rights, and change of legislation.

As a result, it’s a smart move to have an accurately drafted legal agreement and understand all the financial responsibilities of both the seller and the purchaser.

6. Charges associated with the transaction

Certain fees and government charges incurred when buying real estate in Vietnam, for instance, legal service fees, broker commission, notary fees, licensing fees, and personal income tax.

7. Fluctuating foreign currency exchange

Foreign buyers purchasing properties in Vietnam must pay in Vietnamese dong. This means that their home country’s currency will be exchanged into Vietnamese dong which will likely cause some losses due to the currency rate fluctuation.

Consult with Cekindo to Avoid Risks

Cekindo delivers market-leading business consulting services including transactions for buying real estate in Vietnam. We work with you across your real estate interests in Vietnam to ensure that you achieve the most successful property acquisition.

Our due diligence service enables you to have the full transparency of your real estate options, as well as the party you are dealing with. We recognise that it is important for our clients to understand their obligations and rights as property buyers and that’s why we also provide agreement drafting service.

With our detailed report, properly drafted legal agreement, and trusted advice, you can then avoid risks that are associated with buying real estate in Vietnam.

Let Cekindo support you all the way. Fill in the form below.