Salient Points of the 2023 Housing Law

The 2023 Housing Law, effective from August 1, 2024, introduces significant reforms, marking a pivotal moment in refining the legal framework for Vietnam’s real estate market. It supersedes the 2014 Housing Law and focuses on expanding homeownership rights, promoting and supporting social housing development, and enhancing the management of various housing types, particularly condominiums.

Overseas Vietnamese Granted Full Homeownership Rights Equivalent to Domestic Individuals

Article 8 of the 2023 Housing Law stipulates that overseas Vietnamese, as defined under nationality laws, who are permitted to enter Vietnam, shall be entitled to own houses associated with residential land use rights in Vietnam in accordance with the land laws.

Overseas Vietnamese are defined by Article 3 of the 2008 Nationality Law as Vietnamese citizens and individuals of Vietnamese origin residing abroad. Additionally, Clauses 3 and 6 of Article 4 of the 2024 Land Law define land users as: (i) domestic individuals and Vietnamese citizens residing abroad; and (ii) individuals of Vietnamese origin residing abroad.

Therefore, it can be understood that the 2024 Land Law grants Vietnamese citizens residing abroad who are permitted to enter Vietnam full homeownership rights equivalent to those of domestic individuals. However, for individuals of Vietnamese origin residing abroad, although the 2024 Land Law expands their homeownership rights compared to the 2013 Land Law, these rights are not as extensive as those granted to Vietnamese citizens residing abroad.

Unlike the 2014 Housing Law, which limited homeownership for overseas Vietnamese, the 2023 Housing Law merely refers to land law provisions, rather than providing its own set of rules on the matter. This amendment ensures consistency within the legal system and promotes equal treatment among Vietnamese citizens, regardless of their place of residence.

Expanded Eligibility and Enhanced Incentives for Social Housing Project Developers

Article 76 of the 2023 Housing Law significantly expands the categories of individuals eligible for social housing support policies, extending coverage to enterprises, cooperatives in industrial zones, students, learners in specialized educational institutions, and workers in industrial zones. Furthermore, the 2023 Housing Law no longer requires permanent or temporary residence status for purchasing or leasing social houses. For social housing rentals, specific housing or income conditions are no longer mandatory, provided the tenant belongs to one of the eligible categories.
Article 85 of the 2023 Housing Law provides incentive policies for developers of social housing projects, such as: Exemption from land use fees, land rent for the entire project area, and from those procedures for determining land prices or calculating land use fees and land rent exempted; entitlement to a maximum profit margin of 10% for the area allocated for social housing construction; and the possibility to reserve up to 20% of homestead land area within projects to facilitate investment and construction of service, mercantile, commercial housing property structures. 

Compared to the 2014 Housing Law, the 2023 Housing Law introduces two new categories eligible for social housing support and provides additional incentives for developers, thereby encouraging private sector investment and increasing the supply of social housing.

Required Land Allocation for Social Housing Within Commercial Housing Projects

Article 83 of the 2023 Housing Law mandates that provincial People’s Committees allocate sufficient land for social housing development in accordance with the approved provincial housing development programs and plans. In Class Special, Class I, Class II, and Class III urban areas, provincial People’s Committees may require developers of commercial housing projects to reserve a portion of residential land (excluding existing residential land and resettlement land) within the project for social housing construction. Alternatively, developers may allocate social housing land outside the project area within the same urban area or pay an equivalent monetary contribution for social housing development.

Under the 2014 Housing Law, developers of projects spanning 2 hectares or more in special-class or Class I urban areas, or 5 hectares or more in Class II and Class III urban areas, were required to reserve a portion of residential land in the project area for social housing. For smaller projects, developers were obligated to pay land use fees for the entire project area. The 2023 Housing Law introduces flexibility by allowing the allocation of off-site social housing land and excluding existing residential and resettlement land from the calculation of land reserved for social housing. These provisions reduce the burden on developers, enhance local government oversight, and promote the efficient development of social housing.

Resale of Social Housing

Article 89 of the 2023 Housing Law incorporates the 2014 Housing Law’s prohibition on the resale of social housing, barring owners from reselling the property for a minimum of five years following full payment. During this period, owners wishing to resell social housing may only do so to the project developer or eligible social housing buyers, at a maximum price equal to the original purchase price stipulated in the initial contract with the developer.

It is noted that the 2014 Housing Law permitted the resale of social housing to eligible buyers at a maximum price equivalent to the market value of comparable social housing in the same locality at the time of sale. In contrast, the 2023 Housing Law restricts the resale price to the original contract price. This provision is intended to prevent profiteering in social housing transactions.

No Fixed Ownership Term for Condominiums

The draft of the 2023 Housing Law sparked considerable debate regarding proposals to introduce fixed ownership terms for condominiums. Nevertheless, the enacted legislation retains the framework established by the 2014 Housing Law, expressly omitting any fixed term of ownership while specifying the usage term for condominiums.

Under Article 58 of the 2023 Housing Law, the usage term of condominiums shall be determined based on the project’s design documentation and the actual period of use as appraised by duly authorized competent authorities, with such term commencing from the date of project acceptance. The responsibility for supervising the inspection and quality assessment of condominium structures is vested in Provincial People’s Committees.

In contrast to the 2014 Housing Law, which predicated condominium usage terms on construction grades and quality assessments conducted by provincial housing management authorities, the 2023 Housing Law establishes a more precise and rigorous legal framework by incorporating both design documentation and evaluations of actual usage. This enhanced framework promotes transparency, fortifies the legal protections afforded to homeowners, bolsters confidence in the real estate market, and ensures that quality assessments are both accurate and accountable to the actual condition of condominium structures.

New Concept: Mixed-Use Housing

Clause 1 of Article 2 of the 2023 Housing Law introduced the concept of "mixed-use housing," which is defined as residential properties that serve both residential and legally permitted non-residential purposes. For mixed-use housing projects, the residential use purpose, together with other designated functions, such as office, commercial, or service activities, must be specified explicitly in the project’s approved investment policy.

This provision of the 2023 Housing Law marks a notable advancement from the 2014 Housing Law, which limited its scope to housing intended solely for residential or commercial purposes, without accommodating mixed-use developments.

“Pink Book” Issuance for Mini Condominium Units

Article 57 of the 2023 Housing Law allowed individuals to construct: (i) buildings with two or more floors, each floor has designed to integrate several independent condominium units for sale, lease-purchase, or rental; and (ii) buildings with two or more floors and comprising 20 or more rental units (commonly referred to as mini-apartment building), provided that they meet the requirements applicable to residential housing project developers. These condominium units may qualify for individual Certificates of Ownership (also known as pink books) under land law regulations, provided they meet standards for safety, security, fire prevention, technical infrastructure, and approved architectural designs.

Although the 2014 Housing Law provided relevant regulations on the housing ownership and the issuance of pink books for those units in buildings developed by individuals or households, which had two or more floors and at least two condominiums per floor,  the 2023 Housing Law is said to have strengthened the framework established in the former law by specifying rigorous standards for safety, security, fire prevention, and developer qualifications, addressing previous shortcomings that contributed to disputes and safety concerns in mini-condominium developments.

Conclusion

The 2023 Housing Law marks a transformative era for Vietnam’s real estate sector, ushering in transparent and progressive regulations. From expanding homeownership rights and enhancing social housing policies to legalizing mini condominiums, these amendments protect homeowners’ interests and create favorable conditions for developers. Collectively, these changes pave the way for a more stable and sustainable real estate market in Vietnam.