Time Limit for Ownership: Impact to Price to Buy Apartment in Vietnam

Real estate, apartment in Vietnam has passed the most difficult period and stabilized. But to satisfy the house demand of 90 million people, there seems to be a need to have changes in laws.  Real estate lawyers at a real estate law firm in Vietnam would share some aspects in issue of definite ownership that could reduce the price to buy apartment in Vietnam.

Permanent term or 50 years term of apartment ownership in Vietnam

As many other countries such as in England, the term to own an apartment is of 999 years, but in Vietnam, only land has been assigned by the Government in two forms: permanent assignment and definite assignment.

In first method, permanent land assignment fell into residential land, and almost apartments were purchased in market with the “permanent” term.

In the second, lands were assigned within 50 years, the investors continued developing the projects. 

The price of apartment would decrease if the form of definite ownership is applied.  But in another perspective, regulating the definite ownership of 50 -70 years for apartment would bring in some advantages in reconstruction and improvement in case of degrading, usage expiry.

How time limit of apartment ownership would help make price more reasonable to buy apartment in Vietnam?

Reduced Speculation: Implementing a time limit on apartment ownership could discourage speculative buying, where investors buy apartment in Vietnam solely for short-term gains without contributing to the local housing market. This might help prevent price bubbles and sudden fluctuations caused by speculative activities.

Increased Turnover: With a time limit in place, property turnover could increase as owners would need to sell or transfer ownership before the limit expires. This increased turnover might introduce more properties to the market, potentially leading to a better supply-demand balance, which could influence prices.

Affordability for New Buyers: If properties have a limited ownership period, new buyers may have better opportunities to buy apartment in Vietnam and enter the market at relatively lower prices. Sellers might price their properties more reasonably, knowing that they have a limited window to sell, which could alleviate the affordability challenge for first-time homebuyers.

Mitigation of Property Hoarding: Owners might be less inclined to hold onto multiple properties for extended periods if there’s a time limit on ownership. This could prevent property hoarding and encourage a healthier distribution of properties among different owners.

Incentive for Maintenance and Upgrades: Knowing that they have a limited ownership period, property owners might be more motivated to maintain and upgrade their apartments, which could lead to improved property conditions and potentially increase their resale value.

Potential drawbacks and challenges for time limit ownership

Market Uncertainty: Introducing a time limit could create uncertainty in the market. Buyers might be concerned about their ability to resell the property within the given time frame, potentially affecting demand.

Short-Term Decision-Making: Owners might make decisions based on the impending time limit, rather than their long-term interests. This could lead to rushed sales or transactions that might not fully reflect the property’s value.

Market Adaptation: The real estate market in Vietnam might take time to adjust to the new dynamics introduced by a time limit. There could be initial confusion and resistance from both buyers and sellers to sell or buy apartment in Vietnam.

Impact on Long-Term Investment: Investors who seek stable, long-term investments might be discouraged by the time limit, potentially affecting investment in the market.

Complex Implementation: Implementing and enforcing a time limit on ownership would require clear regulations, legal mechanisms, and monitoring systems, which could be challenging to establish and manage.

In conclusion, while a time limit on apartment ownership might have some potential benefits in terms of reducing speculation and encouraging turnover, it’s a complex measure that would need careful planning, stakeholder engagement, and a thorough understanding of its potential impacts on the real estate market and overall economy.

Its effectiveness in making prices more reasonable would depend on various factors and would need to be evaluated in the specific context of the market in which it’s implemented.

In Vietnam, experts are still debating the pros and cons to the time limit apartment ownership in Vietnam and it would take time to turn such into laws.

About ANT Lawyers, a Law Firm in Vietnam

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers has lawyers in Ho Chi Minh city, Hanoi,  and Danang, and will help customers in doing business in Vietnam.