Freehold ownership property in Vietnam or 50 years lease. what risks?

Locals have freehold ownership. They pay for the property once and renew the paperwork every few decades or so - if they choose.

Mind you, their land isn't lost or repossesed by the government if they don't renew the deed. They will just be unable to use it as collateral (loans from the bank) or sell the property until the deed is renewed.

The fee to renew the deed is in the form of a property tax. The property tax varies by land size but it boils down to what the locals are willing to declare.

For example: If a local owns a piece of land worth 500M VND, they will declare its value at 100M VND or even 50M VND and pay a property tax of 1-2M VND.

No local ever declares the correct value as:
1) there are no consequences (good or bad)
2) the tax money goes straight into the pockets of the corrupt government workers

You go the court in your local area (commune, township, ward, etc) and submit your complaint/paperwork and wait for a court date.

All contracts must be notarized by a government official (not public).

Everything will be a 50-year lease for all foreigners. You will not have the same ownership rights as a local, period.

By law, all land belongs to the government, they will allow us the right to use it in a certain amount of time, they can give us more time later when it's expired. But the most fantastic thing is: they can take it back anytime they want because they are the real owners, not you or me.

So, invest in land in Vietnam is really risky, except you have good relationship with the government and by some miracle way you can keep your land forever.

But we are allowed to fully own our apartments, so apartments are real properties, land is not. When they want to take back the land where your apartment is standing on, they'll have to buy your apartment. Sometime the price is super lower than the market price, that's why sometime people have to strike back the government for getting a better price (striking back the Communist Vietnamese government is totally illegal and you can go to jail by doing so), but it most cases it's acceptable.

You have to keep in mind the different sets of rules. Each rule further limits foreigners and eventually leave foreigners will few options.

Foreigners can only buy 30% of a new condo development.

Foreigners can only own up 250 houses/villas in a ward.

Here is the most important one, FOREIGNERS CANNOT BUY FROM VIETNAMESE CITIZEN.

So in essence, it eliminates all the homes that are owned by citizen of Vietnam out of the equation.

So that is why Foreigners have begin to buy houses in new development directly from the developer as long as they stay under 250 unit per ward rule. Its kinda confusing, but once you kinda put all the rules together, Foreigners have really 2 options, buy a condo from a new development or buy a house from a new development since all the other house are already owned by Vietnamese. Hope that helps.

Ownership is always risky unless you have an assurance that it will not be seized by the government or otherwise taken away from you. Generally speaking, there are more risks associated with freehold ownership than there are with 50-year leases because land can be taken away at any time without warning or compensation.

If a company wants to do real estate business in Vietnam, there are some risks when they choose 50 years lease.

The most risk is that the contract will be cancelled by the government. In the case of freehold ownership property. The second risk is when a country changes its economic principle; if Vietnam decides to switch from socialism to capitalism, this will have a negative effect on freehold ownership property. The third risk is inflation has an impact on freehold ownership properties with higher land registry price and increased taxation.