The State grants the LUR to individuals and organizations via the form of allocation of land, lease of land, and recognition of LUR for persons currently using the land in a stable and regular fashion.

In principle, an LUR Certificate does not pass land ownership from the State to the holder. The term of an LUR Certificate issued is normally limited to a maximum of 50 years, although in certain circumstances (e.g. if the investment project involves large amounts of capital and recovery is expected to take longer, or if the project is located in an area facing difficult socio-economic conditions) the term may be for as long as 70 years.

Land Allocation

The State can allocate LURs to land users by way of an administrative decision. The allocated LURs may be subject to a land use fee depending on the purpose of land use. Land may be allocated by the State with the collection of land use fees in the following cases:

• to family households and individuals for residential purposes;
• to economic organizations for implementing investment projects for construction of residential housing for purposes of sale or for sale and lease;
• to Vietnamese residing overseas and foreign-invested enterprises for implementing investment projects for construction of residential housing for purposes of sale or for sale and lease; and
• to economic organizations for implementing projects on investment in infrastructure of cemeteries and graves and for the purposes of transfer of the land use rights attached to the infrastructure.

LURs obtained by way of allocation without collection of land use fees cannot be exchanged, assigned, donated, leased, mortgaged, guaranteed or used as a capital contribution; and the land users are not entitled to compensation for land when the State resumes possession of the land.

Generally, the allocated LURs with payment of land use fees can be assigned, leased, donated, mortgaged or guaranteed, and used as capital contribution in accordance with the laws.

Land Lease

The other form of LUR available to land users including Vietnamese residing overseas and foreign-invested enterprises, is land leasing on the basis of a contract. LURs can be leased directly from the State. The land authority is the People’s Committee and/or the Department of Natural Resources and Environment. The land users have to apply for a land lease and an LUR Certificate and they are free to select either annual rent payments or a one-off payment for the entire term of the lease. The land users are allowed to assign, sublease or mortgage the LURs only if they make a one-off rent payment. A party making an annual rent payment is only allowed to assign, sublease or mortgage the assets owned by them attached to the leased land.

LURs can be subleased from national, foreign-invested enterprises and economic organizations, including zone developers. LURs also can be used as capital contributions by the Vietnamese partner in joint ventures as well. Foreign-invested enterprises are not allowed to sublease land from family households, individuals or communities.

Land use rents or the value of LURs are negotiated freely when foreign-invested enterprises sublease land from an economic organization or other foreign-invested enterprises or when LURs are used as capital contributions to an investment project. All transactions with the State, including for the payment of taxes and fees, are based on land prices as determined by laws.

Contribution of an LUR

Where economic organizations and foreign-invested enterprises are allocated land with collection of land use fees or leased land by making a one-off payment, they may contribute the land as capital to a JV. However, foreign-invested enterprises are not permitted to receive capital contributions by way of LURs from Vietnamese individuals and households. After the establishment of the JV, the LUR Certificate will be granted to the JV and the term of the LUR will equal the duration of the project as recorded in the investment certificate of the JV.

Foreign housing/property ownership

The current foreign property ownership regulations took effect on 1 July 2015 and allow all foreign individuals and organizations that invest in developing residential projects in Vietnam, as well as foreign-invested enterprises, RO or branches of foreign enterprises, foreign investment funds, branches of foreign banks operating in Vietnam and foreigners who have a visa to enter Vietnam to own properties in Vietnam. The ownership rights include the right to use, sell, lease out, donate, bequeath, mortgage or contribute houses as capital to a legal entity. However, if the residential houses are located on leased land, then foreigners may lease out such residential houses only.

Foreigners are allowed to own residential housing (including apartments and individual residential houses) under investment projects for the construction of residential housing, but not the houses beyond a real estate project. The total number of units owned by foreigners may not exceed 30% of the total units in one apartment building and not exceed 250 landed property units in one particular administrative award.

Foreigners are permitted to own apartments for a maximum term of 50 years (with a renewal possibility upon expiration) and foreign companies are permitted to own apartments for a term equal to the term recorded in its IRC prior to the expiry of the period of residential house ownership. The owner can give or sell this house for the subjects who are permitted to own houses in Vietnam. If the time limit of ownership is over but the owners do not sell or donate such property, then that property shall belong to the State of Vietnam.