Vietnam: Overview

RENTAL YIELDS

Yields in Hanoi around 7%

A 170-sq. m apartment in Hanoi, Vietnam is projected to earn a gross rental income of around 7.13%, at a selling price of US$1,903 per sq. m.

The same apartment in Ho Chi Minh City can generate a slightly higher return of around 9.43%.

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TAXES AND COSTS

Vietnam has a high flat rental income tax

Rental Income: Foreign nationals are subject to tax on Vietnam-sourced income at 25%.

Capital Gains: Nonresident foreigners pay a flat tax of 25% on capital gains from the sale of property in Vietnam. Transfer tax must be paid on profit earned on the transfer of property at the rate of 10% of the profit made.

Inheritance: No inheritance tax exists in Vietnam.

Residents: Residents pay tax on their worldwide income

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BUYING GUIDE

Buying costs are low in Vietnam

Buying property is technically a transfer of leasing rights on the land. The total roundtrip cost of buying a dwelling house is around 6.2% of the property value.

To register a property takes around 67 days and five procedures, according to the World Bank.

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LANDLORD AND TENANT

Vietnam's strongly pro-landlord rental market

Vietnamese rental practice is strongly pro-landlord.

Rent: The rent can be freely negotiated by both parties. It is usually fixed for the duration of the lease term, typically 1 to 2 years. Rents are paid well in advance and interest is charged on late payments.

Tenant Security: If payment is delayed by 15 days, the landlord has the right to terminate the tenancy agreement by sending a 3-day written notice to the tenant. The landlord is entitled not to return the security deposit and to charge the tenant one month's rent penalty.

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ECONOMIC GROWTH

Break-neck economic growth

Vietnam (pop. 83.6 million) is one of south-east Asia’s fastest growing economies. The average growth for the past five years has been 7.2%. Officially a socialist government, elements of market forces and private enterprise were introduced from the late 1980s.

After gaining independence from France, Vietnam was divided into two, the communist North Vietnam and the France and US-backed South Vietnam in 1954. A bitter war ensued, until the South Vietnam government collapsed in 1975. Vietnam was officially reunited in 1976 under the socialist government.

However, with the international decline of capitalism and the collapse of the Soviet Union, pro-market economic reforms were adopted in the late 1980s and 1990s. In 1986, the government initiated doi moi, the policy of economic renovation.

The stock market opened in 2000. Vietnam has seen a rapid rise in foreign investment. In the cities, the consumer market is growing, fuelled by the appetite of a young, middle class for electronic and luxury goods.

Despite the reforms, the government still has to tackle problems of corruption and poverty. The slow pace of political reforms is also worrying.

Vietnam joined the World Trade Organization in January 2007. New legislation governing private enterprises and investment are rapidly improving the operating environment for local and foreign investors.