In the general trend of the world real estate market, Vietnam’s real estate market is increasingly developing and is considered as a key economic sector for the development of the country. Therefore, Viet An Law provides regulations on conditions for establishing a real estate company through the following article.
Pursuant to Clause 1 Article 3 of the Law on Real Estate Business 2014, real estate business is the investment of capital to carry out activities of construction, purchase, receipt of transfer for sale or transfer; leasing, subleasing, leasing to purchase real estate; performing real estate brokerage services; real estate exchange services; real estate consulting or property management services for the purpose of profitability. Personnel and organizations when doing real estate business should follow the following principles:
In our country, real estate business includes two types: real estate business activities and real estate service business. If real estate business is the fact that an investor spends capital to create real estate or buys, rents, leases and buys real estate for the purpose of making a profit, real estate service business is the provision of real estate services by organizations or individuals (including real estate consulting services, real estate brokerage services, real estate management services, real estate transaction exchange services) for organizations and individuals in need for the purpose of profit.
The issue is who, which specific subjects are allowed to provide real estate services and the limitation of the scope of business of this type should be specifically determined to avoid encroachment and overlap into the field of other types of service businesses.
Answering this question, the current Law on Real Estate Business stipulates:
Thus, in the field of real estate service business, foreign organizations and individuals have equal business rights with domestic organizations and individuals. If compared with the scope of real estate business, it shows that foreign organizations and individuals are more restricted in business rights than domestic organizations and individuals. For example, in case a foreign organization or individual builds houses on leased land, they are only entitled to lease houses (Clause 1, Article 161 of the current Law on Housing).
According to the schedule of commitments when Vietnam joined the WTO, FTAs: real estate business services with CPC code 821, do not stipulate business conditions in the schedule of commitments.
As stipulated in Annex NCM I-VN-34 to the Trans-Pacific Partnership Agreement on the construction, lease, purchase , lease, purchase, and transfer of real estate, the Law on Real Estate Business provides more limited rights for foreign entities than for Vietnamese entities. Foreign-invested enterprises can only:
According to specialized laws in the Law on Real Estate Business 2014, foreign investors are allowed to establish companies in real estate business and real estate services.
Section B of Appendix I attached to Decree 31/2021/ND-CP stipulates that real estate business is one of the industries and trades with conditional market access for foreign investors. Accordingly, foreign investors who want to do business and establish a real estate company in Vietnam need to meet the requirements specified in Clause 3, Article 9 of the Law on Investment 2020, specifically:
In addition, in addition to market access conditions as prescribed in the List, foreign investors when investing in Vietnam must meet the following conditions (if any) according to Clause 3 Article 15 of Decree 31/2021/ND-CP detailing and guiding the implementation of a number of articles of the investment law:
Organizations and individuals doing real estate business must establish enterprises or cooperatives (hereinafter collectively referred to as enterprises) and must have at least 02 people with real estate brokerage practice certificates. Individuals have the right to provide independent real estate brokerage services but must have a real estate brokerage practice certificate and register to pay tax in accordance with the tax law. Organizations or individuals providing real estate services may not simultaneously act as both a broker and a party to perform a contract in a real estate business transaction.
Previously, when establishing a real estate company, organizations and individuals had to have a legal capital of not less than VND 20 billion, except for cases where organizations, households and individuals copy, transfer, lease or lease to buy small-scale and irregular real estate are not required to establish enterprises but must declare and pay tax in accordance with law.
Currently, Point a, Clause 2, Article 75 of the 2020 Law on Investment stipulates: Organizations and individuals doing real estate business must establish enterprises or cooperatives (hereinafter collectively referred to as enterprises), except for the case specified in Clause 2 of this Article.
Accordingly, legal capital is no longer a condition that real estate business entities must meet. In summary, according to current regulations, the entity of real estate business must establish an enterprise or cooperative.
In addition, Decree 02/2022/ND-CP effective from March 1, 2022 has removed the condition on legal capital of enterprises, the abolition of this condition is to comply with the provisions of the Law on Real Estate Business amended in the Law on Investment 2020).
If the business service of the enterprise is a real estate transaction exchange service, the law requires at least 02 people to have a real estate brokerage practice certificate.
The manager operating the real estate transaction exchange must have a real estate brokerage practice certificate; The real estate transaction exchange must have stable operation regulations, name and transaction address for more than 12 months. If there are changes, they must notify the Department of Construction and the customer; The real estate trading exchange must have a minimum area of 50m2 and technical equipment to meet operational requirements.
The provisions of Article 9 of the Law on Real Estate Business 2014 on the conditions for real estate to be put into business, accordingly, houses and construction works to be put into business must meet the following conditions:
Along with that, Article 9 of this Law also stipulates that land types permitted for trading in land use rights must fully meet the following conditions:
The above is necessary information related to the regulations on conditions for establishing a real estate company in Vietnam. If there are any difficulties in the process of establishing a real estate company, please contact Viet An Law Firm for detailed advice!
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