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After a quite lengthy debate and discussion, on 28 November 2023, the National Assembly officially adopted a new law on real estate business (Real Estate Business Law 2023). The Real Estate Business Law 2023 is expected to enhance the real estate business environment and resolve some long-standing legal issues. However, the new Real Estate Business Law 2023 will have to wait until 1 January 2025 to take effect. The deferred effectiveness of the Real Estate Business Law 2023 is probably intended to give the National Assembly more time to promulgate the new land law, which to some extent could be considered as the “foundation” for formulating the Real Estate Business Law 2023.

Owners of apartments in an apartment building in Vietnam must set aside 2% of the purchase price for contribution into the apartment building’s maintenance fund (Quỹ bảo trì) and pay monthly contribution into the apartment building’s operation fund (Quỹ vận hành). The management of an apartment buildings including the maintenance fund and the operation fund will be handled by (1) “the meeting of [owners of] the apartment building”(hội nghị nhà chung cư) (building owner meeting) (2) a building management board selected by the building owner meeting, and (3) a management company selected by the meeting of owners of the apartment building.

Vietnamese law provides for a relatively detailed framework on management of an apartment building. However, several important issues, which are discussed below, are still not adequately addressed:

• The residential housing regulations seem to require an apartment building to be managed by a single management company. However, an apartment building usually includes certain commercial components such as office or shopping mall which are managed and operated very differently (e.g., the lifts serving commercial section will be used more extensively that those used for residential section). Accordingly, the combination of management of both residential section and commercial section in one single mechanism could cause conflicts between the apartment owners and the owners of the commercial section.

The State Securities Commission (SSC) seems to take the view that public companies involving real estate business are subject to a 50% foreign ownership limit. However, we think that the SSC’s view is not consistent with the law and the foreign ownership limit in a public company involving real estate business should be 100% not 50%.

• Under various international treaty (CPTPP or AFAS), Vietnam does not undertake to impose any foreign ownership limit to real estate business. Vietnam only limits the scope of operation of foreign-invested companies involving in real estate business (e.g. limitation on the ability to purchase houses for lease). This means that under these treaties, the foreign ownership limit in real estate business in general is 100%.

• Article 139.1(a) of Decree 155/2020 provides that In the case of a public company operating in a business investment industry or trade for which an international treaty of which Vietnam is a member regulates foreign ownership, the provisions of such treaty apply. Accordingly, the foreign ownership limit in a public company involving in real estate business is 100%.

• Similarly, since the Law on Real Estate Business 2014 imposes no foreign ownership limit to foreign invested enterprises, under the Law on Real Estate Business 2014, the foreign ownership limit in real estate busienss is 100%. Article 139.1(b) of Decree 155/2020  provides that in the case of a public company operating in a business investment industry or trade for which the relevant law regulates foreign ownership, then the provisions of such law apply. Accordingly, the foreign ownership limit in a public company involving in real estate business is 100%.