When you buy a property for investment in Vietnam, depending on your investment needs you might keep it for some time and look to gain some profits from the rental income instead of looking for a buyer right away. However, certain things might happen along the way that can make you change your goals and now you find yourself in a complicated situation having to sell your property while your tenant is still living inside. But is it legally possible though? The short answer is: YES. However there are many things you need to consider and informed yourself about before you pull the trigger.
Finances
As with every asset you sell, you must set a suitable selling price that goes along with your needs. Remember that as a foreign seller in Vietnam you must cover the following fees:
- Agency fee: 1-2% (if an agent is used)
- 2% PIT Tax on gross transaction amount
Finding the Right Buyer
By selling an “occupied” unit you need to find a suitable buyer whose objectives won’t be affected by the tenant living inside. Your most suitable profile would be another foreigner looking for investment opportunities in Vietnam and not for living purposes. Don’t get me wrong, you can also target buyers to live just need to make sure the lease contract expiration date matches the date the new owner needs to move in.
Inform your tenants in advance & keep them updated
Doesn’t matter if your tenant just moved in or if its been living at your home for a long period of time. You must inform your tenant once you’ve made the decision to sell the property. They are certainly not going to like the news but at least they will have some time to make some of their own decisions as well. Let them know that their lease will still be respected regardless of the new property owner.
By having constant communication with your tenants, they will be more understanding of the situation and help you make the whole transition smoothier for all parties involved.
Check your lease agreement
Even though we’ve already mentioned that is legal in Vietnam to sell your property while still having an active lease, make sure to check your leasing contract as this often includes information for this type of situations. Make sure to respect whatever is written on it.
If you’ve decided to sell the property after the current lease expires but you are unaware if the tenant wishes to extend the contract, you should inform your current tenant 2 months prior to the lease expiration date to avoid any issues.
PROS of selling your property with an active lease
- Being able to keep a fix rental income until the property is sold.
- You get to keep earning rental income even if the sell doesn’t go through
- You don’t have to invest too much (if any) on renovations or repairs
- Having an active lease guarantees immediate returns to a new investor
CONS of selling your property with an active lease
- Not always tenants are keen on letting visitors enter their homes while they are still living inside, making the selling process a bit more complicated
- Buying-to-live buyers won’t probably pay much attention to your property
- Difficult relationship with your tenants for the remaining of the lease
- Early lease termination could happen if your tenants are not willing to live under a different landlord.
