Difference Between SPA & LTL in Vietnam Real Estate Market

Vietnamese real estate is currently growing and attracting a lot of interest from overseas investors, that’s why Vietnam is a dream location to invest in. Every country has its own set of laws, so we’ve listed the various property title types below, along with some quick explanations of what they are and how to own property in Vietnam.

Vietnam’s real estate market is the most dynamic in Asia, maintaining an average growth rate of 15% per year. Real estate is forecasted to have a very positive outlook in the next 20 years because the level of urbanization in Vietnam is still low and taking place strongly; the economy maintains a high growth rate; and there is still a lot of room for growth in basic infrastructure.

Sales and Purchase Agreement (SPA)

To govern this process and protect both the buyer and seller, a Sales and Purchase Agreement (SPA) is necessary. A written and notarized SPA is required under Vietnamese law; thus, you should not rely solely on verbal or handwritten agreements.

The SPA is signed after the seller has received a deposit from the buyer; with the SPA signed, the buyer becomes the property’s new owner. The Pink Book is issued after the apartment project is fully completed/handed over, and the developer applies for it from the government.

Who would get a SPA?

Only 30% of the total apartments in the apartment project may be sold to foreigners, and those buyers may receive “foreign SPAs,” while the remaining 70% may be sold to locals.

Long Term Lease Agreement (LTL)

A long-term lease arrangement is exactly what it sounds like: you can rent the property from the developer for 50 years instead of purchasing it. The government claims that you can extend the contract for an additional 50 years after the initial 50 have passed.

The property is yours to use during this period, but because you are simply leasing it, it officially belongs to the developer. For this reason, you cannot obtain a pink book – the governmental approval of property ownership rights.

Who can qualify for a Long Term Lease?

Because quotas/supply are limited or sales and purchase agreements (SPAs) have already run out, when foreign consumers decide to buy a home, they frequently sign a long-term lease agreement.

As a result, many of those who sign this agreement are foreigners wishing to invest in real estate, as foreigners are only allowed to own 30% of any property. They may be able to buy an apartment for 8-15 percent less than they might if they bought one under an SPA because of the lesser legal status of LTL agreements.

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