Reader inquiry: Mr. Hung, a Vietnamese national holding U.S. citizenship and currently residing in the U.S., asks: Before settling in the U.S., I owned a house in Da Nang City. As I no longer have a personal need for the property, I plan to rent it out for approximately 20,000,000 VND per month. However, since I live abroad, I am unsure whether I have the right to lease the property and what procedures are required to do so in Vietnam. Additionally, given the monthly rent of 20,000,000 VND, am I required to declare and pay taxes in Vietnam? If so, which taxes apply, and what are the necessary steps and procedures?
Lawyer Phan Thuy Khanh – Deputy Head of Phong & Partners Law Office – responds:
Currently, it is quite common for overseas Vietnamese to own and lease out residential properties in Vietnam; however, not all owners are fully conversant with the legal regulations governing these transactions. Owners who are not frequently present in Vietnam may encounter particular difficulties regarding contract execution, property management, rent collection, tenant residency registration, and the fulfillment of tax obligations. In Mr. Hung’s case, provided the house in Da Nang is his lawful property and meets the conditions for such transactions, he has the right to utilize and lease the property in accordance with the law. However, since Mr. Hung currently resides in the United States, he should take note of the following key legal considerations to ensure the lease complies with regulations and to minimize potential risks.
First, what does Vietnamese law stipulate regarding property leasing in this context?
The 2023 Law on Housing provides clear regulations on this matter. “Article 8. Subjects eligible for housing ownership in Vietnam
1. Subjects eligible for housing ownership in Vietnam include:
b) Overseas Vietnamese as defined by the law on nationality;
Article 10. Rights of housing owners and housing users
1. Housing owners who are domestic organizations or individuals, or overseas Vietnamese, have the following rights:
d) […] to lease, lend, allow others to stay, authorize the management of the housing, and exercise other rights as prescribed by law; […].
Article 160. Conditions for housing involved in transactions
1. For transactions involving the sale, lease-purchase, gift, exchange, mortgage, or capital contribution using housing, the housing must meet the following conditions:
c) Being within the term of ownership in cases of term-limited housing ownership;
d) Not being distrained for judgment enforcement or for the execution of a legally effective administrative decision issued by a competent state agency, and not being subject to urgent temporary measures or preventive measures ordered by a Court or competent state agency;
đ) Not being subject to a decision on land recovery or a notice of clearance or demolition issued by a competent agency;
3. In the case of housing for lease, in addition to the conditions specified in Points c, d, and đ, Clause 1 of this Article, the housing must ensure quality and safety for the lessee and be equipped with adequate electricity, water supply, and drainage systems, as well as ensure environmental sanitation, unless otherwise agreed upon by the parties.”
Based on the aforementioned regulations, Mr. Hung—an overseas Vietnamese residing in the US—is eligible to own housing in Vietnam, even though he does not live there regularly; consequently, he has the right to lease out the house he owns. However, please note that the house must meet the conditions stipulated in Article 160 of the 2023 Law on Housing mentioned above. Furthermore, if the house is common property or jointly owned by multiple individuals, renting it out requires the consent of the co-owners, unless the parties have agreed otherwise.
Secondly, how is the house rental process carried out while Mr. Hung is in the US?
Clause 1 of Article 162, Article 163, and Clause 2 of Article 164 of the 2023 Law on Housing stipulate:
“Article 162. Sequence and procedures for housing transactions
1. Parties participating in a housing transaction shall agree to enter into a contract for […] lease, […] (hereinafter collectively referred to as a housing contract) […]
Article 163. Housing contracts
Housing contracts shall be agreed upon by the parties and must be made in writing […].
Article 164. Notarization or certification of contracts and the effective date of housing contracts
2. In cases of […] lease or authorization of housing management, notarization or certification of the contract is not required, unless the parties so desire.
Article 186. Content and scope of authorization for housing management
1. Authorization for housing management is the act of a housing owner authorizing another organization or individual to exercise the rights and obligations of the housing owner regarding housing management for the authorized duration. […]
2. The content and duration of the authorization for housing management shall be agreed upon by the parties and recorded in the housing management authorization contract in accordance with civil law.” In accordance with the aforementioned regulations, a house lease agreement must be made in writing and include key details such as: information regarding the parties, the property's characteristics, the rental price, payment methods, handover arrangements, the lease term, the parties' rights and obligations, tax declaration and payment obligations, the effective date, and signatures. Notarization or certification of the lease agreement is not mandatory unless the parties so desire.
If Mr. Hung cannot return to Vietnam in person to sign the contract or manage the property, he may authorize another organization or individual to do so. Clause 1, Article 138 of the 2015 Civil Code permits individuals and legal entities to authorize other individuals or legal entities to establish and perform civil transactions. However, it should be noted that, pursuant to Clause 1, Article 141 of the 2015 Civil Code, a representative may only establish and perform civil transactions within the scope of their representation. Therefore, the authorization document must...