Tran Thi Nhu Quy - Junior Associate

Le Thi An - Paralegal

According to recent surveys, a growing number of foreigners are choosing Vietnam as a destination for retirement, travel, or long-term residence and business activities, which has led to a significant increase in the demand for foreigners to rent houses. As per our practice, we have encountered the numerous disputes and disagreements between landlords and foreign tenants. These often arise from various factors, including non-compliance with legal requirements, language barriers, cultural differences, and lifestyle mismatches.

In this short article, we would like to highlight some key legal issues when the foreigners lease houses in Vietnam:

1. Conditions for parties participating in house leasing transactions

The landlord being foreigners and overseas Vietnamese who wish to lease houses in Vietnam must be eligible for homeownership in accordance with the Law on Housing. On the tenant’s side, foreign individuals must have lawfully entered into Vietnam. Landlords are also required to register the temporary residence of their foreign tenants within 24 hours of the tenant’s move-in, either through the online portal or directly at the local ward or commune police office. Failure to fulfill this obligation may result in administrative penalties imposed on the landlord in accordance with applicable regulations.

2. Conditions of houses eligible for leasing transactions

Pursuant to prevailing regulations, when leasing, lending, permitting others to stay in, or authorizing the management of a residential property, the landlord is required to provide documentation evidencing that the property satisfies the legal conditions for such transactions, including the following documents:

1. In cases where the leased property was purchased from a real estate project developer: The landlord must possess a sale and purchase agreement or a lease-purchase contract executed with the project developer. If the property was acquired through an assignment of the sale and purchase agreement from a third party, the landlord must also provide a legally compliant assignment document in accordance with the Law on Real Estate Business.

2. In cases where the leased property was constructed by the landlord: The landlord must possess a construction permit or other lawful documentation proving homeownership in accordance with the provisions of civil law and land law.

In the absence of the required documents and agreements mentioned above, the lease may be deemed unlawful, thereby posing legal risks for the tenant.

3. Conditions to legally validate a house lease agreement

Under current regulations, transactions involving the sale, lease-purchase, donation, exchange, capital contribution, or mortgage of residential property are required to be notarized or certified. However, lease agreements are not mandatorily subject to notarization unless otherwise requested by the parties.

To mitigate legal risks for the tenant, notarizing the lease agreement with a notary officer is a recommended practice, as it helps verify the landlord’s legal right to lease the property and the overall lawfulness of the transaction. In case notarizing the lease agreement is not in need, the lease agreement must still be made in writing with clear terms and duly signed by both parties. There are many templates of lease agreement available online, but most of them are quite simple to address potential risks or disputes that may arise during the tenancy.

4. Key considerations for the house lease agreement

1. Regarding deposit to guarantee the tenant’s lease commitment, in most cases, the tenant is required to pay a deposit equivalent to one to three months’ rental, depending on the parties’ agreement. This deposit may be used by the landlord in cases where the tenant fails to pay rent in full or causes damage to the property without making proper repairs. Upon termination of the lease, the deposit shall be refunded to the tenant after deducting any outstanding rent or other payable amounts, if any.

2. The landlord and the tenant may freely agree on the rental price, lease term, and payment method. If the landlord intends to renovate the property with the tenant’s consent, the rental price may be adjusted during one-third of the remaining lease term. If no agreement on the adjustment can be reached, the landlord may terminate the lease and compensate the tenant accordingly. The tenant may sublease the property to a third party, provided that the landlord grants prior consent.

3. Termination of the lease agreement must comply with legal provisions. A lease agreement shall be terminated in accordance with the law under the following circumstances: upon expiration of the lease term; by mutual agreement of the parties; if the property no longer exists; upon the death of the tenant or dissolution of the tenant organization; if the property is damaged, reclaimed, cleared, demolished, or requisitioned by the State; or if the landlord provides at least 30 days’ prior notice, except in cases of force majeure or where otherwise agreed by the parties.

4. The landlord is not permitted to unilaterally terminate the lease agreement, except in the following circumstances: leasing the property to an ineligible party; the tenant’s arrears for three months or more; misuse of the property’s intended purpose; unauthorized renovations; unlawful subleasing; causing public disorder; or other grounds as provided by law.

5. The tenant has the right to terminate the lease agreement if the property is seriously damaged and not repaired by the landlord, if the rent is increased unreasonably, or if the tenant’s right to use the property is restricted due to claims or interests of third parties.

Unilateral termination of the lease agreement must be notified at least 30 days in advance, unless otherwise agreed by the parties. In cases where this requirement is violated and causes damage, the breaching party shall be liable for compensation in accordance with the law.

6. If the owner of residential property transfers ownership to another person while the lease term remains valid, the tenant shall have the right to continue leasing the property until the end of the contractual term. The new owner shall be responsible for continuing the terms of the existing lease agreement, unless otherwise agreed by the parties.

To ensure legal compliance and prevent potential disputes between the landlord and the tenant, the parties are advised to engage an experienced lawyer to advise and prepare a good drafted lease agreement for both parties’ discussion and signing.

Here is our advice on What are the notable legal issues when leasing houses to foreigners in Vietnam. If you are interested or need legal consulting support in the rental process. Please visit our DIMAC Website and other News Category to get the latest updates on legal advice and market experience sharing.