Important Criteria When Selecting Off-Plan Housing for Investment

Important Criteria When Selecting Off-Plan Housing for Investment (housing formed in the future) are of special interest to many investors in the context of a real estate market containing significant legal risks. Correctly and fully evaluating these criteria helps investors limit the risk of disputes, protect capital safety, and ensure future exploitation and transferability.

The concept of future housing

Pursuant to Clause 5, Article 3 of the Law on Real Estate Business 2023, the legal nature of off-plan housing is defined as follows:

• Definition: Off-plan housing refers to housing that is in the process of construction investment or has not yet been accepted and put into use.
• Legal Characteristics: The most important feature is that the asset is not physically complete or has not completed legal procedures for operation at the time of contract execution. The subject of the contract is the property right arising from the contract and the developer’s commitment to hand over the house in the future.
• Forms: This includes apartment buildings and individual houses within urban area construction projects or commercial housing projects. Note: A structure with completed rough construction but lacking acceptance minutes from competent state agencies is still considered off-plan housing.

>>> See more: Off-Plan Property Purchase: A Guide

Conditions for putting housing projects under construction into business.

According to Article 24 of the Law on Real Estate Business 2023, for off-plan housing to be legally traded, it must meet rigorous conditions:

1. Documentation of Construction and Land Rights

• The project must have construction commencement papers and valid Land Use Right Certificates (or decisions on land allocation/lease/conversion).
• It must possess a Construction Permit (where required), design files, and documents proving the acceptance of completion of technical infrastructure corresponding to project progress.
• For apartment complexes, there must be documents proving the acceptance of the foundation completion.

2. Notification of Eligibility

• Before selling or lease-purchasing, the developer must submit a written notification to the provincial housing management agency (Department of Construction).
• Within 15 days of receiving the notice, the state agency is responsible for checking conditions and issuing a written response confirming the housing is eligible to be sold; if ineligible, reasons must be clearly stated.

3. “Clean” Legal Status and Financial Obligations

• The property must not be under dispute regarding land use rights or ownership, must not be seized for judgment enforcement, and must not be suspended from trading.
• The project developer must have fully completed financial obligations regarding land (land use fees, rent, taxes) to the State.
• The project information must be publicly disclosed according to regulations.

>>> See more: Conditions  for guarantee housing formed in the future

Important considerations when choosing to invest in properties under construction.

Beyond standard legal checks, investors must pay special attention to financial, guarantee, and contract regulations to safeguard their capital.

1. Deposit and Payment Schedule

• Deposit Limit: The developer is only allowed to collect a deposit of no more than 5% of the housing selling price when the project meets eligibility conditions (Clause 5, Article 23, Law on Real Estate Business 2023).
• Payment Caps: The first payment must not exceed 30% of the contract value (including the deposit). Total payments before handover must not exceed 70% (for domestic developers) or 50% (for foreign-invested developers).
• Final Balance: The seller cannot collect more than 95% of the contract value if the Certificate of Land Use Rights (Pink Book) has not yet been issued to the buyer.

2. Bank Guarantee Regulations

• Pursuant to Article 26 of the Law on Real Estate Business 2023, the project developer must obtain approval from a commercial bank to guarantee financial obligations to the buyer before selling.
• This mechanism ensures that if the developer fails to hand over the house as committed, the bank will refund the advance payments to the customer. It is safest to request the Developer to provide a Letter of Guarantee specifying the validity period for the specific unit.

3. Contract Forms and Information Verification

• Contracts for sale or lease-purchase must follow the standard forms prescribed in Decree 96/2024/ND-CP to eliminate unilateral disadvantageous terms.
• Clients should proactively check the list of projects eligible for business on the Department of Construction’s website to verify the developer’s capacity and the project’s legal status.

>>> See more: Form Ia-Pl1_Decree No. 96/2024/ND-CP_Form applicable in the purchase and sale of apartment units

>>> See more: How to pay for housing purchase contracts formed in the future?

Long Phan Consulting provides investment consulting services for properties under construction.

Long Phan Consultants provides comprehensive legal solutions to support clients during off-plan real estate transactions, acting as an independent protector of investors’ interests.

1. In-depth Legal Due Diligence

• We verify core legal documents: Investment policy approval, construction permits, foundation acceptance minutes, and official confirmations of eligibility to sell.
• We verify the mortgage/release status of the project at credit institutions and research the developer’s history of disputes and implementation capacity.

2. Contract Review and Negotiation

• We review critical terms in the contract against legal standards: Price, payment progress, handover deadlines, and penalties for violations.
• We detect disadvantageous terms and support negotiations with the developer to amend the contract, protecting the client’s rights.

3. Dispute Resolution Support

• We advise on handling scenarios where the developer delays handover, violates guarantee obligations, or delays issuing the Certificate.
• We draft complaints, work with competent authorities, and represent clients in litigation at Court or Arbitration when necessary.

Frequently Asked Questions

Below are some frequently asked questions about investing in off-plan housing; please refer to them:

Is the developer allowed to mobilize capital while the project is not yet released from mortgage?

No. The developer must release the mortgage on a part or the entire project, land use rights, and housing before signing sales contracts with customers. This ensures the asset sold is not bound by debt obligations, unless the buyer and the mortgagee (bank) agree otherwise. (Legal basis: Clause 2, Article 183 Law on Housing 2023; Article 24 Law on Real Estate Business 2023.)

Can the buyer transfer the sales contract to another person before receiving the house?

Yes. The buyer can transfer the off-plan housing sales contract before receiving the house, provided the application for the Certificate has not yet been submitted, there is no dispute, the asset is not seized/mortgaged (unless agreed), and the contract is legal. Transfer must apply to the entire contract. (Legal basis: Articles 50, 51 Law on Real Estate Business 2023.)

Is the 5% deposit amount calculated into the initial 30% payment?

Yes. The first payment must not exceed 30% of the contract value, and this figure includes the deposit money. This means if the customer has deposited 5%, the first installment upon signing the sales contract requires paying an additional maximum of 25%. (Legal basis: Clause 1, Article 25 Law on Real Estate Business 2023.)

Is it mandatory to notarize the off-plan housing sales contract?

Not mandatory. If the seller is a project developer (real estate business organization), the contract is not required to be notarized or certified, unless the parties request it. The contract’s legality is ensured if it complies with the statutory form and content. (Legal basis: Clause 4, Article 44 Law on Real Estate Business 2023.)

Can foreigners buy off-plan housing in Vietnam?

Yes, but with limits. Foreign individuals permitted to enter Vietnam can buy housing (including off-plan) in commercial housing projects (excluding defense/security areas). Ownership is capped at 30% of apartments in a building or 250 individual houses per ward-level administrative unit. (Legal basis: Articles 17, 19 Law on Housing 2023.)

Conclusion

Mastering the legal regulations regarding off-plan real estate acts as a “steel shield” protecting your assets against market fluctuations. Long Phan Consultants is committed to accompanying investors in legal appraisal and strict contract risk control. If you need in-depth support regarding procedures or dispute resolution, please contact us immediately via Hotline 1900636389 for timely advice.