The rental procedure is one of the indispensable parts when conducting a rental. If the tenant is Vietnamese, the procedure will be easier to do. But for foreign tenants, the rental procedure is somewhat more complicated. Specifically, what are the difficulties when carrying out procedures for renting houses for foreigners in Vietnam? Find out with AequitasAudit.com right in the sharing post below!
The development of home rental services in Vietnam
Renting a house to foreigners is currently a fairly developed service in Vietnam. Concentrated in big cities such as Hanoi, Ho Chi Minh City, Da Nang… Large domestic enterprises, foreign-invested enterprises… will attract a large number of qualified laborers from abroad. out. They can be engineers and experts from many countries. Working time in Vietnam may be different, but the need to find a place to live will be the same. All with the desire to find a suitable space to live and work.
However, in order for you to be able to trade this service well, you must learn some basic knowledge. Especially the house rental procedures for foreigners in Vietnam. As such, you must arm yourself with the following information:
Conditions for renting a house to foreigners
Article 118 of the Law on Housing 2014, the conditions of houses participating in transactions are as follows:
a) Having a Certificate as prescribed by law, except for the case specified in Clause 2 of this Article.
b) Not subject to a dispute, complaint or claim about ownership rights. Or being in the house ownership period for the case of house ownership with a definite term.
c) Not being distrained for judgment enforcement or distrained to execute legally effective administrative decisions of competent state agencies.
d) Not subject to a decision on land recovery or a notice on house clearance or demolition issued by a competent authority.
The conditions specified at Points (b) and Points (c) of this Clause do not apply to the case of buying, selling, or renting-purchase houses to be formed in the future.
Article 120 of the Law on Housing 2014, the order and procedures for renting houses to foreign tenants are as follows:
- Making contracts for purchase, sale, lease, hire-purchase, donation, exchange, mortgage, capital contribution, loan, stay, authorization for housing management. Or a written transfer of a commercial house sale and purchase contract with the contents specified in Article 121 of this Law. In case the organization donates to the house of gratitude or charity, it only needs to make a donation in writing.
- One of the parties shall submit a dossier to request a competent state agency to issue a Certificate for that house. In case of buying or renting a house from the project investor, the investor is responsible for carrying out the procedures. In order for the competent state agency to issue the Certificate to the purchaser and the lessee. Except for the case where the purchaser, the lessee voluntarily carry out the procedures for applying for the Certificate.
- Competent state agencies when granting certificates to buyers, lessees, recipients of gifts, exchanges, capital contributions, inheritance of houses together with receipt of lawful residential land use right transfer have a house there. At the same time, the house ownership and residential land use rights are recognized for the house owner.
Possible risks when renting a house to foreigners in Vietnam
Renting a house to foreigners also has certain undesirable risks. Especially the house rental procedures for foreigners. Therefore, the landlord should carefully understand the provisions of the law before renting. At the same time, to avoid financial risks, the lessor also needs to have constraints right from the start.
The most important thing is to be documented and certified by the local government. All provisions of the two parties must be clearly written.
You should pay special attention to following specific procedures and agreements. By doing this you are protecting your own interests. Contents of the agreement such as house price, rental period, form of payment of rent and payment time. All must be specified in writing. And it’s better to leave a deposit equal to 3 months’ rent.
Penalties for violations when renting houses to foreigners
Penalty for not having a business registration
A fine ranging from VND 2,000,000 to VND 3,000,000 shall be imposed for conducting business in the form of household business. But there is no certificate of business household registration as prescribed. (Clause 2, Article 6 of Decree 124/2015/ND-CP)
Penalty for not declaring temporary residence
A fine ranging from VND 2,000,000 to VND 4,000,000 for failing to declare temporary residence for foreigners (Point h, Clause 3, Article 3 of Decree 167/2013/ND-CP)
Penalty for not presenting fire prevention records
A warning or a fine ranging from VND 100,000 to VND 300,000 shall be imposed for failure to present dossiers and documents serving the inspection of fire prevention and fighting safety (Clause 1, Article 28 of Decree 167/2013/ND-CP). )
Penalty for not having a security certificate
A fine ranging from VND 5,000,000 to VND 15,000,000 (Point a, Clause 3, Article 11 of Decree 167/2013/ND-CP only applies to accommodation establishments)
Procedures for renting a house when dealing with foreign tenants
Step 1: Register your business
Business activities for foreigners to rent houses are conditional business activities. You must go to the District People’s Committee where you have a rental house to register.
Because of the small business scale, you only need to set up an individual business household.
If you have a large business, you can set up a business. It will be more convenient for development as well as long-term cooperation with partners.
To do business registration, you need to prepare some documents such as:
- Documents proving the owner of the rental house (Red book or house purchase and sale contract).
- Identity card (ID card).
Step 2: Pay license tax and declare tax code of the rental house
Paying excise tax and declaring tax identification number is an important step in the process of renting a house. It helps the tax authorities control your business. In this step, you need to prepare:
- Business registration certificate.
- Tax code declaration of the rental house.
- License tax return.
Step 3: Complete the fire protection file
Normally, a set of documents proving eligibility for fire prevention and fighting will include two cases:
The case must be appraised and approved the fire prevention and fighting design. Then documents proving eligibility must have:
- Minutes of appraisal and approval of fire prevention and fighting design.
- Minutes of acceptance of fire prevention and fighting.
In case of not having to appraise and approve the design and take over for fire prevention and fighting. Then the document proving eligibility is the record of inspection of eligibility for fire prevention and fighting.
Step 4: Register for security order
The registration of security and order helps the management agency control the stay of foreigners in Vietnam. This is mandatory in order to comply with the law. When conducting security order registration, documents need to be prepared:
- Household affidavit.
- An application form for a certificate of satisfaction of security and order conditions for doing conditional business lines.
- Business registration certificate.
- Certificate of eligibility for fire prevention and fighting mentioned in step 4 (according to the requirements of each project).
Step 5: Register temporary residence for foreign guests to rent a house
This is the basic thing on the to-do list when conducting the rental process. The purpose is to protect their interests in Vietnam when any problems arise. You need to prepare:
- Business household registration certificate or business registration certificate.
- Legally notarized copy of passport of foreigner.
- ID card, household registration book (certified copy) of the business owner.
- Certificates of land use rights.
- Passport and Work Visa are still valid.
Step 6: Pay personal income tax
The payment of personal income tax is the final step to complete the rental procedure. By going to the district tax office to file a tax return. Profile includes:
- House rental contract.
- Tax declaration must be filed with the tax authority (declared according to the form).
After receiving the confirmation of the tax amount, you must submit the personal income tax declaration to the treasury to remit into the state budget.
The personal income tax rate or the partially progressive tax rate applies to income from production, business, salary, wages and remuneration.
Income tax schedule for resident individuals according to new regulations:
- 5 million/month: 5%
- Over 5 million – 10 million: 10%
- Over 10 million – 18 million: 15%
- Over 18 million – 32 million: 20%
- Over 32 million – 52 million: 25%
- Over 52 million – 80 million: 30%
- Over 80 million: 35%
The procedure for renting a house when the tenant is a foreigner is actually not too complicated. Therefore, you should take all steps to ensure the interests of the lessor as well as the tenant. If you have any questions, you can visit AequitasAudit.com to learn more!
Phuong Dung – Content Writer
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