Experts Urge Policy Shift to Unlock Vietnam's Rental Housing Potential

Vietnam’s property market, long dominated by a cultural and institutional preference for homeownership, is facing a critical juncture as soaring prices push housing beyond the reach of a growing segment of the population. Industry leaders, academics, and policymakers are now advocating for a fundamental strategic shift to cultivate a viable and sustainable rental housing market, arguing it is essential for social welfare, economic stability, and modern urban development.

Dr. Doan Van Binh, Vietnam National Real Estate Association

The market’s traditional focus on homes for sale is deeply rooted in Vietnamese culture, according to Dr. Doan Van Binh, Vice Chairman of the Vietnam National Real Estate Association and Chairman of the CEO Group. The concept of “settling down before building a career” remains a powerful social norm, driving a belief that one should eventually purchase a home in their place of work to establish a family. Renting is often perceived as a sign of instability or a failure to provide for future generations.

This cultural predisposition has resulted in one of the world’s highest homeownership rates. Garret, a Kentucky-based real estate company, ranks Vietnam third globally at 90 per cent, trailing only Romania and China. Similarly, data from Global Property Guide places Vietnam 13th worldwide, also with a 90 per cent homeownership rate.

This intense demand for ownership has fueled a rapid escalation in housing prices. According to VietnamPlus, Vietnamese property prices have surged by approximately 59 per cent over the past five years. This outpaces growth in several major international markets, including the US (54 per cent), Australia (49 per cent), Japan (41 per cent), and Singapore (37 per cent). In contrast, rental yields in Vietnam are comparatively low, ranging from 2-4 per cent annually depending on the location, significantly below the 5-7 per cent typically seen in other regional markets.

The affordability gap is stark. Vietnam’s house price-to-income ratio stands at an extremely high 23.7 to 30 times annual income. This means an average household would need to save its entire income for 23 to 30 years, without any expenditure, to afford a home. This is between 1.6 and 2 times higher than the global average of 11 to 15 times, and far exceeds the generally accepted affordability threshold of 5 to 7 times income.

Several structural factors exacerbate the issue. Dr. Binh notes that Vietnam’s long-term capital market, including the market for Real Estate Investment Trusts (REITs), remains underdeveloped. Furthermore, developers contend with high development, regulatory compliance, and borrowing costs.

The institutional framework has also historically favored for-sale housing. The state generates significant revenue from land-use fees, while developers prefer sales-focused projects because they offer easier access to financing, allow for capital mobilization before completion, and provide a faster return on investment. Obligations for developers are also shorter-term, generally concluding upon the handover of homes and the transfer of technical infrastructure to authorities.

However, the country’s socio-economic landscape is evolving. Rapid urbanization, expanding city populations, and unprecedented labor mobility are creating new housing demands. With homeownership increasingly unattainable for young people, workers, professionals, and middle-income households, the need for accessible rental options is becoming a pressing social welfare issue.

“As representatives of the real estate business community, we strongly support the government’s efforts and hope it will establish appropriate mechanisms to encourage private sector participation in the development of rental housing and affordable housing,” Dr. Binh stated, advocating for a model where the state acts as a facilitator through institutional and policy reforms, without resorting to blanket subsidies or leaving the market entirely to self-regulate. Businesses, in turn, should develop rental housing with reasonable profit expectations and a commitment to professional management.

Mr. Vu Sy Kien, Ministry of Agriculture and Environment

In recent years, the government has taken steps to address market bottlenecks. Mr. Vu Sy Kien, Deputy Director of the Department of Land Administration at the Ministry of Agriculture and Environment, highlighted that the government has submitted various mechanisms to the National Assembly (NA), leading to the issuance of NA Resolution No. 254 and the government’s adoption of Resolution No. 49, both aimed at unlocking resources for the real estate market.

Key reforms have been implemented in three main areas. First, local authorities now have greater autonomy to review and allocate land for different housing types based on local demand. Second, new mechanisms have been introduced to resolve stalled projects, particularly those where compensation and site clearance work is over 70 per cent complete but procedural hurdles have caused delays. These measures have allowed many projects to resume, boosting market supply. Third, land pricing policy has been revised. The previous project-by-project valuation method, which created timeline and cost uncertainties for investors, has been supplemented by a system allowing the use of land price tables and adjustment coefficients in certain cases, simplifying procedures and improving transparency. For social housing, exemptions from land-use fees continue to be a key incentive.

“We view rental housing as a particularly important segment,” Mr. Kien said. “At this stage, developing rental housing should be regarded as a priority, a key pillar and a major growth driver for the future direction of Vietnam’s housing and real estate market.”

A primary challenge, in his view, is the lack of comprehensive data on the scale and demand for rental housing. “It is important to conduct a comprehensive nationwide assessment of rental housing demand as soon as possible,” he urged. This data would provide a foundation for local authorities to allocate land and design supportive policies.

Mr. Kien suggested prioritizing two areas for pilot rental housing programs. The first is in city centers and Transit-Oriented Development (TOD) areas, which concentrate large numbers of young professionals and skilled workers. Land for these projects could be supported by preferential policies, such as reduced or zero land-use fees. The second is rental housing in industrial parks to serve workers on modest incomes, a segment with significant potential to improve living conditions and support workforce stability.

Associate Professor Nguyen Quang Tuyen, Hanoi Law University

From a legal standpoint, the regulatory framework for rental housing remains incomplete, according to Associate Professor Nguyen Quang Tuyen, Dean of the Faculty of Economic Law at Hanoi Law University and an arbitrator at the Vietnam International Arbitration Centre (VIAC). While the National Assembly has passed relevant resolutions, a core issue persists: the absence of a formal legal definition for rental housing.

“Without a clear legal definition, it will be difficult to design appropriate policies and management mechanisms,” he explained. He pointed out that the Law on Housing 2023 includes a dedicated chapter on social housing but lacks a comprehensive, separate framework for rental housing, a gap he believes should be addressed urgently.

Professor Tuyen recommended that during the planned amendments to the Land Law 2024, the Law on Housing 2023, and the Law on Real Estate Business 2023, lawmakers should introduce at least one dedicated chapter or a specific set of provisions for rental housing. This would create a legal foundation for the sector’s sustainable development.

He also called for stronger incentive mechanisms to help businesses access land for rental projects. He stressed the need for clear planning, with the government assigning responsibility to local authorities to prepare designated land reserves for rental housing, specifying the proportion, location, and allocation criteria to ensure transparency. Mechanisms for land rental fee exemptions and reductions also need to be clarified, as affordable input costs are crucial for keeping rents accessible.

Further legal clarity is needed on the responsibilities of local authorities in site clearance to create clean land funds for rental projects, as current regulations are too general. The specific incentives and obligations for rental housing developers compared to other real estate types also remain ambiguous, creating a major implementation bottleneck. Finally, the rights and protections for tenants—including occupancy rights, lease terms, and dispute resolution—need to be strengthened with provisions tailored specifically to the rental context.

Dr. Ngo Trung Hai, Vietnam Urban Planning and Development Association

Dr. Ngo Trung Hai, Vice Chairman of the Vietnam Urban Planning and Development Association, offered a different perspective, arguing that rental housing is already an integral part of the market, spanning from luxury apartments to informal units along the Red River. He questioned whether a separate legal framework is necessary, suggesting the more critical issue is the organization of urban space and the design of appropriate development mechanisms.

“Any market is ultimately driven by supply and demand,” he noted. He pointed to China’s introduction of the R4 land-use category, specifically designated for long-term rental housing developed by private investors, as a potential model. He also observed that modern urban planning is moving away from rigid distinctions between commercial, social, and rental housing, focusing instead on creating an integrated mix of housing types to foster more inclusive cities.

Transit-Oriented Development (TOD) presents a significant opportunity. Dr. Hai noted that demand for rentals around TOD hubs is substantial, citing the student and lower-income resident population along Ho Chi Minh City’s Ben Thanh - Suoi Tien Metro Line as a strong potential tenant base. The challenge, however, is that few developers are genuinely interested in rental projects.

He suggested drawing lessons from Japan, where developers in TOD projects have considerable autonomy but are encouraged to allocate a portion of their development to a mix of rental, social, and commercial housing. “I believe developers can successfully invest in rental housing and generate reasonable returns, much as has been done in China,” he said, adding that this approach could help build a more stable market that avoids cycles of boom and bust.

He cautioned against the risk of creating cities with unoccupied housing units, leaving neighborhoods “dark and inactive at night.” The key question for policymakers and developers, he concluded, is determining the appropriate balance between rental and for-sale housing based on the specific needs of each city.

Professor Hoang Van Cuong, Vietnam Economic Association

Shifting demographics and labor market dynamics are making rental housing more practical than ever, argued Professor Hoang Van Cuong, Vice Chairman of the State Council for Professorship and Vice Chairman of the Vietnam Economic Association. While previous generations often stayed with one employer for their entire career, making homeownership synonymous with stability, younger generations are far more mobile, frequently changing jobs and locations.

For this new workforce, renting offers greater flexibility, allowing them to live closer to work and adapt their housing as their needs change. It also frees them from the burden of long-term mortgage debt, which can limit investment in other areas of life. As a result, demand for rental housing is rising rapidly, especially in major cities.

Professor Cuong called for a comprehensive national strategy that involves both public and private sectors, but with strong state leadership. He argued that if left to the private sector alone under current conditions, rental housing cannot compete with for-sale developments due to high costs and insufficient rental income to cover financing. The government should therefore play a central role in urban planning, allocating land for rental housing in areas with good transportation links but lower commercial value, often near city centers.

This approach aligns with classical urban development theory, where prime central land is used for commercial activities while nearby areas are suited for high-density residential use. It also reflects the natural evolution of mature real estate markets, which shift from rapid for-sale construction to generating long-term income from existing assets as land becomes scarcer.

To address the critical issue of land costs, which can be a major portion of development expenses, he proposed shifting from large, upfront land-use payments to a system of annual land rental payments for rental housing projects. Ultimately, he concluded, coordinated reforms across legal, land-use, and investment policies are needed to create high-quality rental communities that are more than just temporary accommodation.

Mr. Le Hoang Chau, Ho Chi Minh City Real Estate Association

In Ho Chi Minh City, the housing challenge is particularly acute. Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, noted that the newly expanded city is home to nearly 3 million migrants, plus over 1.2 million migrant workers from the former Binh Duong province. An estimated 974,000 people require social housing, yet supply is lagging dramatically. Between 2021 and 2025, only 17,902 social housing units were completed.

The city’s target for 2026-2030 is 181,498 units. Even if the total reaches 199,400 units by 2030, it will still fall short of demand, especially in the rental segment.

To spur private investment, the Association proposes incorporating a dedicated policy framework for “rental housing affordable to middle and low-income urban residents” into the amended Law on Housing. This framework should include exemptions from land-use fees and land rental payments for the entire life cycle of qualifying projects. To ensure long-term commitment, developers would be required to maintain rental operations for a minimum of 20 years to be eligible for these incentives, reflecting the typical investment recovery period for such projects.

The Association also advocates for reinstating a 70 per cent reduction in value-added tax and corporate income tax for developers of social and affordable rental housing. Furthermore, it suggests that the state should only regulate the maximum rental rate, allowing developers to determine tenant eligibility for their affordable rental units.

Finally, to meet the needs of smaller households, Mr. Chau proposed amending the Law on Housing to establish minimum standards for studio apartments and rental units, with a minimum floor area of no less than 15 square meters. This would facilitate the development of smaller, more affordable rental options suited to the country’s changing demographics.