According to Clause 1, Article 9 of the Law on Real Estate Business No. 29/2023/QH15 dated November 28, 2023, it is stipulated that organizations and individuals engaged in real estate business must establish a company in accordance with the law on enterprises or establish a cooperative, union of cooperatives in accordance with the law on cooperatives, with real estate business as a registered industry or profession (collectively referred to as real estate business enterprises), except in the following cases:

First: Individuals engaged in small-scale real estate business are not required to establish a real estate business enterprise but must declare and pay taxes as prescribed by law.

Second: Organizations and individuals selling residential houses, construction works, or areas of construction floors in construction works not for business purposes, or selling, renting, or renting out residential houses, construction works, or areas of construction floors in construction works on a small scale, are not required to comply with the provisions of this Law but must declare and pay taxes according to the law; in the case of individuals selling, renting, or renting out residential houses, construction works, or areas of construction floors in construction works, notarization and certification must also be carried out in accordance with the law.

So, what constitutes a “small scale”?

Currently, the Government has not issued official guidelines on this matter. However, in the second draft of the Decree detailing and guiding the implementation of several articles of the Law on Real Estate Business 2023, there are three proposed options, whereby small-scale real estate business by individuals might be understood as follows:

Option 1: 

a) Individuals selling, transferring, renting, or renting out future housing or existing housing from 03-05 houses or 03-05 apartments within one year (12 months). 

b) Individuals selling, transferring, renting, or renting out future construction works or existing construction works from 05-10 construction works or 05-10 construction floor areas within one year (12 months).

Option 2: 

a) Selling, transferring, renting, or renting out real estate owned or used under the law on an area of 1,000m2 to 2,000m2 of land in urban areas; 

b) Selling, transferring, renting, or renting out real estate owned or used under the law on an area of 3,000m2 to 5,000m2 of land in rural areas; 

c) Selling, renting, or renting out real estate owned or used under the law on an area of 1,000m2 to 2,000m2 of construction floor space for residential or mixed-use buildings with housing; 

d) Selling, renting, or renting out real estate owned or used under the law on an area of 3,000m2 to 5,000m2 of construction floor space for non-residential buildings.

Option 3: 

a) Individuals investing in building standalone houses from 02 floors upwards and having a scale of fewer than 20 apartments for rent as prescribed in Clause 3, Article 57 of the Law on Housing No. 27/2023/QH15. 

b) Individuals selling, renting, or renting out housing or construction works originating from inheritance. 

c) Individuals selling, renting, or renting out housing originating from social housing, charitable housing, or housing donated by the government, organizations, or individuals.

Therefore, individuals renting out property, depending on the specific case, may be required to establish a business or cooperative, or union of cooperatives according to regulations for real estate business enterprises. If they are not required to establish a business, individuals must still declare and pay taxes in accordance with tax laws.

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