VIETNAM Law and Practice Contributed by: Tran Thai Binh and Duong Thi Minh Han, LNT & Partners
6.9 Payment of Maintenance and Repair By law, the maintenance and repair of a privately owned property is the obligation of the owner. In the case of common areas, co-owners share that respon - sibility. In property leases, the property owner will have that obligation unless it is agreed to be passed to the tenants in the lease contract. 6.10 Payment of Utilities and Telecommunications Utilities and telecommunications expenses incurred in privately used areas will be measured by separately installed gauges and independently borne by the spe - cific user. Expenses incurred in public areas will be borne by the property owner or shared or allocated to the tenants as stipulated in the contract. 6.11 Payment of Property Taxes Technically, landlords are responsible for paying taxes charged on the income earned from real estate leas - ing activities. 6.12 Insurance Issues It is common practice for the tenant to bear the insur - ance premium for policies that cover all risks on the real estate and public liabilities. However, it is also common practice for the property owner to procure insurance for the building structure. The insurance will be in the name of the tenant and the landlord, and at the coverage rate requested by the landlord. Business interruption insurance is more unusual in this market, given that tenants have suffered significant losses following the COVID-19 pandemic, and land - lords have had to forego basic rent due to closure of a tenant’s business. 6.13 Restrictions on the Use of Real Estate Per general regulations, tenants are obliged to lease and use the property according to its intended pur - pose, function, design and other agreements under the lease contract. Tenants are required by law to pre - serve, maintain and repair minor effects at the leased property and will bear the cost if there is any loss or damage. Subject to negotiations between the parties, a land - lord may impose further restrictions on tenants regard -
land lease granted to primary land users by the state and the investment term (if a real estate project): • the typical length of the lease term may vary from two to five years, and some may be extended to seven years, with the rent adjusted annually; for the lease of facilities in industrial parks, the terms are usually for the full investment term; • the maintenance and repair of the real estate occu - pied by the tenant will be carried out by the land - lord at the expense of the tenant; and • the rent payments must be made either monthly or half-yearly. 6.5 Rent Variation Rent variation depends the different real estate sec - tors. For instance, in commercial leasing of retail space, base rent will be adjusted on a regular basis. The frequency and rate of rent adjustment is entirely at the landlord’s discretion. However, in respect of facil - ity leases in an industrial park, base rent is paid in a lump sum for the entire lease term, with no variation applied. 6.6 Determination of New Rent Unless the lease is a lump-sum payment, lease con - tracts usually have a rent review clause based on the market price at the time. Some may choose to deter - mine the increase in rent at a particular rate in the lease contract as the lease continues. The proposed increase in rent is permissible if it is reasonable. 6.7 Payment of VAT VAT is incurred on basic rent, currently at the rate of 10%. 6.8 Costs Payable by a Tenant at the Start of a Lease It is entirely up to the concerned parties to negotiate any costs payable by the tenant at the start of a lease other than basic rent. However, it is common prac - tice in this jurisdiction for the tenant to be required to pay a deposit prior to the lease taking effect, with this amount kept by the landlord during the entire lease term.
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