VIETNAM Law and Practice Contributed by: Tran Thai Binh and Duong Thi Minh Han, LNT & Partners
6.2 Types of Commercial Leases A commercial lease is not classified by type, and payment by the tenant is dependent on nego - tiation between the parties. However, besides basic real estate rent, tenants usually have to bear: • utilities charges; • management and maintenance fees; and • insurance. In the case of lease of a retail space, tenants may incur “percentage rent” . 6.3 Regulation of Rents or Lease Terms General rules on leasing real estate are provided under the Law on Real Estate Trading 2023 and the Civil Code 2015. Terms on rent are freely negotiable between the parties to the lease, as long as they are not contrary to, or prohibited by, regulations under the law. Lease rent in industrial parks may be subject to certain regulations by industrial park management authority. 6.4 Typical Terms of a Lease The typical terms are subject to the nature and purpose of the lease, provided that the terms of a commercial lease do not exceed the terms of a land allocation/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 occupied by the tenant will be carried out by the landlord 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 sectors. For instance, in commercial leasing of retail space, base rent will be adjusted on a regu - lar basis. The frequency and rate of rent adjust - ment is entirely at the landlord’s discretion. How - ever, in respect of facility 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 contracts usually have a rent review clause based on the market price at the time. Some may choose to determine 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 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 nego - tiate any costs payable by the tenant at the start of a lease other than basic rent. However, it is common practice in this jurisdiction for the ten - ant 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. 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 responsibility. In property leases, the prop - erty owner will have that obligation unless it is passed to the tenants in the lease contract.
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