Clarifying the Scope of Small-Scale Real Estate Business under the 2023 Law and Decree 96

Under the Law on Real Estate Business, entities and individuals wishing to engage in real estate activities must establish a business enterprise, cooperative, or cooperative union with registered real estate business lines—except in cases classified as “small-scale business.”

While the concept of “small-scale business” is not new—it was introduced under the previous law—the updated Law on Real Estate Business 2023, along with its implementing regulation, Decree No. 96/2024/ND-CP (“Decree 96”), offers more detailed guidance on its scope and application.

Specifically, the law categorizes small-scale business into two distinct groups, each subject to different eligibility criteria:

(a) Individuals conducting small-scale real estate transactions; and
(b) Organizations or individuals selling, leasing, or lease-purchasing houses, buildings, or floor space not for business purposes, or doing so below a defined threshold (“Below Small-Scale Business”).

According to Article 7.1 of Decree 96, individuals under category (a) must meet the following conditions:

• (i) Their activities must not trigger the requirement to establish an investment project under construction and housing laws;
• (ii) The value of each contract must not exceed VND 300 billion (“Value Threshold”);
• (iii) The number of transactions must not exceed 10 per year. Notably, if only one transaction is conducted annually, the Value Threshold does not apply.

However, the interpretation of condition (i) remains unclear. Articles 30.2, 54, and 57 of the Housing Law suggest that individuals may construct houses for sale, lease, or hire-purchase provided the projects do not fall into the following categories:

• Multi-story houses (two floors or more) with apartments designed for sale, lease-purchase, or rental;
• Multi-story houses with 20 or more rental apartments.

This interpretation, however, is subject to debate and has yet to be confirmed in practice, leaving uncertainty around when an individual’s housing project would require formal investment approval.

In addition to condition (i), individuals must also comply with the Value Threshold and transaction limit. Yet, ambiguity remains around the definition of “10 transactions”—whether it refers to contracts, buyers, or other metrics—leaving room for administrative discretion.

For category (b), the criteria are similar but differentiated between individuals and organizations:

• Individuals must not be subject to investment project requirements under construction and housing laws;
• Organizations must ensure each contract does not exceed VND 300 billion and must limit transactions to no more than 10 per year. Again, if only one transaction occurs annually, the Value Threshold is waived.

The uncertainties surrounding these provisions mirror those discussed under category (a). As the new law and Decree 96 have only recently come into force, many aspects remain untested. It is therefore crucial to closely monitor how regulatory authorities interpret and enforce these rules in practice