How Much Deposit Can Be Taken for Off-Plan Housing? The 5% Cap under Article 23 of the 2023 Real Estate Business Law

For many years, the deposit stage carried the greatest latent risk when buying off-plan housing. Not a few buyers paid very large deposits — sometimes several tens of per cent of an apartment’s value — for projects still on paper, only to become trapped when the project stalled or the developer ran into financial difficulty. The root of the risk lay in the fact that, previously, specialised law left the control of deposit levels almost entirely open, allowing the parties to agree freely in a setting of information asymmetry heavily tilted towards the developer.

The 2023 Real Estate Business Law (Law No. 29/2023/QH15), effective from 1 August 2024, has for the first time set a hard ceiling on this deposit in order to protect buyers and bring the market to a healthier footing. This article analyses the new rule on the deposit cap, the point in time at which a deposit may be taken, and the legal considerations that both buyers and developers need to grasp clearly.

Mục 01What is the maximum deposit for buying off-plan housing?

This is the question of decisive significance for buyers. Under Clause 5, Article 23 of the 2023 Real Estate Business Law, a real estate project developer may only collect a deposit of no more than 5% of the sale or hire-purchase price of the housing, construction work, or floor area within a construction work, from the depositing party seeking to buy or hire-purchase. This 5% figure is a mandatory ceiling, meaning that any deposit agreement exceeding this ratio is contrary to the regulations, and the portion above the ceiling may not be protected by law.

The significance of the 5% limit lies not only in the number. In substance, this rule returns the deposit to its original function as a measure to secure the conclusion of a contract, rather than a channel for the developer to raise capital in disguise from customers while the project does not yet meet the required conditions. Previously, collecting large deposits was in effect a form of appropriating buyers’ capital, shifting the entire project risk onto customers. Capping it at 5% rebalances this relationship: the buyer places only a modest deposit to secure the right to purchase, while the resources to implement the project must come from the developer’s genuine capacity.

Mục 02When may a developer take a deposit?

A point no less important than the ceiling is the timing. The developer may only take a deposit when the housing or construction work already meets the conditions for being put into business under the 2023 Real Estate Business Law. This means the developer may not take a deposit while the project is still at the “selling green rice” stage — before completing the legal procedures or before qualifying to sell off-plan housing.

For buyers, this is an extremely useful legal “litmus test”. If a developer proposes to take a deposit while the project lacks the legal documents proving it qualifies for business, that is a clear warning sign that the transaction may breach the regulations and carries high risk. Customers should require the developer to produce the documents proving the conditions for putting the real estate into business before signing any deposit agreement. Skipping this verification step is precisely why many buyers have ended up losing their deposit with no basis for recovering it.

Mục 03What must a deposit agreement clearly state?

Beyond the limits on level and timing, the law also imposes requirements on the content of the deposit agreement. Under the regulations, the deposit agreement must clearly state the sale or hire-purchase price. This seemingly simple requirement carries great protective value for the buyer, because it prevents the situation where the developer takes a deposit first and only fixes the sale price later, placing the customer in a fait accompli and forcing acceptance of a price higher than expected.

By way of illustration, consider a customer interested in an apartment with an expected price of VND 3 billion. Under the new rule, the developer may take a deposit of at most 5%, i.e. VND 150 million, and the deposit agreement must clearly state this price of VND 3 billion. As a result, the buyer knows their financial obligation precisely from the outset, while capping the amount at risk at VND 150 million rather than the far larger sums of the past. If a deposit agreement fails to state the sale price or requires payment exceeding 5%, the buyer has grounds to refuse and to request adjustment in line with the regulations.

Mục 04Distinguishing a deposit from progress-based payments

It should be noted that a deposit and progress-based payment are two different legal institutions and should not be confused. A deposit, with its 5% ceiling, is the amount paid before the contract is signed. Progress-based payment, made after the contract has been signed, is carried out according to construction progress and is subject to its own ceilings under the law on real estate business. Understanding the boundary between these two institutions helps the buyer control their cash flow at each stage and avoid having the developer “lump” the amounts together to the buyer’s disadvantage.

Mục 05Frequently asked questions

Is it lawful for a developer to require a 10% deposit? No. A deposit exceeding 5% of the sale price is contrary to Clause 5, Article 23 of the 2023 Real Estate Business Law. The buyer has the right to refuse and to ask the developer to adjust it down to the correct ceiling. If an above-ceiling amount has already been paid, the buyer should consult a lawyer to assess options for protecting their interests, because the portion above the ceiling may not be recognised and protected by law as a valid deposit.

If you place a deposit but then change your mind and do not buy, do you lose the deposit? Under the general principles of civil law, if the depositing party refuses to conclude the contract, the deposited asset belongs to the party receiving the deposit. Therefore, before placing a deposit, the buyer should consider carefully and read closely the clauses on handling a breach by either party.

Mục 06HTIC’s legal support in buying and selling off-plan housing

The deposit is the first step, yet also the step most prone to risk, on the journey of buying off-plan housing. HTIC Law Firm assists buyers in reviewing the legal status of the project, checking the conditions for putting the real estate into business, and appraising the deposit agreement and sale contract before signing. We also advise developers on building a deposit-collection process that complies with the regulations so as to prevent disputes. Explore HTIC’s real estate lawyer service for safe transactions.

Fixed fee quotation for each matter/project — Hotline +84 379 044 299.