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The amended Vietnamese Land Law, effective from January 2025, marks a significant milestone in reforming the legal framework for land management. This aims to create an effective and transparent legal system, ensuring fairness and sustainability in land management and use. This law serves not only as a legal document but also as a practical guide for stakeholders, especially foreigners interested in investing in and owning land-use rights in Vietnam.
This article will focus on analyzing the main points of the amended Land Law, highlighting important regulations and notable impacts on foreigners. This will help them better understand the opportunities and challenges when participating in the Vietnamese real estate market.
Flexibility in Land Rent Payment in Vietnam
According to the 2013 Land Law, individuals and enterprises could switch from annual land rent payments to one-time payments for the entire lease period, but not the other way around. Recognizing this limitation, the 2024 Land Law allows economic organizations, individuals, Persons of Vietnamese descent residing overseas, and foreign-invested economic organizations to choose the form of annual land rent payment. This provides more flexibility for land tenants in making payments, suitable for their financial situation.
Although this provision brings flexibility to the real estate market, some argue it has no practical impact as most businesses tend to pay land rent once to qualify the asset for bank mortgages. However, increasing options still helps financially constrained businesses better allocate their resources.
Strict Regulation of Land Use Rights for Persons of Vietnamese descent residing overseas
Previously, Vietnamese descendants residing overseas had no land rights under the law because they were not subject to land law adjustments. The 2024 Land Law introduces the concept of “Persons of Vietnamese descent residing overseas,” allowing them to actively engage in land transactions. This opens up a new investment channel for the Vietnamese real estate market, bringing new capital to the market’s development.
Abolishing Land Price Framework, Determining Land Prices by Market Principles
A significant change in the 2024 Land Law is abolishing the land price framework and determining land prices based on market principles. This reduces the incidence of secret land transfer agreements on the secondary market, reduces tax losses, and strengthens state control over land prices. Applying land price lists close to market prices also facilitates easier land acquisition from residents and minimizes protests.
Tightening Land Recovery Regulations
The 2024 Land Law specifically outlines 32 cases of land recovery for socio-economic development in the national and public interest. The state can only recover land in “truly necessary” cases to ensure citizens’ rights. While there may still be opposition, supporting mechanisms such as abolishing the land price framework and applying new annual land price lists will minimize this, facilitating better planning and real estate market development.
Expanding Issuance of Land Use Rights Certificates for Untitled Land
Owning a land-use rights certificate opens many opportunities for people, such as mortgages or loans. Previously, if a plot of land without a certificate was involved in projects or general planning, it did not qualify for a land-use rights certificate. However, the 2024 Land Law stipulates that people will have the right to be issued certificates even if the land is part of projects or general planning. This helps the state better monitor the land market and increase tax revenue from certified land plots.
In summary, the 2024 Land Law brings many important and positive changes to Vietnam’s land legal system, from flexible land rent payments, expanding land use rights for Persons of Vietnamese descent residing overseas, to determining land prices by market principles and tightening land recovery regulations. These changes not only enhance transparency and fairness in land management and use but also create conditions for the sustainable and balanced development of the Vietnamese real estate market.
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