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As part of a significant step in adjusting and reforming the legal system regarding land, the Land Law 2024, amending and replacing the Land Law 2013, has been enacted with the paramount mission of creating an effective and transparent legal framework while ensuring fairness and sustainability in land management and use. This law is not only a legal document but also a specific guidance for the legal community in Vietnam and stakeholders in the field of land and real estate during enforcement and compliance processes.
With a focus on addressing complex issues related to land management, use, and transactions, the Land Law 2024 marks a new step in promoting sustainable and equitable development of land throughout the country.
Here, the main highlights of this law not only meet practical needs but also propose innovative and flexible solutions to cope with emerging challenges in modern land management.
Flexibility in Land Rent Payment
According to the provisions of Article 172, Clause 2 of the Land Law 2013, individuals, businesses, and other entities leasing land from the state, paying annual land rents, may be permitted to convert to a one-time payment for the entire lease period.
However, the reverse conversion right from a one-time payment to an annual rent payment is not currently stipulated in the Land Law 2013, creating a bottleneck for parties without sufficient financial resources to make a one-time payment for the entire lease period.
Recognizing this limitation, Clause 2 of Article 30 of the Land Law 2024 has added provisions for the option of annual land rent payment for “economic organizations, individuals, persons of Vietnamese origin residing abroad settling abroad, economic organizations with foreign investment capital leasing land from the state paying land rents once for the entire lease period…”
The previously enacted provisions regarding the conversion from annual rent payment to a one-time payment for the entire lease period remain unchanged. Accordingly, land lessees will have the flexibility to choose the form of land rent payment depending on their financial situation and leasing purposes.
Providing diversity in options for land lessees will facilitate enterprise project implementation. However, there are currently some opinions suggesting that this additional provision will not create significant impacts because the majority of enterprises operating in Vietnam tend to make one-time land rent payments rather than annual payments.
When enterprises make a one-time land rent payment, the asset becomes eligible for mortgage for bank loans, serving as financial leverage for business purposes. Additionally, if paying annual land rents, enterprises will bear financial risks as land rents tend to increase gradually in Vietnam, which is inevitable.
However, increasing options for land lessees will still bring flexibility to the real estate market, helping financially struggling enterprises have more choices to allocate capital more effectively rather than giving up leasing land due to the inability to make a one-time payment for the entire lease period.
Enhanced Regulations on Rights and Obligations of “Persons of Vietnamese origin residing abroad” in Land Use
Currently, there are many Vietnamese individuals who want to buy and sell land, real estate in Vietnam but do not hold Vietnamese citizenship. This situation has become more common recently as Vietnamese individuals increasingly settle and immigrate abroad.
Previously, these Vietnamese residents who wished to own land in Vietnam had to contact and rely on Vietnamese citizens to hold the land they wanted to buy or sell. This situation led to many unnecessary disputes, especially in cases where the person asked to hold the land was a relative of the Vietnamese resident living abroad.
Clause 4 of Article 3 of the Nationality Law 2008 No. 24/2008/QH12 (“Nationality Law 2008“) defines persons of Vietnamese origin residing abroad as Vietnamese people who used to have Vietnamese nationality which had been determined at the time of their birth on the consanguinity principle and their offsprings and grandchildren are permanently residing in foreign countries.
However, this concept is not currently stipulated in the Land Law 2013, leading to individuals who are persons of Vietnamese origin residing abroad not having rights over land according to the provisions of the law because they are not included in the regulated subjects regarding land.
Articles 4 and 6 of the Land Law 2024 have changed this by adding the term “persons of Vietnamese origin residing abroad” into the legal system regarding land in Vietnam, allowing Vietnamese citizens living abroad to actively conduct land transactions without the need for intermediaries or facing many difficulties as before.
With the Vietnamese real estate market expected to experience strong growth in the coming years, the number of Vietnamese citizens working and settling abroad who desire to return to Vietnam for development has increased significantly. Providing a legal basis for persons of Vietnamese origin residing abroad to participate in developing the real estate market will open up a new investment channel for the market, providing new sources of capital for the rapid development of the Vietnamese real estate market.
Abolishing Land Price Frameworks, Determining Land Prices According to Market Principles
Stipulated in Resolution No. 18-NQ/TW, the Land Law 2024 has officially legalized the provision regarding the abolition of land price frameworks, current land price lists, and will determine land prices according to market principles. This is the most significant change in the Land Law 2024.
In the dominant real estate market today, which is the secondary market, land transactions between parties are mainly conducted according to market principles, meaning land prices are determined based on the needs of the parties, relying on secondary market price frameworks not stipulated in legal documents or by authorized agencies.
In contrast to the primary market where parties directly purchase land use rights from the state as the representative of the nation’s land ownership, land use right transactions in the secondary market are currently not conducted according to land price frameworks and lists as regulated.
With land price frameworks issued by the Government every 5 years as stipulated in Article 113 of the Land Law 2013, and land price lists determined every 5 years by provincial People’s Committees and People’s Councils at the same level as stipulated in Clause 1 of Article 114 of the Land Law 2013, the prices applied according to land price frameworks, land price lists in Vietnam still vary greatly from the actual market prices of the secondary market.
This situation has led to the consequence that parties involved in land transactions in the secondary market implicitly agree on the actual land transfer prices among themselves, but when notarizing, handing over land under the supervision of competent authorities, the land prices in the transfer contracts are set very low compared to market prices, only slightly higher than the land price frameworks, lists to avoid high taxes.
This behavior results in tax losses. More seriously, hiding these land transfer prices makes it difficult for the state to control and supervise land prices in the secondary market, creating conditions for speculative real estate activities or organizations to manipulate, inflate land prices to profit.
These legal violations have negative impacts on the Vietnamese economy and society, making it difficult for Vietnamese people to access real estate for actual residential purposes due to soaring land prices, or the practice of land hoarding to wait for price increases happening frequently, leading to many pieces of vacant land not included in planning, tarnishing the image of Vietnam, along with many other consequences.
In addition to reducing these issues, abolishing land price frameworks, applying land price lists close to market prices, which are built annually, will also bring more positive impacts to the real estate market. For instance, implementing land retrieval from residents will be easier when applying market-priced land.
Previously, cases where residents protested, refused to hand over land mainly stemmed from them feeling that compensation, land retrieval based on previous land price frameworks, lists did not closely match market prices, leading to many houses becoming obstacles in the middle of the street, spoiling the urban landscape.
Tightening Regulations on Land Reclamation
Land reclamation policies, compensation, support, and resettlement for citizens have always been a land issue that many people are concerned about because it directly affects their rights and interests. Most land users believe that land reclamation policies or compensation policies when reclaiming land are not truly fair to them.
For instance, resettlement apartments provided to citizens whose land is reclaimed are often assessed as too old or in inconvenient locations compared to where they currently reside, making it difficult to access infrastructure such as schools, markets, supermarkets, or workplaces, and not commensurate with the value of the reclaimed land.
To ensure a mechanism of fair, just, and transparent compensation and support for citizens whose land is reclaimed, Article 79 of the Land Law 2024 has specifically stipulated 32 cases of land reclamation for the purpose of socio-economic development for the national and public interest.
Accordingly, since the Land Law 2024 came into effect, the state is only permitted to reclaim land in cases deemed “truly necessary” to implement socio-economic development projects for national and public interests to harness land resources, improve land use efficiency, develop economic and social infrastructure in a modern direction, implement social welfare policies, protect the environment, and preserve cultural heritage.
Emphasizing the truly necessary factor is particularly important to ensure the rights of land users in Vietnam.
However, currently, these 32 cases of land reclamation still have a general nature, meaning there is no specific explanation of cases that meet the criteria for land reclamation. Therefore, land reclamation will still receive objections from citizens because specifying each specific case is unfeasible. However, with other support mechanisms such as abolishing land price frameworks, applying new annual land price lists close to market prices, the expected opposition will be less than before, creating conditions for better planning and development of the Vietnamese real estate market.
Expanding the Scope of Land Use Right Certificates for Untitled Land
The lack of land use right certificates brings many inconveniences to citizens. Owning a land use right certificate will open up many opportunities. For instance, citizens can use the certificate as a tool for mortgage or borrowing, business development. However, fundamentally, the lack of a “red book” brings insecurity and uncertainty to citizens’ lives, leading to many difficulties.
Before July 1, 2004, the deadline for issuing land use right certificates for untitled land in Vietnam was divided into 2 timeframes according to the guidelines in Article 20 of Decree 43/2014/NĐ-CP, namely before October 15, 1993, and from October 15, 1993, to before July 1, 2004.
The Land Law 2014 provides more detailed regulations for each timeframe. Specifically, before December 18, 1980, from December 18, 1980, to before October 15, 1993, and from October 15, 1993, to before July 1, 2014.
Article 138 of the Land Law 2024 stipulates 9 cases of issuing land use right certificates for households, individuals using untitled land without violating land laws, not belonging to cases of land improperly allocated.
In addition to changes in the scope of issuing certificates for untitled land and uncontested land, the most notable change in this area is that previously, if untitled land was involved in projects or general planning, it would not meet the conditions for issuing land use right certificates. However, currently, citizens will have the right to be issued certificates even in cases where the land is part of a project or general planning.
Accordingly, if the land is currently under planning, competent authorities must negotiate with land users to transfer their land use rights, thereby prioritizing the interests of certificate holders.
For the state, as the representative body of the nation in land management, issuing land use right certificates to citizens not only provides psychological security but also brings some tangible benefits such as providing a basis for better monitoring of the land and real estate market, or increasing revenue through taxing certified land owned by individuals or organizations.
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