Notes need to know when the Vietnamese Government makes a decision to recover land with compensation price in Vietnam, the Vietnamese Government makes a decision to recover land with compensation price in Vietnam, recover land with compensation price in Vietnam, compensation price in Vietnam,

Notes need to know when the Vietnamese Government makes a decision to recover land with compensation price in Vietnam

In Vietnam, as well as, arguably, the rest of the world, the land is not for full ownership. This means that although you may build a house and live in that land for decades, even hundreds of years, you technically won’t have ownership of that land. You can only gain the right to use that land for a really long time. If problems occur, the government can take back the land and pay you the compensation for that land and infrastructure in that land, the house, or other buildings. At this moment, the right to use the land of you will be permanent or temporary expropriated, depending on the situation and the government. So, what are the notes need to know when the Vietnam Government makes a decision to recover land with compensation price?

In Vietnam, the land is owned by the entire citizens of Vietnam and is represented by the State. However, when the need arises, such as for the preparation of war or to expend the public road, etc., the land is recovered and the compensation price will be decided by the State.

Article 4 of the 2013 Land Law stipulates: “Land belongs to the entire people with the State acting as the owner’s representative and uniformly managing land. The State shall hand over land use rights to land users in accordance with this Law.”

Thus, the land is not under the private ownership of any organization, household, or individual. 

However, if the land is abandoned, it won’t create any economic benefits for the country and its citizens. 

Accordingly, the State will grant land-use rights to land users in many forms.

This might include recognition of land use rights, land allocation by the State, land lease by the State. 

The right to impose compensation price for the land under Vietnam territory

As the land is not owned by the users of that land, they can’t negotiate with the government about the compensation for that land and its infrastructure. 

Notes need to know when the Vietnamese Government makes a decision to recover land with compensation price in Vietnam
Notes need to know when the Vietnamese Government makes a decision to recover land with compensation price in Vietnam

This creates many problematic issues as the compensation price of the government is usually way lower than the actual price of the land at the moment that it is ‘recalled’, not to mention the future price that it might reach as Vietnam’s real estate market is extremely competitive. 

In brief, when the State recovers land for defense and security purposes and for socio-economic development in the interests of the nation and the public, people cannot negotiate on the compensation price because they are not the owners of the land.

The situation when the users of land can negotiate the price

Clause 1, Article 73 of the Land Law 2013 stipulates that the use of land for the implementation of production and business projects and works are not subject to the land recovery cases by the State. 

Accordingly, if the negotiator is a business implementing a project, the user of land can negotiate a high price.

However, the users of land should note that there is some rare circumstance that in some cases, the government might reclaim the land for low compensation price and appoint a business to implement projects on that land.

The calculation method of compensation price when the State recovers land

The price of compensation for land when the State recovers land for national defense and security purposes and for socio-economic development in the national and public interests shall be decided by the People’s Committee. 

According to Point dd, Clause 4, Article 114 of the 2013 Land Law, Clause 5, Article 4 of Decree 44/2014/ND-CP, and Clause 4, Article 3 of Decree 01/2017/ND-CP, the specific land price is determined by the method of land price adjustment coefficient applied to the case of calculating land compensation when recovered by the State.

Value of land plot to be valued (01m2) = Land price in the land price list x Land price adjustment coefficient

ASL LAW is the top tier Real Estate law firm in Vietnam. If you need any advice, please contact us for further information or collaboration.

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