Tiếng Việt
中文 (中国)
In a significant step towards amending and reforming the legal system concerning land, Land Law 2024 amends and replaces Land Law 2013 (“the Land Law 2024”), with the supreme mission of establishing an efficient and transparent legal framework while ensuring fairness and sustainability in land management and use. Issued with the purpose and spirit of enhancing the quality of life and fostering sustainable development, this law is a legal document and a specific guideline for the legal community in Vietnam and stakeholders in the fields of land and real estate throughout the enforcement and compliance process.
With a focus on addressing complex issues related to land management, use, and transactions, Land Law 2024 marks a new step in promoting sustainable and equitable land development nationwide.
In this regard, the prominent features of this law not only meet practical needs but also propose innovative and flexible solutions to cope with emerging challenges in modern land management.
Therefore, this article will analyze and present the key points of the Land Law 2024, emphasizing important provisions and notable impacts that the amended law brings to society.
Flexible in land rental payment
According to Article 172(2) of the Land Law 2013, individuals, businesses, and other entities leasing land from the state and paying annual land rent may be allowed to convert to a lump-sum payment for the entire lease period.
However, the right to convert from a lump-sum payment to an annual land rent payment is not currently stipulated in the Land Law 2013, creating difficulties for parties without sufficient financial resources to make a lump-sum payment for the entire lease period.
Recognizing this inconsistency, Article 30(2) of the Land Law 2024 has added provisions allowing for the option of annual land rent payment for “economic organizations, individuals, overseas Vietnamese settling abroad, economic organizations with foreign investment capital leased land by the state for a lump sum for the entire lease period…”
The previously paid land rent will be deducted from the annual land rent payment according to government regulations.
The previous regulations regarding the conversion from annual payments to lump-sum payments for the entire lease period remain unchanged. Accordingly, land lessees will have the flexibility to choose the payment method depending on their financial situation and leasing purposes.
Providing this variety of options for land lessees will facilitate businesses in implementing projects. However, there are some opinions suggesting that this additional provision may not have a substantial impact because the majority of businesses operating in Vietnam tend to prefer making a lump-sum payment rather than annual payments.
When a business pays rent in one lump sum, the property becomes eligible for bank loans, which can be used as financial leverage for the business’s operations. Additionally, if paying annual land rent, businesses will bear the financial risk as land rental prices tend to increase gradually in Vietnam, which is inevitable.
Nevertheless, increasing options for land lessees will still bring flexibility to the real estate market, allowing businesses facing financial difficulties to have more choices for better capital allocation rather than giving up leasing land due to the inability to make a lump-sum payment for the entire lease period.
Relaxing strict regulations regarding the rights and obligations of land use for “overseas Vietnamese”
Currently, many Vietnamese individuals want to buy and sell land and real estate in Vietnam but do not hold Vietnamese citizenship. This trend has become more common recently as Vietnamese people increasingly immigrate and settle abroad.
Previously, these Vietnamese citizens wishing to own land in Vietnam had to contact and rely on individuals with Vietnamese citizenship to have the land they wanted to buy or sell registered under their names. This situation has led to unnecessary disputes, especially in cases where the individuals asked to register the land are relatives of Vietnamese citizens living abroad.
Article 3(4) of the Nationality Law 2008, Law No. 24/2008/QH12 (“Nationality Law 2008”), defines overseas Vietnamese settlers as Vietnamese citizens who once held Vietnamese citizenship, whose citizenship is determined by bloodline and descendants, and who reside permanently abroad.
However, this concept is not currently stipulated in the Land Law 2013, leading to individuals who are overseas Vietnamese settlers not having rights over land according to legal regulations because they are not among the regulated subjects regarding land.
Articles 4 and 6 of the Land Law 2024 have changed this by introducing the concept of “overseas Vietnamese” into Vietnam’s legal framework concerning land, creating opportunities for Vietnamese nationals residing abroad to actively engage in land transactions without the need for intermediaries or encountering the difficulties faced previously.
With the Vietnamese real estate market expected to experience significant growth in the coming years, the number of Vietnamese citizens working and settling abroad who wish to return to Vietnam for development has increased significantly. Providing a legal basis for overseas Vietnamese to participate in the development of the real estate market will open up a new investment channel for the market, providing new capital sources for the rapid development of the Vietnamese real estate market.
Abolishing land price brackets and determining land prices according to market principles
Abolishing land price brackets and determining land prices according to market principles has been stipulated in Resolution No. 18-NQ/TW. The Land Law 2024 officially legalizes the abolition of land price brackets, and current land price lists, and will proceed to determine land prices according to market principles. This is the most significant change in the Land Law 2024.
In the current real estate market, which is primarily a secondary market, land transactions between parties are mainly conducted based on market principles. This means that land prices are determined based on the demand of the parties, relying on secondary market price frames not specified in legal documents or by authorized agencies.
In contrast to the primary market, where parties acquire land use rights directly from the state as the representative of the people’s land ownership, transactions of land use rights in the secondary market are not conducted according to land price brackets and lists as regulated.
Due to the periodic issuance of land price brackets by the government every 5 years as stipulated in Article 113 of the Land Law 2013 and land price lists by provincial People’s Committees and People’s Councils at the same level every 5 years as stipulated in Article 114(1) of the Land Law 2013, the prices applied according to land price brackets and lists in Vietnam still differ significantly from the actual market prices in the secondary market.
This situation has led to the consequence where parties involved in land transactions in the secondary market implicitly agree on the actual land transfer price. However, during notarization and land transfer under the supervision of competent authorities, the land price stipulated in the transfer contract is often significantly lower than the market price, only slightly matching or exceeding the price brackets or lists to avoid high taxes.
This behavior results in tax losses. More seriously, concealing the actual land transfer price makes it difficult for the state to control and supervise land prices in the secondary market, providing opportunities for speculation or organizations to manipulate and inflate land prices for profit.
Such legal violations have negative impacts on the Vietnamese economy and society, as they hinder Vietnamese people’s access to real estate for genuine living purposes due to soaring land prices or the frequent speculation and hoarding of land, leading to unplanned land areas, tarnishing Vietnam’s image, and causing various other consequences.
In addition to alleviating these issues, removing land price brackets and applying market-based land price lists developed annually is expected to bring more positive impacts to the real estate market. Notably, the implementation of land reclamation from citizens will be easier when applying market-based land prices.
Previously, instances where citizens protested and refused to hand over land mainly stemmed from the perception that compensation and land reclamation prices based on the previous price brackets or lists did not align with market prices, resulting in many houses becoming obstacles in urban areas, detracting from the urban aesthetic.
Tightening regulations on land reclamation
Land reclamation policies, compensation, support, and resettlement for citizens are always topics of interest because they directly affect their rights and interests. The majority of citizens who hold land use rights often perceive land reclamation policies or compensation policies as unfair to them.
For instance, resettlement apartments provided to citizens whose land has been reclaimed are often considered too old or inconveniently located compared to their previous residences. They may have difficulty accessing essential infrastructure such as schools, markets, supermarkets, or workplaces, and the compensation received may not adequately reflect the value of the reclaimed land.
To ensure a fair, adequate, and transparent compensation mechanism for citizens whose land has been reclaimed, Article 79 of the Land Law 2024 specifically stipulates 32 cases of land reclamation for socio-economic development for the national and public interests.
Accordingly, since the Land Law 2024 came into effect, the state is only allowed to reclaim land in cases deemed “truly necessary” to implement socio-economic development projects for national and public interests. This is aimed at maximizing land resources, improving land use efficiency, developing modern socio-economic infrastructure, implementing social security policies, protecting the environment, and preserving cultural heritage.
Emphasizing the “truly necessary” factor is particularly important to safeguard the rights of land users in Vietnam.
However, the current 32 cases of land reclamation still lack specific explanations regarding the criteria for land reclamation. Therefore, land reclamation may still face opposition from citizens due to the impracticality of specifying each specific case. Nevertheless, with other support mechanisms such as abolishing land price brackets and applying new market-based land price lists annually, anticipated opposition is expected to decrease, facilitating better urban planning and development of the Vietnamese real estate market.
Expanding the scope of granting land use rights certificates for land without documentation
The absence of land use rights certificates poses many inconveniences for citizens. Owning a land use rights certificate opens up many opportunities. For example, citizens can use the certificate as a tool for mortgage or loan purposes, as well as for business development. However, fundamentally, the lack of a “red book” (land use rights certificate) brings insecurity and uncertainty to people’s lives, leading to many difficulties.
Before July 1, 2004, the deadline for granting land use rights certificates for land without documentation in Vietnam was divided into two timeframes as guided by Article 20 of Decree 43/2014/NĐ-CP: before October 15, 1993, and from October 15, 1993, to before July 1, 2004.
The Land Law 2014 provides 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 for granting land use rights certificates to households and individuals using land without documentation without violating land laws and not falling under cases of improperly allocated land.
In addition to changes in the scope of issuing certificates for undocumented land and land without disputes, the most notable change in this area is that previously, if a piece of land without documentation was involved in projects or general planning, it would not meet the conditions for a “red book.” However, currently, citizens have the right to be granted a land use rights certificate even in cases where the land is part of a project or general planning.
Therefore, if the land is currently under planning, competent authorities must negotiate with the landowner to transfer their land use rights, thereby emphasizing the rights of the certificate holder.
From the state’s perspective as the representative agency for land management, issuing land use rights certificates to citizens not only provides psychological assurance but also brings some tangible benefits. The state will have a basis for better monitoring of the land and real estate market or increasing revenue through taxation on land parcels certified with land use rights of individuals and organizations.
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