SOME HIGHLIGHTS AND IMPACTS OF THE 2024 LAND LAW

20/02/2024

SOME HIGHLIGHTS AND IMPACTS OF THE 2024 LAND LAW

 

 

Regulations

Land Law 2013 & guiding documents

New regulations in Land Law 2024

Impact

LAND USERS

Vietnamese individuals intending to settle abroad

The Land Law  2013 (Article 5) makes a distinction in land access rights between 'domestic individuals' and 'Vietnamese individuals residing abroad.

Clause 3, Article 4 of the Land Law 2024, the provision is in favor of Vietnamese individuals resi

ding abroad. It stipulates that Vietnamese citizens living abroad shall enjoy the same land-related rights as citizens residing within the country (domestic individuals)

The new regulations are expected to contribute to promoting investment growth and attracting remittances from millions of Vietnamese citizens residing abroad, creating resources for the economic development of the country.

Businesses with foreign investment capital / Economic organizations with foreign investment capital

The Land Law 2013 (Article 5, Clause 7) defines "enterprises with foreign investment capital" as including enterprises with 100% foreign investment capital, joint ventures, and Vietnamese enterprises in which foreign investors acquire shares, merge, or acquire in accordance with the laws on investment. This regulation leads to the understanding that any enterprise with even 1 share or 1% of capital contribution from foreign investors is considered an enterprise with foreign direct investment.

Article 46, Clause 3 of the Land Law 2024 defines the land user as "economic organizations with foreign investment capital" as stipulated by the Investment Law 2020 (meaning enterprises with over 50% charter capital, with the majority of members in a joint venture being foreign investors).

The provision of the Land Law 2024 is in accordance and consistent with the provisions of the Investment Law 2020 regarding the concept of economic organizations with foreign investment capital.

 

To address inconsistencies in the concept of 'enterprises with foreign investment capital' in Article 5, Clause 7 of the Land Law 2013, which lacks uniformity and is outdated compared to the provisions of the Investment Law 2020.

GRANTING LAND USE RIGHT CERTIFICATES TO HOUSEHOLDS AND INDIVIDUALS

Recognition of land use right certificate for households and individuals without documentation

Households and individuals currently utilizing land without documentation, but with stable use since before July 1, 2004, without violating land laws, free from disputes, and in compliance with local planning (land use, 1/500 scale), as confirmed by the commune People's Committee, are eligible for the issuance of Land Use Right Certificate under Article 101 of the Land Law 2013 and Article 20 of Decree 43/2014 amended

The State recognizes and issues Land Use Right Certificates to households and individuals using land WITHOUT documentation, with no violation of land laws, and not falling under cases of jurisdictional errors, based on the milestones specified in Article 138 of the Land Law 2024, as follows:

  • Stable land use before December 18, 1980.
  • From December 18, 1980, to before October 15, 1993.
  • From October 15, 1993, to before July 1, 2014 => The deadline is extended until July 1, 2014.

 

Recognition of Land Use Right Certificates

for households and individuals without documentation for the land they are currently using stably before July 1, 2024 (previously, this deadline was only until July 1, 2004), creating favorable conditions for households and individuals to be granted certificates even in the absence of legal documents regarding land use rights.

Issuing Land Use Right Certificates for households and individuals who were allocated land outside of proper jurisdiction

The 2013 Land Law does not stipulate this. Article 23 of Decree 43/2014 (amended) regulates the issuance of Land Use Right Certificates for individuals who were allocated land outside of proper jurisdiction before July 1, 2014

Article 140 of the 2024 Land Law stipulates the issuance of Land Use Right Certificates (LURC) for households and individuals allocated land outside of proper jurisdiction, categorized based on the following time frames:

(i) Stable use before October 15, 1993, confirmed by the commune People's Committee with no disputes.

(ii) Stable use from October 15, 1993, to before July 1, 2004, confirmed by the commune People's Committee with no disputes, in compliance with land use planning and urban/rural planning.

(iii) Stable use from July 1, 2004, to before July 1, 2014, confirmed by the commune People's Committee with no disputes, in compliance with land use planning and urban/rural planning.

(iv) No issuance of LURC for land allocated or leased outside of proper jurisdiction from July 1, 2014, onwards.

(v) Exception: Land allocated from July 1, 2014, to before January 1, 2025, confirmed by the commune People's Committee with no disputes, in compliance with land use planning and urban/rural planning, and individuals with documented proof of payment for land use, will be eligible for LURC issuance

 

In essence, the provisions of Article 140 in the 2024 Land Law are similar to those in Decree 43/2014 (amended) with some minor adjustments, including:

(i) Determining that land allocated outside of proper jurisdiction before October 15, 1993, only requires confirmation of no disputes (the previous law required compliance with both land use planning and urban/rural planning).

(ii) An exception for cases where land is allocated from July 1, 2014, to January 1, 2025, is confirmed by the commune People's Committee with no disputes, in compliance with land use planning and urban/rural planning. Individuals who have submitted payment for land use during this period are still eligible for the issuance of Land Use Right Certificates (LURC)

 

LAND SUPPORT FOR ETHNIC MINORITY COMMUNITIES

Supporting land for ethnic minority communities

Article 27 of the 2013 Law only provides general and principled regulations regarding land support for ethnic minority communities (EMCs)

Article 16 provides specific policies on land support for ethnic minority communities (EMCs) in the following directions:

(i) First-time support for allocation, allowing for purpose change, and land leasing (exemption/reduction of land fees) for EMCs categorized as poor or near-poor households in EMC and mountainous regions. (ii) Continued support for livelihood assurance upon subsequent allocations, leases, or purpose changes (second-time support) when EMCs are poor or near-poor households in EMC and mountainous regions and have no land or insufficient land within the specified limit.

Additionally, the law outlines policies to protect the land fund of EMCs (Article 48) by restricting individuals who are EMCs from transferring, inheriting, giving, or contributing land that has been RE-ALLOCATED to a third party (except for EMC individuals in poor or near-poor households in mountainous areas). The mortgage of RE-ALLOCATED land by EMCs is specifically facilitated through social policy banks (not commercial banks in general)

 

Theses policies fundamentally contribute to addressing the shortage of residential and agricultural land for ethnic minority communities.

LAND RECLAMATION AND UTILIZATION

Circumstances of Land Requisition for Socio-Economic Development

Circumstances of State Land Requisition under Article 62 of the 2013 Law:

  • All projects approved for investment by the National Assembly.
  • Three categories of projects approved for investment by the Prime Minister (paragraph 2 of Article 62).
  • Five categories of projects approved for investment by the Provincial People's Council (paragraph 3 of Article 62)

 

Article 79 expands the cases of State Land Requisition and categorizes them under three competent authorities:

  • All projects approved/decided for investment by the National Assembly.
  • All projects approved/decided for investment by the Prime Minister.
  • The remaining 30 project categories under the jurisdiction of other authorities according to laws on investment, public investment, and public-private partnership (Provincial People's Council, Provincial People's Committee, etc.).

Note: Article 80.2 allows land requisition according to the project's phased investment schedule

 

The 2024 Law provides detailed and clear regulations on cases where state projects requisition land for the purpose of socio-economic development. It expands the authority to requisition land to include the Prime Minister (for all projects approved/decided by the Prime Minister for investment according to various laws). The 2024 Law establishes a legal framework for land requisition in phases based on the project's investment schedule, a clarity that was not present in the 2013 Law.

Land Requisition in "Urban Areas"/ "Rural Residential Areas

The authority to requisition land applies to 'new urban area projects' approved by the Prime Minister under the investment decision approval (point (a) of Clause 2, Article 62 of the 2013 Land Law) or projects for 'construction of new urban areas, new rural residential areas; urban and rural refurbishment' approved by the Provincial People's Council (point (d) of Clause 3, Article 62 of the 2013 Land Law). In these cases, the state has the right to reclaim land.

Land Law 2024 still stipulates that 'urban areas' and 'rural residential areas' fall under the case of state land requisition. Specifically, it states, 'Implementing projects to invest in building urban areas serving mixed functions, synchronizing technical infrastructure and social infrastructure with housing as prescribed by construction laws for the purpose of new construction or urban refurbishment; projects for rural residential areas' (Article 79, Clause 27).

Therefore, the Land Law 2024 essentially considers 'urban areas' and 'rural residential areas' as cases for state land requisition. However, the 2024 Law has clarified that urban areas must (a) have synchronized infrastructure [in fact, 'urban areas' are required to have synchronized infrastructure] and (b) comply with construction laws. The future Construction Law's task is to clarify both the qualitative and quantitative factors to determine urban areas.

On the other hand, [Clause 1, Article 126] stipulates that for new urban area projects/rural residential area projects with competitive bidding to select investors, the Provincial People's Council determines criteria for bidding on projects that involve the use of land suitable for the local reality

 

Thus, projects classified as 'urban areas' and/or 'rural residential areas' still fall under the category of state land requisition, as per the previous law. However, the nature and requirements (both qualitative and quantitative) of 'urban areas' must be determined according to the Construction Law. Typical commercial housing projects (for example, the construction of one or a few building complexes) will not be subject to state requisition. The Provincial People's Council must specify the criteria for land bidding to select investors as per [Clause 1, Article 126]

Land Requisition due to Violation of Land Laws

Article 64 Land Law 2013

The regulation clearly specifies the NON-application of force majeure circumstances in cases where the land user delays fulfilling financial obligations to the State, delays putting agricultural land into use, or delays using land for investment projects [Article 81].

Previously, the 2013 Law only regulated force majeure circumstances in cases where the land user failed to put the land into use within the extended period of 24 months.

 

The 2024 Law provides clearer and broader specifications regarding the scope and applicable entities in relation to 'force majeure' to determine whether land users have violated land laws. The previous 2013 Law had limitations (narrow application) regarding force majeure, leading to many difficulties in its application

Authority to Reclaim Land

Article 66 of the 2013 Land Law stipulates the authority to reclaim land based on the land user category, where the Provincial People's Committee reclaims land from foreign organizations or entities, and the District People's Committee reclaims land from domestic individuals.

[Article 83] of the 2024 Law specifies the authority to reclaim land by the Provincial People's Committee concerning organizations, religious entities, Vietnamese expatriates, and diplomatic organizations in cases of (1) land reclamation due to violations of land laws and (2) voluntary land return with a threat to human life.

The District People's Committee reclaims land (without distinguishing the land user) in cases of (1) land reclamation for defense purposes, (2) land reclamation for economic and social development, and (3) land reclamation from households and individuals due to (i) violations of land laws or (ii) voluntary land return with a threat to human life.

 

 

The 2024 Law delineates the authority to reclaim land by classifying specific cases of land reclamation and empowering the district-level People's Committee to reclaim land for national defense, economic and social development. The 2024 Law resolves complications related to state assets by clarifying that if land is reclaimed under the Land Law, there is no need to adhere to asset arrangements according to the State Asset Law

LAND PLANNING, LAND USE PLANNING

Land planning, land use planning

 

 

Chapter IV of the Land Law 2013 (multiple contents)

[Article 61] The 2024 Land Law establishes a three-tier system for land use planning and allocation, including national-level, provincial-level, and district-level planning. The law restores provincial-level land use planning (Before January 1, 2025, provincial-level land use planning was incorporated into the "land use plan" at the provincial planning level under the 2017 Planning Law). [Clause 2 of Article 243] stipulates the continuation of the effectiveness of approved land allocation plans within provincial-level planning until the end of the planning period. Adjustments to provincial-level planning (if any) are carried out according to the 2017 Planning Law.

[Clause 4 of Article 66] specifies that districts, cities, and towns (the 2013 Land Law only mentions "districts") with approved urban planning are not required to establish land use planning but only need to develop annual land use plans at the district level. The law adds provisions that projects approved by the National Assembly, the Prime Minister, the Provincial People's Council, and Ministries under the Public Investment Law and PPP Law; projects approved by the National Assembly and the Prime Minister can be implemented without being obligated to be included in district-level land use planning [Article 67, Clause 4] => Resolves the requirement that all projects must align with land use plans.

The law stipulates that the area in land use plans subject to repossession or change of purpose after two consecutive years (the 2013 Law stipulated three years) without repossession or change of purpose must be adjusted or canceled [Article 76] => Limits the practice of keeping land in planning indefinitely.

 

The new regulations on land planning and land use planning are the latest updates, serving as tools to manage and regulate land resources. For individuals, the 2024 Law has streamlined administrative procedures for changing the purpose of land use, reducing the phenomenon of lingering planning issues that existed before.

COMPENSATION FOR RESETTLEMENT SUPPORT WHEN THE STATE RECLAIMS LANDTop of Form

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Diversifying Compensation Forms

Section 2 of Chapter VI of the 2013 Law

The 2024 law has diversified the forms of land compensation for entities subject to land reclamation; not only is compensation provided in the form of land with the same purpose as the reclaimed land or in monetary terms, as stipulated in the 2013 law.

 

Households, individuals whose agricultural land is reclaimed may be compensated with residential houses, other types of land, or in monetary terms [Article 96.1]. Households, individuals with residential land subject to reclamation may receive compensation in the form of residential land, houses, or "other types of land" [Article 98]; reclaimed non-agricultural land can still be compensated with "residential houses" or "other types of land" [Article 99]. Households, individuals, Vietnamese-origin individuals owning residential houses attached to residential land during reclamation may be compensated with residential land/houses, in monetary terms, or "other types of land" [Article 98].

The 2024 law has diversified the forms of land compensation, thereby contributing to accelerating the progress of compensation and resettlement when the State reclaims land. However, the local allocation of other land funds or residential properties for compensation to those whose land is reclaimed poses a separate challenge.

Conditions for Land Compensation

Article 75 of the 2013 Law

In addition to cases stipulated in the 2013 Law, such as having a Land Use Right Certificate (LURC) or meeting the conditions for obtaining a Land Use Right Certificate, [Article 95] supplements provisions that households or individuals are eligible for land compensation if: (i) they receive the transfer of Land Use Right Certificates from individuals with legal usage rights, but the land registration process is incomplete; (ii) they use the land based on agreements in mortgage debt settlement contracts or documents from auction winners who have paid for land use.

 

 

The 2024 law has become more flexible in determining the conditions for land compensation when the State reclaims land, contributing to reducing complaints and disputes, especially in cases where buyers have not completed land procedures.

LAND USE DURATION

 

 

 

 

 

 

 

 

 

Land use duration

Stable Long-Term Land Use


Land supplement: Funeral homes, crematoria facilities; land for storing cremation ashes [Article 10 of Article 171] are used for a specified and long-term period.

 

 

Regulations in line with reality

Extension of Land Use for Individuals Engaged in Direct Agricultural Production Allocated Land/Recognized Land Use Rights

 

 

Individuals directly engaged in agricultural production within the quota have a land transfer period, recognizing agricultural land use rights for 50 years. At the end of the term (50 years), the land use is automatically extended without the need for renewal procedures [Clause (a) Point 1 of Article 172]. This regulation differs from the 2013 Law (Clause 1 of Article 126), which requires households, individuals, and organizations to "apply for extension" if needed.

Creating favorable conditions for individuals directly engaged in agricultural production who are allocated or recognized for agricultural land, eliminating the need for extensions and the submission of applications, as required by the 2013 Law.

 

 

Handling Property on Land when Land Use is not Extended

In addition, the provision stipulates that if the land use right is not extended, the land user is responsible for handling assets on the land. If the land user fails to handle the assets within 24 months from the expiration date of the land use right, the state will reclaim the land without compensation for the land or the assets. The owner bears the cost of demolition [Clause 4 of Article 172]

 

Establishing a legal framework for the recovery and handling of assets on expired land use rights.

 

 

Land Use Duration in the Transfer of Land Use Rights

 

 

Agricultural Land Use Rights: In the case of receiving the transfer of state-owned land within the quota of individuals directly engaged in agricultural production through contracts, handling mortgage assets, and court judgments when the land use right expires, it can be continued without renewal for 50 years [Article 174].

 

 

Facilitating conditions for asset management and ensuring security.

 

 

Adjustment of Land Use Duration for Investment Projects

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Additionally, there is a supplement to the provision for adjusting the land use term of investment projects [Article 175] based on: (i) alignment with district-level land use planning, (ii) the investor completing financial obligations related to land, (iii) adjusting the project's operating period, and (iv) the land not being reclaimed and meeting environmental conditions.

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Creating favorable conditions for the synchronized implementation of investment project timelines with land use rights.

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage of Land Use Rights, Assets Attached to Land

(1) Economic organizations entrusted with land and receiving one-time payment have the right to mortgage Land Use Rights and Assets attached to Land at credit institutions operating in Vietnam (Clause 2 of Article 174 of the 2013 Law); Economic organizations can mortgage Assets attached to Land with annual payment at credit institutions operating in Vietnam (Clause 1 of Article 175).

 

(2) Households and individuals are eligible to mortgage Land Use Rights and Assets attached to Land (Clause 1 of Article 179); Mortgage of Assets attached to Land with annual payment at credit institutions operating in Vietnam, foreign investors, or individuals.

 

(3) Vietnamese individuals residing abroad, and enterprises with foreign investment capital can mortgage Assets attached to Land with annual payment; Mortgage of Land Use Rights and Assets attached to Land (if the allocated land involves one-time or annual payment) at credit institutions operating in Vietnam (Article 183).

(1) Land allocated to foreign investors with one-time payment can be mortgaged with Land Use Rights and Assets attached to Land [Clause 1 of Article 33]; Mortgage of Assets attached to Land with annual payment at credit institutions operating in Vietnam, foreign investors, or individuals [Clause 1 of Article 34] => Expanding the scope of subjects eligible for mortgage of Land Use Rights and Assets attached to Land is not limited to credit institutions operating in Vietnam (similar to the rights of individuals).

(2) Individuals can mortgage Land Use Rights and Assets attached to Land for credit institutions operating in Vietnam, financial institutions, and individuals [Clause 1 of Article 37]; Mortgage of Assets attached to Land with annual payment at credit institutions operating in Vietnam, foreign investors, or individuals [Clause 2 of Article 37] => The subjects eligible for mortgage are similar to the 2013 Law.

(3) Vietnamese nationals residing abroad, foreign investors, and individuals with foreign investment capital leasing land annually can mortgage Assets attached to Land [Clause 2 of Article 41], and mortgage Land Use Rights and Assets attached to Land [Clause 3 of Article 41] at credit institutions operating in Vietnam. => The subjects eligible for mortgage are similar to the 2013 Law

 

Expanding the scope of subjects eligible for the mortgage of Land Use Rights and Assets attached to Land, including both economic organizations and individuals in cases where economic organizations are entrusted with land and receive one-time or annual payments (previously, only eligible for mortgage at credit institutions operating in Vietnam)

 

 

LAND ALLOCATION/ LAND LEASING & CONDITIONS

Land leasing

The 2013 Law allows the option of choosing between a one-time or annual land lease payment.

[Article 120] stipulates the cases for one-time land lease payment for the entire lease period:

(i) Land for agricultural production projects, forestry projects, aquatic projects, and salt production.

(ii) Land for industrial zones, industrial clusters, high-tech industrial zones, concentrated information technology zones, high-tech agricultural application zones, accommodation facilities within industrial zones, and public projects for business purposes. Also, land for trade and services, tourism, and office purposes.

(iii) Land for residential construction for lease.

For the remaining cases, the annual land lease payment method will apply.

 

The new law has detailed provisions on cases where a one-time land lease payment is applicable for the entire lease period.

 

 

Leasing Rights in Annual Land Lease Agreement

 

 

The 2023 Law does not provide provisions on this matter.

 

 

The tenant has the right to transfer the lease rights in the land lease agreement with annual payment, and the transferee inherits the rights and obligations of the land user [Article 3.37].

[Article 37.2] Individuals leasing land with annual payment (excluding production forests) have the right to transfer, inherit, donate, or lease assets attached to the land and lease rights within the land lease agreement; "sublease the lease rights within the land lease agreement (with annual payment)." Vietnamese individuals and economic organizations with foreign investment capital have the right to sell assets attached to the land and lease rights within the land lease agreement [Article 41.2].

[Article 46] The conditions for buying and selling assets attached to the land, lease rights within the land lease agreement with annual payment include:

(i) legally formed and registered assets and

(ii) completion of construction in accordance with the planning, project. The buyer of assets attached to the land and lease rights within the land lease agreement is allowed to continue using the land for its intended purpose within the remaining land use period, and is entitled to continue deducting the pre-advanced amount that has not been deducted [Article 46.3].

The new law regulates the "lease rights" in annual land lease agreements, facilitating a consistent approach for cases involving transfer, capital contribution, and asset transactions on annually leased land.

 

 

Rate of Adjustment for Annual Land Lease Payments

 

 

The adjustment of land lease rates is regulated by Decree No. 46/2014 (amended). According to this decree, the adjustment of lease rates after a stable period of 5 years (for leases not through auction) or 10 years (for leases through auction) is carried out in accordance with the policies and laws of each period to facilitate the settlement and clearance of lease payments. Specifically, the rate adjustment for land leases through auctions does not exceed 30% compared to the previous 10-year cycle.

[Clause 2 Article 153] stipulates that the annual land rental fee applies for a 5-year period starting from the commencement of the land lease. The rental fee for the subsequent period is calculated based on the Land Price Table of the specified year. In case of an increase compared to the previous period, the rate of increase is determined by the government but must not exceed the total Consumer Price Index (CPI) for the annual period nationwide over the preceding 5 years

The new regulations contribute to stabilizing financial obligations, providing reassurance to investors when deciding on investment capital, avoiding risks, and preventing abrupt increases in lease prices, as seen in the past. The new provisions also enable investors to predict land use costs (land lease fees) for suitable business planning.

 

 

Basis for Land Allocation/Leasing/Change of Land Use Purpose

 

 

Article 52 of the 2013 Land Law provides general regulations, merging the procedures for both organizations and individuals, without distinguishing land allocation based on the type of land use rights holder.

[Article 116] Regulations on the allocation/lease/transfer of land based on the chosen form of the investor include:

(i) Allocation/lease of land through auction: Approval document for the auction result. (ii) Allocation/lease of land through project bidding with land use rights: Approval document for the selection of the investor.

(iii) Allocation/lease of land without auction/bidding based on:

  • Annual district-level land use plan (excluding individuals transferring land-use purposes, projects approved by the National Assembly, or the Prime Minister for investment direction);
  • Decision approving the investment project/ simultaneously approving the investor, approving the investor;
  • Detailed planning at a 1/500 scale (for housing projects, underground works, and reclamation projects).

 

The new law establishes a comprehensive legal framework for land allocation to projects corresponding to all three options for investors as per the 2020 Investment Law, including auction, bidding, and investment approval. Unlike the previous 2013 Law, which did not address land allocation/lease in the case of bidding (later supplemented by Decree 148/2020 and Decision 10/2023).

 

 

Land Allocation/Leasing/Partial Change of Land Use Purpose

 

The provisions in this regard are not clear.

 

 

[Article 116.5] allows the allocation/lease/transfer of land in parts (multiple times) based on phased investment in the project or the progress of compensation for land clearance

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It creates a legal basis for the partial allocation/lease/transfer of land, providing convenience for large-scale investment projects that require multiple land allocations.

 

 

Conditions for Land Allocation/Leasing/Change of Land Use Purpose

Article 58 of the 2013 Land Law stipulates the conditions for land allocation/lease/change of land use purpose, including: (i) Approval document from the Prime Minister for projects on land over 10 hectares for rice cultivation, 20 hectares for protective forest/ special-use forest.

(ii) Compliance with financial capacity/ deposit requirements.

(iii) No violation of other land laws for OTHER projects.

[Article 122] The 2024 Law stipulates that the State Agricultural Agency is only permitted to allocate/lease/transfer land when:

 (i) The project involves the use of paddy fields, protective forests, special-use forests, or production areas without differentiated scale, and must have a resolution from the Provincial People's Council, except for projects approved by the National Assembly or the Prime Minister. The government regulates the conversion of land use purposes for paddy fields, protective forests, special-use forests, or production areas.

(ii) A deposit or other form of guarantee is provided.

(iii) There is no violation of land laws, or any violations have been rectified at the time of land allocation/lease/transfer.

 

 

These provisions address jurisdictional issues between the Forestry Law and the Land Law concerning the allocation/lease/transfer of forest land/agricultural land for projects.

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INVESTOR SELECTION METHODS AND LAND ACCESS

 

 

 

Auction of Land Use Rights

 

 

 

Article 118 Clause 1 of the 2013 Law

[Article 125] of the 2024 Law regulates the auction of land use rights with land allocated for payment/one-time lease payment as follows:

  1. For enterprises implementing projects, the auction determines the land use type. Specifically, for investment projects, the types of land managed by the State/undeveloped public land or land already allocated for management are specified in [Clause 1 of Article 217].

For individuals: Determine the auctioned land type as "residential land," except in cases allocated without going through an auction.

  1. Auction conditions [Clause 2 of Article 125] "legalize" provisions in Decree 10/2023/NĐ-CP, specifying the requirement for a 1/500 detailed planning, included in the district-level land use plan, except when auctioning land from the land fund managed by the Land Development Fund, in which case it is not required in the district-level land use plan.

For enterprises participating in auctions: Additional requirements include having the capacity and experience to implement projects and meeting other conditions stipulated by the law on asset auctions.

 

New regulations have:

 

(i) Clarified specific cases in which auctions must be organized for organizations/individuals and the auction conditions;

(ii) Addressed the shortcomings of the 2013 Law, where unclear provisions led to the National Assembly's unreasonable interpretation, relying solely on Article 119 of the 2013 Law.

(iii) Added auction participation conditions for projects, requiring businesses to have the expertise to carry out the project and other legal conditions for auctions to eliminate enterprises lacking the necessary experience from participating in the auction.

 

 

 

 

 

 

 

 

 

 

 

 

 

Bidding

The 2013 Law does not regulate auctions. Auctions for land-use projects are governed by Decree 25/2020/NĐ-CP.

 

 

[Article 126] of the 2024 Law regulates the auction of land use projects as follows:

  1. Projects that use land must undergo two types of auctions:

(i) Urban and rural residential area projects, in cases where the State reclaims land according to Article 79, Section 27 of the 2024 Law, are assigned/leased through the investor selection auction. The provincial People's Council establishes criteria to decide on conducting auctions to select investors for projects that involve land use, based on the local realities.

(ii) Investment projects falling under the case where the State reclaims land according to the provisions of Article 79 of the 2024 Law must undergo auctions according to sector-specific regulations.

  1. The auction land fund must come from cases where the State reclaims land. If there is a "stuck" public land fund, then the public land portion is included in the project for auction without requiring a separate auction for this portion.
  2. Auctions must meet the following conditions:

(i) Belong to the list of land lots for auction in projects with land use, as decided by the provincial People's Council. (ii) Have a 1/2,000 zoning plan or an approved detailed 1/500 zoning plan.

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The new law has addressed the following points:

 

(i) Clearly defined criteria for bidding projects.

(ii) No longer requires the auctioning of public land if the public land is "interlocked" within the bidding project.

Establishing project enterprises (economic organizations) is not regulated by the 2013 Law. The provisions are found in Articles 57 and 60 of Decree 25/2020/NĐ-CP (amended), but they lack clarity.

 

 

Investors who participate in the auction and are selected as the winning investors must establish a Project Enterprise to be allocated/leased land in accordance with government regulations and legal requirements for investment and auctions [Clause 6 Article 126].

The 2024 Law also allows winning investors to establish economic organizations for project implementation (not mandatory). This provides flexibility for winning investors or Project Enterprises to allocate/lease land in compliance with investment and auction laws [Point (d) Clause 7 Article 126].

 

There is a clear legal basis for allocating land to the winning bidder or the economic organization (project enterprise) established by the winning bidder.

Responsibilities of the parties after winning the bid are not regulated by the 2013 Law.

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[Clause 8 Article 126] stipulates the responsibility of the People's Committee to complete compensation for land acquisition and resettlement within 36 months from the date of recognizing the auction results or within a different timeframe as specified in the project contract.

Economic organizations implementing the project or winning investors who fail to provide capital for Build-Transfer-Resettlement within 6 months from the date of receiving the request will have their bid canceled.

 

The provisions in Article 126, Section 8 of the 2024 Law have enhanced the responsibilities for both parties: the provincial People's Committee and the winning bidder investor (the economic organization established by the investor). However, there is a basis for the cancellation of the bid when the business delays the partial deposit, and the provisions between the 2024 Law and the 2023 Bidding Law are currently conflicting regarding the timing and grounds for bid cancellation.

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[Article 124] of the 2024 Law provides detailed provisions on cases that are not subject to auction/bidding, including:

  1. Allocating land without collecting land use fees; allocating land for free land use; leasing land without charging rent.
  2. Land reclaimed by the State under Article 79 for PPP projects or publicly funded projects.
  3. Allocating land for projects involving reclamation activities.
  4. Individuals changing land use purposes [Clause 4 Article 124].
  5. Allocating/leasing land in various cases, such as:

- Individuals or organizations whose land/property is reclaimed, and they are provided land/lease support for business production.

- Allocating land for stuck land plots (before the provisions of Decree 01/2017/NĐ-CP); leasing land for constructing underground structures for business purposes.

- Allocating land for groups of officials, civil servants, police, military personnel, teachers, and other individuals who have not yet been allocated land or housing.

  1. Allocating land in the case of two unsuccessful or no participants in the land use rights auction; after 12 months from the second unsuccessful auction, land will be allocated/leased without going through the land use rights auction [Clause 5 Article 124].
  2. Economic organizations with foreign investment capital receiving the transfer of land use rights in real estate projects [Clause 7 Article 124].

 

The new law has clearly and comprehensively defined more detailed cases for land allocation without going through Land Use Right auctions. This is a significant new point that addresses previous obstacles where competent authorities required Land Use Right auctions seemingly without justification (e.g., changing the land use purpose).

 

 

 

[Article 127] of the 2024 Law includes the following provisions:

  1. Investment projects not subject to state land reclamation can negotiate to receive land use rights if it aligns with the local land use planning criteria at the district level.
  2. For commercial housing projects (non-auction/non-bidding), an agreement on land use rights must involve "residential land" (meaning the entire land must be designated as "residential land") for the project to proceed.
  3. Allows investors (without using state budget funds) to negotiate the receipt of land use rights in cases where the State reclaims land to accelerate the progress of compensation, support, and resettlement.
  4. Permits the allocation/lease of "stuck public land" without separating it into an independent project without the need for auction/bidding when receiving the transfer of land use rights. This legalizes the provisions in Decree 148/2020/NĐ-CP.
  5. Prioritizes individuals currently using land who change the land use purpose in alignment with local land use planning when approving investment decisions, allowing them to use the land for the new purpose without being subject to state land reclamation.

For businesses with existing land funds, specific conditions are required, such as having 100% "residential land" or a combination of "residential land" and other land types in accordance with local land use planning (previously land use plans). This allows for the implementation of housing projects.

NOTE: All cases of land use rights acquisition require approval from the provincial People's Committee (previously, only cases involving the consolidation of agricultural land required approval from the provincial People's Committee).


The new law has:

(i) Expanded the scope of entities eligible to negotiate the transfer of Land Use Rights, particularly in cases where state-owned land is reclaimed, but businesses voluntarily negotiate to expedite the progress of compensation for land clearance.

(ii) Prioritized individuals who already own land for the change of land use purpose without the necessity of land reclamation.

(iii) Modified the conditions for negotiating the acceptance of Land Use Rights, specifying the project scope subject to the procedures for negotiating the transfer of Land Use Rights.

 

 

 

The land fund for implementing commercial housing projects

 

 

(Not specified in the 2013 Land Law. The regulation is found in the 2014 Housing Law.)

[Article 127] provides specific regulations for changing the land use purpose for commercial housing projects, distinguishing between two cases:

(1) For businesses that currently possess land, there is a requirement to have either the entire or a partial portion of the land designated as "residential land" [Clause 6 Article 127].

In cases where businesses negotiate to receive land use rights, they must have 100% "residential land" [Point b Clause 1 Article 127]. Approval from the provincial People's Committee is required for all cases of acquiring land use rights (previously, under the 2013 Law, only the consolidation of agricultural land required approval from the provincial People's Committee).

(2) Conforming to local land use planning.

 


The provisions in the 2024 Law are fundamentally similar to those in Article 23 of the Housing Law, which mandates that real estate developers must possess "residential land." This regulation is likely to continue posing challenges for businesses that do not possess residential land.

THE TRANSFER OF REAL ESTATE PROJECTS

The transfer of real estate projects

The 2013 Land Law does not provide clear regulations on the transfer of real estate projects. The provisions for the transfer of real estate projects are outlined in accordance with the Real Estate Business Law

To align with the Real Estate Business Law 2023, the 2024 Law allows the transferor, who does not possess a land use rights certificate (but has a land allocation or lease decision), to transfer real estate projects to an organization in accordance with real estate business laws. In such cases, the government will not reclaim the land but instead issue a land allocation or lease decision directly to the transferee [Clause 3, Article 142]

The regulations create conditions regarding land when transferring real estate projects and ensure financial obligations related to the inherited land from the transferor to the transferee

CONCENTRATION, ACCUMULATION OF AGRICULTURAL LAND

Transfer of rice cultivation land

Article 191 of the 2013 Land Law stipulates that individuals not directly involved in agricultural production are not allowed to receive the transfer or gift of the right to use rice cultivation land.

[Article 45] The 2024 Land Law allows organizations and individuals to transfer the right to use agricultural land, provided that they obtain approval for the agricultural land use plan from the People's Committee at the district level. Individuals who are not directly involved in agricultural production are also permitted to receive transfers or gifts of the right to use paddy fields beyond the allowed limit. However, they must establish an economic organization and submit a plan for paddy field use for approval by the People's Committee at the district level, except in cases where the recipient is an heir

The above provisions of the law align with the trend of developing high-tech agriculture and large-scale agriculture as seen today. This also creates conditions for certain entities not directly involved in agricultural production, such as government officials, civil servants, and individuals with capital and scientific-technical expertise, to invest in the development of rice cultivation to enhance productivity.

Some regulations regarding agricultural land

Land Law 2013 (provisions in various articles):

 

[Article 177] The 2024 Land Law increases the limit for receiving transfers of agricultural land for households and individuals to not more than 15 times (the previous law was 10 times) the land allocation limit. This new regulation aims to enhance opportunities for households and individuals to accumulate agricultural land for large-scale agricultural production activities.

 

- Individuals not directly engaged in agricultural production who receive transfers of paddy fields beyond the specified limit must establish an economic organization and present a plan for paddy field use. This plan requires approval from the district People's Committee, as stipulated in [Article 45, Clause 7].

 

- The lease period for land designated for public purposes managed by the commune-level People's Committee (land fund of 5%) is extended from 5 years, as per the 2013 Law, to 10 years under [Article 179] of the 2024 Law.

Concentrating and accumulating agricultural land for agricultural production establishes a legal foundation for undertaking large-scale agricultural business activities, following concentrated models such as clean vegetable production or eco-friendly farming.

Centralization, consolidation of agricultural land

The 2013 law does not have regulations. The content of concentrating and accumulating agricultural land is addressed in the texts under the Land Law.

The new concept of concentrating agricultural land (without transferring land ownership rights) is implemented through methods such as conversion, leasing, and agricultural land production cooperation. Economic organizations and individuals concentrating agricultural land are required to formulate a plan and submit it to the People's Committee at the commune level for monitoring, as outlined in Article 192. In cases where the concentration of agricultural land leads to adjustments in land use rights (changing land users), the contribution of land use rights must be carried out, and land adjustments made in accordance with Article 219.

Infrastructure for concentrated farming, cultivation, and production of Agriculture-Forestry-Aquaculture-Marine products.

The 2013 law does not have regulations.

[Article 194] regulates the formation of Infrastructure for concentrated farming, cultivation, production, and processing of Agriculture - Forestry - Aquatic - Marine Products, with the aim of enabling Investors (I) to invest in infrastructure for leasing land (similar to Industrial Zones) or directly implementing concentrated Agriculture - Forestry - Aquatic - Marine Products projects. Infrastructure investors in agricultural areas may lease land back to secondary investors once or annually (if the agricultural infrastructure investor pays the rent in a lump sum) or lease land back annually (if the agricultural infrastructure investor pays the rent annually).

Investors leasing agricultural infrastructure land in a lump sum to concentrated Agriculture - Forestry - Aquatic - Marine Product project developers have rights similar to those of individuals leased land by the state in a lump sum; while those leasing land back annually have rights similar to cases of individuals leasing land from the state and paying rent annually [Clause 5 of Article 194].

 

Initiating the development of agricultural zone infrastructure and establishing a clean land fund to be leased by secondary investors for implementing agricultural production projects.

SEA RECLAMATION

 

Sea reclamation

The Land Law of 2013 and the accompanying guiding documents do not contain provisions regarding

The 2024 Land Law regulates that the land use by central and local authorities in coastal areas includes the 'reclamation' area [Article 69.5]. The boundaries of the reclaimed area for provincial land use are determined by the district-level People's Committee [Article 66.2.(đ)].

The area designated for reclamation in the land use plan approved by the People's Committee is managed under the Land Law, not under the Maritime Law [Article 190.4]. This constitutes a crucial basis for managing areas currently classified as 'sea' under the Land Law.

Reclamation activities must be established as investment projects or components within investment projects and comply with various types of planning regulations [Article 190.2]

 

Establishing a legal framework for both existing and future coastal reclamation projects with a mechanism for allocating/leasing land to investors for the implementation of reclamation activities.

According to Article 190.6, for projects with reclaimed areas that have been approved for investment, the investor is allocated the coastal area for reclamation along with the land granted or leased for the investment project.

Regarding the transfer provisions [Article 250.6], for projects involving reclamation approved by the National Assembly and the Prime Minister before the effective date of the 2024 Land Law, the project developer is allocated/leased land without going through auction or bidding processes for project implementation. This exemption from auction or bidding applies to the transfer of land formed after reclamation for such projects.

SPECIFIC TYPES OF LAND

Concentrated Livestock Farming Land

The 2013 Law does not regulate concentrated livestock farming land

Bolstering provisions regarding concentrated livestock farming [Article 183] to establish a mechanism for the 'clean' concentrated farming model. The regulations stipulate that organizations, individuals authorized by the State, and those engaging in land transfer, lease, exchange, or contribute capital with land-use rights are permitted to implement concentrated livestock farming projects. For individuals of Vietnamese origin residing abroad, or foreigners with foreign investment, they are allowed to lease land or receive capital contributions in the form of land-use rights to carry out concentrated livestock farming projects

In essence, establishing a legal framework for the development of land funds for centralized livestock farming models.

Multi-purpose Land

The 2013 Law does not regulate multi-purpose land.

Article 218 stipulates various types of mixed-use land, including:

(i) Agricultural land used in conjunction with business, services, livestock farming, and medicinal plant cultivation.

(ii) Public land combined with business and services.

(iii) Construction land for projects combined with business and services.

(iv) Residential land combined with agricultural, business and services, and economic development purposes.

(v) Specialized water surface land combined with pond, lake, reservoir land; coastal water surface land; and specialized water surface land. (vi) Religious land combined with business and services. (vii) Agricultural and Non-agricultural land combined with agricultural, infrastructure for postal and telecommunications, information technology, outdoor advertising, and solar power.

The mixed-use of land does not change the land classification. In cases of mixed-use with business and services, a land use plan must be submitted to the competent authority for approval [Clause 4 of Article 218]. However, the 2024 Law does not specify the authority responsible for approving the mixed-use land plan; regulations are awaited from the Government

 

Establishing an initial legal framework for multi-purpose land. However, certain issues related to fulfilling financial obligations and the tenure of use for multi-purpose land on the same plot remain unclear and require clarification in forthcoming guidance documents.

Land for Underground Construction

Article 161 Land Law 2013

Land for the construction of underground structures (CUS) includes (=) land for the construction of surface structures serving the operation of CUS and (+) the subsurface space for building structures underground that are not part of the underground section of the surface construction [Clause 1, Article 216].

=>Note: CUS is not a component or underground part of the surface construction.

CUS is defined by projects for the construction of underground structures. The construction of CUS must comply with construction planning and urban planning regulations.

The leasing of land for surface construction serving the operation of CUS involves annual rent payments when constructing structures on the land to facilitate the exploitation and operation of CUS for economic purposes.

The project developer for CUS is granted a Certificate of Land Use Rights for the surface construction serving CUS and the underground structure beneath the surface [Clause 6, Article 216].

Establishing a legal framework for the construction of urban underground spaces.

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LÁND FINANCE

Methods of Land Valuation

The 2013 Law does not provide detailed regulations for each method, but instead delegates this authority to Decrees and Circulars.

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The new law has defined the input information for determining land prices using various methods. The time frame for determining input information is 24 months prior to the land price determination point [Clause 3, Clause 4, Article 158].

The law formalizes four methods for determining land prices: (i) the comparison method, (ii) the income method, (iii) the residual method, and (iv) the land price adjustment factor method. The deduction method, present in the 2013 Law, has been removed. These methods are employed to determine both specific land prices and to construct the Land Price Table.

The 2024 Law specifies the cases and conditions for applying each land price determination method to individual land plots [Clause 6, Article 158]

The law stipulates a clear direction on the internalization of land valuation methods, specifically outlined in the draft law. The proposed law includes various land valuation methods such as comparison, surplus, income, and land price adjustment factor. It integrates the deduction method into the comparison method. The use of each method in specific cases and for certain types of land is more clearly defined to avoid complicating the task of the designated land valuation authority

     Land Price Framework

Land Price Framework (Article 113 of the 2013 Law): The government issues a Land Price Framework every 5 years for each land category. The government-issued Land Price Framework serves as the basis for local authorities to establish Land Price Tables

 

 

 

The 2024 Law has abolished the Land Price Framework

Empowers local authorities to be proactive and flexible in determining the Land Price Table. The Land Price Table is not constrained by an upper or lower limit, as was the case with the previous Land Price Framework.

 

Land Price Table

Based on the Land Price Framework issued by the Government, the Provincial People's Council issues a Local Land Price Table every 5 years, first announced on January 1st of the period (Article 114)

The Land Price Table is constructed based on regions and locations. For areas with digital cadastral maps and a land price database, the table is developed down to each specific land plot based on the value zone and standard land plots. The Provincial People's Council decides on the initial Land Price Table starting from January 1, 2026. Annually, the Provincial People's Council decides on adjustments, modifications, and supplements to the Land Price Table [Article 159]

Regulating the Land Price Table according to regions and value zones aids in determining the value of land plots closer to their actual worth, addressing the current issue where the existing Land Price Table often sets prices much lower than the real values.

Article 114 specifies the use of the land price table in 6 specific cases

Article 159 of the 2024 Law specifies that the Land Price Table is applicable in 12 cases.

Clause 1, Article 257, stipulates the transition of the Land Price Table issued by the provincial People's Committee, which remains effective until December 31, 2025

The scope of application of the Land Price Table is now more detailed and broader than the previous regulations

Specific Land Prices

Specific land prices are used as a basis in 5 specific cases (Clause 5, Article 114)

The specific land prices are applicable in six cases according to Article 160. The 2024 Law allows their application in areas where land price tables exist down to each specific land plot based on the value zone. For standard land plots, the specific land prices are determined according to the land price table at the valuation time.

The authority to determine specific land prices has been decentralized further to the district-level People's Committees. Accordingly, in cases where the district People's Committee leases/transfers/changes the land use purpose or extends land use rights for certain entities, it has the authority to determine specific land prices (Clause 2, Article 160).

Clause 2, Article 257 specifies the transition of specific land prices that have not been approved by the provincial People's Committee before the effective date of the 2024 Land Law (January 1, 2025)

The scope of application for specific land prices is now broader and more explicit than before, covering cases such as auctions, land use rights extension, detailed planning adjustments, etc. The new law delegates the authority to determine specific land prices to the People's Committees at the district level (previously, the 2013 Law primarily designated the provincial People's Committees with this responsibility)

Resolution of Land Disputes

Land disputes shall be resolved by the courts or People's Committees at various levels in accordance with Article 203 of the 2013 Law.

The provisions in Clause 5, Clause 6, Article 236 stipulate that disputes arising from commercial activities related to land shall be resolved by the courts or by the Vietnam Commercial Arbitration Center in accordance with the laws on commercial arbitration. The new regulations supplement the jurisdiction of commercial arbitration in settling land disputes arising from commercial activities (for example, capital contribution contracts with land-use rights between legal entities)

Supplementing/clarifying the jurisdiction of the Vietnam Commercial Arbitration Center in resolving land disputes within commercial activities.

SYNCHRONIZATION BETWEEN ‘FOREST LAND’ UNDER LAND LAWS AND 'FOREST' UNDER FORESTRY LAWS

Synchronization between 'forest land' under land laws and 'forest' under forestry laws.

Article 15 of the 2017 Forestry Law on the basis for allocation/lease/transfer of forest land use purposes.

Article 248 stipulates that the basis for allocating/leasing/assigning forest land use rights is either the approved forest allocation/leasing/assignment plan by the district-level People's Committee, approved by the provincial-level People's Committee, OR the annual land use plan approved by the district-level People's Committee.

Previously, Article 15.1 of the Forestry Law required the allocation/leasing/assignment of forest land use rights to be in line with the approved forest allocation/leasing/assignment plan by the district-level People's Committee and the annual land use plan approved by the district-level People's Committee. This led to the understanding that both conditions for the forest allocation/leasing/assignment plan and the land use planning at the district level had to be simultaneous. The new law has clarified that it is sufficient to rely on either of these two criteria.

 

Clarify the basis for allocating/leasing/assigning forest land use rights to avoid mechanistic interpretations. Allocating/leasing/assigning forest land use rights requires both the forest allocation/leasing/assignment plan and the land use planning at the district level to be simultaneous

Article 20 of the Forestry Law stipulates the authority to change the purpose of forest land use. The authority is determined by the National Assembly, the Prime Minister, and the Provincial People's Council depending on the scale and area.

Article 248 specifies the authority of the Provincial People's Council to decide on the approval of changing the purpose of FOREST use, except in cases of projects approved for investment by the National Assembly, the Prime Minister, and the Provincial People's Council under the Investment Law, Public Investment Law, Public-Private Partnership Law, and Petroleum Law.

The new law consolidates the authority to decide on the change of forest land use purposes under the People's Councils, addressing inconsistencies in jurisdiction for changing the land use purposes between the Forestry Law and the Land Law.

Authority to reclaim forests (Article 23 of the Forestry Law).

Aligned with the Land Law 2024, it is stipulated that the district-level People's Committee has the authority to reclaim land (without distinguishing the land user) in cases of land recovery for national defense and security purposes, and land recovery for economic and social development for the national and public interest. Article 248 of the Land Law 2024 also amended Clause 2 of Article 23 of the Forestry Law to align with the direction that the district-level People's Committee has the authority to 'reclaim forests in cases of land recovery involving forests within the jurisdiction of the district-level People's Committee as stipulated by the Land Law

The Land Law 2024 amends the provisions of the 2017 Forestry Law, ensuring clarity and rationality, particularly in cases of forest recovery associated with the recovery of forested land.

 

 

 

 

 

 

 

 

 

 

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For more information, please contact:

Hoang Pham (James) / Managing Partner at: hoang.pham@vselawyers.com

© 2023 VSE LAWYERS LIMITED LIABILITY LAW COMPANY – All rights reserved.

Attention: This legal update is not an advice and should not be treated as such.

 


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