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| Forest land in Son Kim 2 commune, Huong Son district, Ha Tinh province, has been allocated to local businesses and residents for protection__Photo: Vu Sinh/VNA |
The Land Law (the Law), passed by the 15th National Assembly in January and set to take effect as of the beginning of 2025, plays a pivotal role in the land-related legal system, exerting effects on all aspects of the country’s socio-economic life, national defense, security and environmental protection. The 260-article Law is expected to contribute to guaranteeing harmony of rights and interests of the State, land users and investors and, at the same time, promote commercialization of land use rights and development of a transparent and healthy real estate market. As evaluated by National Assembly Chairman Vuong Dinh Hue, the passage of the Land Law, together with the Housing Law and the Law on Real Estate Business, has met the requirements of completing policies and laws on land management and use to make sure that land resources are managed, utilized and used in an economical, sustainable and efficient manner, which would create as a driving force for turning Vietnam into a developed, high-income country.
The Law has notable provisions concerning rights and obligations of land users; land-use master plans and plans; land recovery; land allocation, lease and repurposing; and land prices, among others.
Rights and obligations of land users
It is stated in the Law that for overseas Vietnamese who hold Vietnamese citizenship are fully entitled to the land-related rights like Vietnamese citizens living in the country. This is a totally novel point compared to the current land law, which complies with the Party’s guidelines and the State’s policies aiming to mobilize investment resources into Vietnam for national socio-economic development, according to Phan Duc Hieu from the National Assembly’s Economic Commission.
As for persons of Vietnamese origin who are residing overseas, the policy is kept unchanged, i.e., the Law on Real Estate Business and the Housing Law will apply for determining subjects entitled to implement projects in case people of Vietnamese origin living abroad carry out real estate business activities or act as housing project owners.
The Law additionally provides the right to choose the method of land rental payment, saying that economic organizations, individuals, people of Vietnamese origin residing abroad and foreign-invested economic organizations that are leased land by the State with annual land-rental payment but are eligible for lump-sum payment of land rental for the entire lease term may opt to pay land rental in lump sum for the remaining lease period. In case these entities are leased land by the State with lump-sum payment of land rental for the entire lease term, they may shift to annual land rental payment. The paid land rental amounts will be subtracted from annual land rental amounts under the Government’s regulations.
According to experts, annual land-rental payment would, on the one hand, help enterprises and project owners relieve financial burden in the early period of project implementation and help reduce selling prices of real estate. On the other hand, this might remove the right to mortgage land use rights and retain only the right to put in mortgage land-attached assets to secure bank loans, since the banks only accept lump-sum payment for the mortgage of land use rights.
For economic organizations that are leased land by the State with annual land rental payment, they will have the right to sell land-attached assets and the lease right under land lease contracts when such assets have been lawfully created and registered in accordance with law. They may also exercise these rights after having completed the construction in conformity with approved plans and investment projects and made advance payments for compensation, support and resettlement of land users having their land recovered while the paid amounts have not yet been fully deducted from payable land rental amounts.
One more novel point of the Law is that individuals not directly engaged in agricultural production may acquire use rights for rice cultivation land within the land allocation limit. Individuals who wish to acquire the land use rights in excess of the set limit are required to establish an economic organization and have a land use plan approved by the district-level People’s Committee. The Law also states that an individual using agricultural land may transfer agricultural-land use rights within the same provincial-level administrative unit to another person without having to pay the registration fee as well as tax on income earned from the transfer. Meanwhile, economic organizations entitled to acquire agricultural-land use rights must have land use plans approved by district-level People’s Committees.
Land-use master plans and plans
As per the Law, land-use master plans and plans formulated at national, provincial and district levels must meet the requirements for rapid and sustainable socio-economic development and national defense and security assurance.
With regard to the authority to decide on or approve land-use master plans and plans, the Law empowers the Prime Minister to approve provincial-level land-use master plans or provincial-level land-use plans for centrally run cities not required to formulate provincial-level land-use master plans. Meanwhile, provincial-level People’s Committees are empowered to approve district-level land-use master plans and district-level annual land-use plans. These regulations would facilitate the state management of land and create conditions for businesses to carry out their investment activities and persons having their land recovered to exercise their rights so as to stabilize their life and production activities.
The Law delegates the Government to approve national land-use plans while assigning provincial-level People’s Councils to decide on provincial-level land-use plans. Particularly, plans on use of land for national defense or security purposes will be incorporated in contents of master plans on use of land for national defense or security purposes.
Local authorities are tasked to determine land use norms for inclusion in land-use master plans so that they can take the initiative in carrying out socio-economic development activities in their localities. Norms of national land-use master plans will be observed only for land areas under protection forests, special-use forests and production forests being natural forests and those for national defense and security purposes.
Land recovery and compensation for recovered land
The Law authorizes provincial-level People’s Committees to decide on recovery of land from domestic organizations, religious organizations, affiliated religious organizations, people of Vietnamese origin residing abroad, foreign organizations with diplomatic functions, and foreign-invested economic organizations. They are also competent to recover land for national defense or security purposes after obtaining written approval of the Minister of National Defense or Minister of Public Security. In other cases, district-level People’s Committees may decide on land recovery, regardless of land users or entities currently managing or possessing land.
Article 79 of the Law lists 31 cases in which the State recovers land for implementation of socio-economic development projects for national and public interests. These include projects on construction of public works; projects on construction of working offices of state agencies or non-business works; projects for which the National Assembly or Prime Minister has approved or decided on investment policy in accordance with law; and projects in other cases in which the State recovers land for auction or bidding to increase state budget revenues. For projects other than the aforesaid projects, the National Assembly will consider necessity of land recovery according to fast-track procedures.
The Law retains the current provisions proven appropriate while revising those on compensation, support and resettlement upon land recovery by the State. It sets out a principle requiring resettlement areas to satisfy conditions on technical and social infrastructure facilities to be built under detailed master plans approved by competent authorities. At the same time, resettlement areas must ensure conformity with cultural traditions, customs and habits of residential communities in localities where exist recovered land areas. Another principle is that the approval of compensation, support and resettlement plans and arrangement of resettlement areas must be completed before relevant land recovery decisions are issued.
A resettlement area may be arranged for one or more than one project. When the State decides to recover part of a land user’s land parcel, if the remaining area of such land parcel is smaller than the law-specified minimum area and the land user consents to the recovery, the competent People’s Committee will decide to recover such land area and provide compensation and support in accordance with law.
The Law also allows a compensation, support and resettlement council to have more members who are representatives of the People’s Council and Vietnam Fatherland Front Committee of the same level, and representatives of land users whose land areas are recovered. This aims to ensure objectivity, transparency and stakeholder engagement in the compensation, support and resettlement work.
Land allocation, lease and repurposing
The Law specifies cases of land allocation and land lease through auction of land use rights for land areas managed by state agencies or organizations and allocation of residential land to individuals. Under Article 125 of the Law, auction of land use rights to a land area will be conducted when: (i) The land area has been recovered and compensation, support and resettlement work has been completed or compensation, support and resettlement work is not required; the connected transport infrastructure facilities are available in the project area; (ii) The land area is included in the approved district-level annual land-use plan for the purpose of auction of land use rights; (iii) The competent state agency has approved a detailed master plan of 1:500 scale for housing projects; and (iv) The competent authority has approved a plan for auction of land use rights.
In order to ensure the feasibility of the Law, Article 125 also sets specific conditions for organizations and individuals to participate in land-use rights auctions. Meanwhile, provincial- and district-level People’s Committees are assigned to annually announce auction plans and lists of land areas subject to land-use rights auction on portals of their own and of auction organizations and on the National Portal for Land-Use Rights Auction.
Regarding land allocation and lease, Article 126 of the Law says that subject to land allocation and lease through bidding for selection of investors to implement land using projects are projects subject to bidding to select investors, and urban development projects for which provincial-level People’s Councils decide on land allocation and lease through bidding for selection of investors for investment projects. To make it clearer, the Law sets several more conditions in addition to the conditions specified in the bidding law. Firstly, the land area for project implementation is on the People’s Council-decided list of land areas subject to bidding for land-using projects. Secondly, the competent agency has approved a detailed master plan or a zoning master plan of 1:2,000 scale for the land area for project implementation.
Foreign investors that wish to participate in bidding for being selected to execute land-using projects are required to meet several conditions specified in the Law: (i) Having paid deposits or implemented other forms of security under the investment law; (ii) Being financially capable to use land according to schedule of investment projects; and (iii) Not violating the land law or having completely executed the competent authorities’ rulings or judgments for their violations by the time of requesting land allocation, lease or repurposing.
With respect to land rental payment, the Law specifies cases of lump-sum payment of land rental for the entire lease term for three groups of land users. Group 1 includes users of land for implementing investment projects on agriculture, forestry, aquaculture and salt production. The second group consists of those using land in industrial parks, cottage industry zones and hi-tech parks and building workers’ houses in industrial parks; using land for public purposes combined with commercial purposes; or using commercial-service land for tourism and office lease purposes. The last group comprises those using land for construction of social houses for lease in accordance with the housing law. Other cases are subject to annual land rental payment.
Worthy of note, the Law assigns provincial-level People’s Councils to approve repurposing for rice cultivation land, and land under protection forests, special-use forests and production forests being natural forests.
For land users being households and individuals that wish to repurpose agricultural land in residential areas or agricultural land on the same land parcel embracing residential land into residential land, or repurpose non-agricultural land other than residential land into residential land, the purposing may be permitted based on approved district-level land-use master plans instead of district-level annual land-use plans.
Land prices
The Law says that provincial-level People’s Committees will have to formulate first-ever land price lists and submit them to same-level People’s Councils for decision and application from January 1, 2026. They must also report adjustments to land price lists to provincial-level People’s Councils for announcement and application from the first day of the subsequent year. In case it is necessary to make adjustments to land price lists right in a year, provincial-level People’s Committees will submit them to same-level People’s Councils for decision.
At the same time, competent People’s Committees must issue decisions on specific land prices within 180 days from the time of land price determination in case of land allocation or lease, permission for land repurposing, land use term extension or adjustment, land-use form change, adjustment of land allocation or lease decisions, or adjustment of detailed master plans by the State. They must state land prices in the above decisions in case of application of land prices on the land price lists for calculating land use levy and land rental amounts.
The Law additionally provides that annual land rental will be applied stably for a five-year period from the time the State decides on land lease or permits land repurposing associated with shifting to land lease with annual land rental payment. Land rental for the next period will be calculated based on the land price list applicable for the year in which the land rental is determined. In case the payable land rental amount for a period is higher than the land rental amount applied in the previous period, it will be adjusted at a rate not exceeding the rate set by the Government for each period. It should be noted that the Government-set adjustment rate must not surpass the country’s total annual consumer price index in the previous five-year period.
As for the competence to decide on land prices, the Law empowers chairpersons of district-level People’s Committees to decide on specific land prices in case of land allocation or lease, permission for land repurposing, recognition of land use rights, extension or adjustment of land use term, determination of reserve prices for auction of land use rights to allocate or lease land, adjustment of detailed construction master plans, and land recovery under the competence of district-level People’s Committees.
The Law provides four land valuation methods, including comparison method, income-based method, surplus-based method, and land-price adjustment coefficient method. The Government may set land valuation methods other than the above four methods after obtaining the consent of the National Assembly Standing Committee. The Law also specifies land valuation cases and conditions for application of specific land valuation methods, stating that in case the application of land valuation methods makes determined land prices lower than those set in the land price lists, the latter will be applied.
The Law also increases the composition of land price appraisal councils. Specifically, such a council may include a representative of the land price determination consultancy organization and a land price expert, in addition to specialized agencies of the concerned People’s Committee. At the same time, representatives of the Vietnam Fatherland Front Committee and other institutions and socio-political organizations may be invited to attend land-price appraisal meetings with a view to ensuring independence and objectivity during the valuation process.- (VLLF)
