Breakthroughs expected from new Land Law: association chairman

By Vu Pham, Minh Hue
Sun, January 21, 2024 | 8:33 pm GMT+7

The freshly-approved revised Land Law will create motivation for Vietnam’s real estate market to become a reasonable, fair and efficient land allocation channel, said Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA).

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA). Photo by The Investor/Quang Thuong.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA). Photo by The Investor/Quang Thuong.

The National Assembly officially passed the revised Land Law on January 18. What is your take on it?

Parliament passed the revised Land Law to institutionalize the Party Central Committee’s Resolution 18 dated June 16, 2022 on mechanisms and policies to raise the effectiveness and efficiency of land management and use in line with the market economy mechanism.

The new Land Law ensures that land resources are managed, exploited, and used in the most economical, sustainable, and effective manner, meeting the requirements of promoting industrialization, modernization, equity and social stability, and creating motivation for our country to become a high-income country by 2045. The real estate market, including the land use rights market, is expected to become a reasonable, fair and efficient land allocation channel.

It can be jokingly said that the process of developing policies and laws on land has been associated with "lucky number 18". One is Resolution 18 and the other is January 18, 2024 when the National Assembly passed this law at its fifth extraordinary session.

The new law has many major changes compared to the 2013 version. What are the highlights of this new law?

Clause 9, Article 138 adds an innovative regulation on the state's responsibility, which is to issue land use right certificates (LURCs) to all land users upon request (with applications) or even those without request.

This is a huge and fundamental change in state management because Article 101 of the 2013 Land Law mentions the issuance of LURCs but does not stipulate that the state is responsible for granting such certificates.

This means that state agencies only issue LURCs when land users request it. So before the new law was passed, the state did not consider the issuance of LURCs as its responsibility, leading to the fact that no locality could complete 100% of the work for granting LURCs.

For example, in Ho Chi Minh City, more than 99% of LURCs have been issued for land plots, but some households and individuals have not been granted LURCs even though they have been using land stably for a long time.

In addition, Article 79 specifies 31 cases in which the state "recovers land for socio-economic development for national and public benefits", while Clause 32 also stipulates that "In cases of land recovery to implement projects and works for national and public interests that do not fall into the cases specified in clauses 1 to 31 of this article, the National Assembly shall amend and supplement cases of land recovery" to ensure publicity and transparency, thus easily controlling and fixing widespread land recovery in localities as before.

Chapter 7 of the new Land Law has strict regulations on "compensation and resettlement support when the state recovers land" to ensure the legal and legitimate rights and interests of people whose land is revoked.

The new Land Law also adds Chapter 8 on the "development, management and exploitation of land funds." Accordingly, the development, management and exploitation of land funds must comply with land use planning and plans; be for the right purposes; and be conducted publicly, transparently, reasonably, effectively and in line with the law.

A real estate project site in Dong Anh district, Hanoi. Photo by The Investor/Trong Hieu.

A real estate project site in Dong Anh district, Hanoi. Photo by The Investor/Trong Hieu.

How does removing the regulation on land price ranges and allowing land users to choose land use fee payment methods benefit the market and stakeholders?

The new law removes the land price frame and stipulates a "land price list" in Article 159. Accordingly, the "land price list" will be released annually and the first will be applied from January 1, 2026 and adjusted from January 1 the following year, helping the "land price list" stay in touch with market prices. However, this regulation will also increase management pressure on localities.

Clause 5, Article 158 and Article 160 stipulate four land valuation methods including a comparative, income-based approach, added value, and land price adjustment coefficient to determine specific land prices. In some special cases, "other land valuation methods" will be applied but with the consent of the National Assembly's Standing Committee, ensuring smooth land valuations.

Article 30 stipulates that land users have the right to choose the method of paying land rent. Specifically, they have the right to pay rent annually or once for the entire lease period. This will encourage land users to choose the annual payment method to gain more favorable credit access.

Furthermore, Article 126 mentions the mechanism for implementing "bidding to select investors" for land that has not yet been cleared. Investors are responsible for advancing capital to carry out compensation and resettlement support.

Such regulations will ensure a harmony of interests among the three related entities (state, business and land user).

Firstly, they ensure the legal and legitimate interests of land users whose land is recovered as they will receive compensation at the market price, and be prioritized for on-the-spot resettlement.

Secondly, they also ensure the benefits of investors as they will know clearly the costs and time to complete compensation for site clearance and be allocated land to implement their projects.

Finally, the entire "land rent difference" will be collected for the state budget to serve public interests. Furthermore, doing this will build a transparent and fair investment environment, thus increasing the national competitiveness index.

Are you satisfied with the provisions of the law? Are there any provisions that still concern you?

The new Land Law will create very favorable land use conditions to promote production and business development investment activities such as developing industrial parks, economic zones, high-tech parks, high-tech agricultural zones, industrial clusters, and production and business establishments.

However, we realize that the provisions in Subsection b, Clause 1, Article 127 may lead to a shortage of supply in the commercial housing segment due to lack of land funds in the next five to seven years. The reason is that land fund development fails to create and develop land funds, and meet socio-economic development requirements to carry out land allocation and lease through land use rights auctions and project bidding.

The regulation "only agrees to receive residential land use rights" and Clause 6, Article 127 stipulating "to implement a commercial housing project, the developer must have the right to use residential land or other land" will benefit developers who have land funds, especially those developing large-scale urban and commercial housing projects.

Therefore, HoREA hopes that the National Assembly will allow, if necessary, the government to research and develop a pilot project on the implementation of commercial housing projects through agreements on receiving land use rights and submit it to the legislature for approval.

Vietnam’s National Assembly, the country’s highest legislative body, on January 18, 2024 passed long-delayed amendments to the Land Law.

The passage was endorsed by 432 out of 477 NA deputies present at a three-day extraordinary parliamentary session ending last Thursday. The new Land Law with 16 chapters and 260 articles will take effect on January 1, 2025.

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