Land law updates offer grand real estate foundation

January 24, 2024 | 09:44

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The National Assembly has approved the revised Land Law, which will come into full effect next year.

At an extraordinary session in Hanoi on January 18, the 16 chapters and 260 articles of the law were given the green light. According to Vu Hong Thanh, Chairman of the National Assembly’s Economic Committee, the law has been prepared thoroughly by authorities at various levels.

Among the revised issues, the agencies completed provisions on the rights and obligations regarding land use of Vietnamese individuals residing abroad, and the transfer of real estate projects of an economic organisation with foreign investment capital.

Specifically, the new law stipulates that Vietnamese residing abroad who have Vietnamese citizenship will have full rights related to land (not only rights to residential land), the same as Vietnamese individuals, and the current regulations are kept unchanged for those of Vietnamese origin living abroad. This will contribute to promoting investment and attracting remittances from Vietnamese citizens residing abroad, it is believed.

“The provisions in the Land Law have been reviewed to ensure consistency with the Law on Nationality. If a person of Vietnamese origin conducts real estate business activities or is an investor implementing a housing project, the determination of the entity with the right to implement it shall be in accordance with the provisions of the Law on Real Estate Business and the Housing Law,” Thanh said.

Accordingly, the new Land Law retains the provisions of the 2013 Land Law on economic organisations with foreign investment and Vietnamese individuals residing abroad are allowed to receive land use rights transfer in industrial parks, clusters, and high-tech zones. Other foreign capital related organisations can access land through the form of land allocation or land leased by the state.

“The Land Law has provisions in the case of land recovery for projects that have been approved, and decided on investment policies according to the provisions of law,” Thanh said. “With these revisions, the obstacles in foreign-invested economic organisations implementing ventures with land that have been approved by competent authorities and decided on investment policies have been resolved.”

Another issue that foreign investors have been concerned about is economic organisations with foreign investment capital receiving transfer of real estate schemes according to the provisions of the real estate business law.

According to Thanh, to improve land administrative procedures when economic organisations transfer real estate projects according to the Law on Real Estate Business 2023 and ensure financial obligations regarding land inherited for economic organisations, the new Land Law regulates that the government will not repossess land but allocate it with a fee, without bidding.

According to the provisions of Article 79 of the newly passed Land Law, the state can repossess land in 32 necessary cases to implement socioeconomic development initiatives for national and public interests. This is to promote land resources, improve land use efficiency, develop modern socioeconomic infrastructure, implement social security policies, protect the environment, and preserve cultural heritage.

Cases where the state can reposes land are for construction of traffic works, irrigation, water supply, waste treatment, energy, public lighting, oil and gas, postal and telecommunications infrastructure, a range of entertainment or political facilities, and more besides.

The new Land Law stipulates four land valuation methods: comparison, income, residual, and land price coefficients. It clearly stipulates that land pricing must ensure market principles, compliant with correct methodology, order and procedures, honesty, objectivity, openness, transparency, and harmonise the interests between the state, land users. and investors.

The law also stipulates that the People’s Committee develops and submits to the People’s Council at the same level to decide on the first land price list to announce and apply from 2026. After that, every year, the provincial People’s Committee is responsible for submitting to the People’s Council for decision on adjusting, amending, and supplementing the land price list to announce and apply from January 1 of the following year.

The new Land Law will be effective from January 1, 2025, except for articles 190 and 248, which will be implemented from April 1 this year.

Phan Duc Hieu, standing member National Assembly Economic Committee

The new Land Law covers regulations to better protect the rights and interests of land users, on land access for individuals and businesses, improving land use efficiency and land finance, and improving the effectiveness of state management of land use.

According to preliminary statistics, there are about 65 articles assigned to the government to stipulate in detail. Therefore, the government will issue decrees to guide the implementation of these articles within the year. I propose that the government needs to soon have a plan to implement the laws, including determining the early drafting and issuance of decrees guiding its implementation, ensuring the Law comes into effect soon.

Regarding the impact of the Land Law on public transport-oriented urban development as stipulated in the draft capital law, this is a new point in the group of regulations on land access for the development of socioeconomic technical infrastructure.

From experience in resettlement of the Ring Road 4 project, for example, Hanoi has proposed to set aside favourable land funds for resettlement of land recovery projects for local technical infrastructure construction projects. I see that in the amended land law, there are a number of regulations to legislate for these recommendations.

Nguyen Van Sinh, deputy minister of Construction

New laws for housing, real estate business, land, and credit institutions have been passed by the National Assembly in recent times, helping to remove difficulties for the real estate market and offering many favourable policies for businesses and investors.

The government is very actively directing ministries and branches to complete legal documents guiding the implementation of these new laws, decrees and circulars, which will have to be completed and implemented by 2025.

It also continues to improve and amend the institutional aspect so that legal regulations are consistent, minimise administrative procedures, and reduce transaction costs for individuals. Other solutions are decentralising to localities so that businesses will receive the best support from the local authorities.

In addition, businesses must also prepare financial and human resources to be able to keep up with the market’s recovery.

Le Hoang Chau, Chairman Ho Chi Minh City Real Estate Association

The passing of the land law brings a lot of good news to the market, especially it is now in the process of recovery.

Last year was the most difficult year since the last real estate crisis took place in 2008, with Ho Chi Minh City the hardest hit. With the efforts of the entire political system, and new resolutions and laws approved, the market is gradually being resumed.

There are some positive points in the new Land Law. Firstly, for the first time ever, a chapter is added on development, management, and exploitation of urban land funds that previous laws had not mentioned.

This creates a supply of land for socioeconomic development to put out for bidding. It also helps clear land and create more supply of land for the market. The government is planning to propose a pilot fund for commercial housing development, finding a mechanism to ensure more supply.

Peter Hong, Vice chairman Business Association of Overseas Vietnamese

The National Assembly has adjusted and approved the new Land Law, which offers more chances for overseas Vietnamese to buy homes in Vietnam. We are looking forward to this condition being implemented.

We expect that up to 10 per cent of Vietnamese living abroad are older people that may want to return to Vietnam. These figures would approximate 350,000-700,000 people.

When the revised policy creates conditions for overseas Vietnamese to easily buy houses, and even invest in building houses and construction projects for sale, lease, or lease purchase, a large source of remittance capital will pour into real estate. In 2023, remittances to Ho Chi Minh City reached about $9 billion, triple compared to foreign direct investment.

The government should have special guidelines or policies, calling on people to send remittances to invest. This is a huge resource that needs to be developed. Based on approved rules which stipulate a special mechanism for Ho Chi Minh City, the city authorities should include remittances from overseas Vietnamese as part of its solutions.

The city should also map out key projects and sell the city’s shares to overseas Vietnamese. We will be happy to contribute to the city’s development by buying such shares. However, everything needs to be done methodically and transparently.

David Jackson, Principal and CEO Avison Young Vietnam

Allowing overseas Vietnamese to own real estate, as well as to have rights and obligations equivalent to those of Vietnamese citizens domestically, will be beneficial for multiple market participants.

It opens an investment channel for the strong inflow of remittance, which is expected to revive the domestic real estate market. It also makes it safer and adds more transparency for overseas Vietnamese to invest in real estate in Vietnam.

Coupled with discussions on taxing individuals owning multiple properties in the upcoming Land Law amendments, I believe these measures will complement each other: aiding the government in controlling speculation and waste of housing resources, while meeting the desires of overseas Vietnamese to own property in the country.

Moreover, with the new flow of capital injection, it is expected that market liquidity will be improved, and further the positive impacts into other sectors such as construction, and services. The Vietnam real estate market is a demand-driven one, especially in the residential segment.

Therefore, when more participants are involved in developing housing projects here in Vietnam, there will be expectedly more variety in terms of products and services in the market.

Jack Nguyen, CEO InCorp Vietnam

The new Land Law is a very positive development for the real estate market in Vietnam, providing opportunities for developers and real estate investors in particular. The hope is that the new Land Law will start a new wave of real estate development and transactions.

One source of real estate investment that has a huge potential but has yet to even be close to its potential is the overseas Vietnamese. Many overseas Vietnamese, particularly those close to or having retired, want to spend more time in Vietnam to enjoy their native culture and lifestyle.

This group has the necessary finance to easily buy a home in Vietnam and are readily willing to. Even though the current law allows for overseas Vietnamese to buy condos under their name, many are hesitant to do so because of the administrative procedures.

They also don’t feel the laws in Vietnam protect the rights of the buyers. This is unfortunate because the overseas Vietnamese could invest significant amounts of money into Vietnam through real estate purchases.

I believe that the improvements in the new land law should untie some of the administrative knots we’ve witnessed the past few years and create more confidence for real estate investors, particularly Vietnamese from overseas markets.

Delay of land law puts issues into spotlight

The National Assembly last week decided to postpone the approval of the draft revised Land Law until the next session in 2024 because many provisions remain controversial and unclear.

By Bich Ngoc

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