Legal issues in land use still stifling development

The real estate market has struggled for a year. The downturn has affected many industries and affected growth. What problems does the market face?

Lawyer Nguyen Hong Chung, chairman of DVL Ventures and vice chairman of the Hanoi Real Estate Club

Vietnam’s economy has been in the process of recovery after the pandemic. However, complex fluctuations in the world economy, including the Russia-Ukraine conflict, trade competition between developed countries, supply chain disruptions, and some internal difficulties have slowed down the recovery process. As an important component of the economy, the real estate market is also facing major challenges, especially cash flow difficulties and legal bottlenecks that reduce buyers’ belief, stability and sustainability of market members.

Being the output of many production and business fields and also the essential infrastructure for key economic sectors such as industry, tourism, and services, the downturn of the real estate market is one of the serious reasons causing economic growth to slow.

Moreover, the downturn of the market is also caused by many issues, including policy barriers such as in land allocation, land leasing, land price determination, and time to calculate land use fees and land rent, rent exemption, and procedures for selecting investors to use land.

In practice, some localities remain less proactive and determined in directing and resolving difficulties and problems under their authority, as well as in coordinating with central agencies to resolve difficulties. In addition, many legal regulations remain overlapped and the application of the law is in lacking in uniformity and synchronisation.

The draft revised land law does not currently include tourism, entertainment and multipurpose projects, yet they are crucial to economic and social development. What needs to change?

Article 62 of the 2013 Land Law stipulates different cases where the state can repossess land for socioeconomic development for national and public benefits, including key national projects that were decided investment policies by the National Assembly, and land repossessed, projects approved and invested by the prime minister that require land repossession, including industrial and export processing zones, high-tech parks, offices, technical infrastructure and projects to serve residential communities, etc.

According to the aforementioned regulations, projects are land repossessed by the state include projects to upgrade technical infrastructure and the general social infrastructure of the population, ensuring social security for residents, but exclude projects aiming to develop tourism, entertainment, or combining commercial housing with tourism, services, entertainment, and recreation facilities.

Meanwhile, many large-scale entertainment complexes worldwide have changed the whole region, such as the Genting Complex of Malaysia with an area of more than 5,000 hectares, or the Mega Kingdom City Urban Area worth $26.7 billion.

In Vietnam, some mega projects were also developed under this format, such as the Phu My Hung Urban Area in Ho Chi Minh City with an area of 750ha, or the Vinhomes Ocean Park Urban Area with 420ha in Hanoi.

However, the revised draft land law does not mention regulations on land repossess for new urban area projects, while the development and construction of large-scale urban areas (from 300ha upward) must be approved at the highest levels.

Therefore, it is necessary to add “new urban areas project over 300ha” to Article 79 of the revised land law to ensure uniformity of technical and social infrastructure systems according to construction planning, land use planning, and housing development planning.

In practice, projects that are not subject to land repossession by the state, but still implemented through transfer, lease of land use rights, or capital contribution with land use rights, are suffering obstacles. Because, currently, the law does not have mechanisms to encourage specific activities to support investors in the process of negotiating with landowners.

Land use rights for condotels remain stalled amid lack of thorough guidance Three months after a decree was issued to regulate land and housing rights certificates for condotels, additional guidance for relevant departments is still not forthcoming.