Vietnam's amended Land Law 2023: some pivotal changes and their impacts

Following the recent enactments of the Law on Real Estate Business (amended) and the Law on Housing (amended) at the end of 2023, this legislative development signifies a synchronised and transformative shift, significantly impacting both the broader economy and the real estate sector.

Tran Duy Canh, managing partner, Dentons LuatViet (left) and Vi Nguyen, senior associate, Dentons LuatViet

The forthcoming updates to the Land Law encompass noteworthy changes, which are outlined as follows:

Firstly, the Land Law (amended) introduces a new approach to land valuation methods. The approach evaluates land price on market principles and aligns with the essence of Resolution No.18-NQ/TW.

The new regulations simplifying land price determination for land use levies promise to speed up real estate project approvals, aiding investors in securing funding. However, the Land Law (amended) still requires further clarification on market principles and related issues, potentially through a government decree.

Secondly, the Land Law (amended) outlines the forms of access to land for investors, including:

1-Auction of land use rights applicable to clean land managed by a competent authority or organisation of the government, specifically, land that has been recovered and compensation has been completed. This covers cases not requiring compensation, support, or resettlement.

2-Bidding to select investors for projects using land.

This form is for urban development projects with integrated infrastructure and housing, and rural residential projects subject to land recovery. The provincial People's Council decides on investor selection through bidding, setting criteria based on local needs. This flexible approach empowers local decision-making, but is new for the Council and may need time to implement effectively. Other investment projects subject to land recovery follow specialised laws for investor selection through bidding.

3-Agreement on receiving land use rights:

The Land Law (amended) allows investors to mutually agree on receiving land use rights for the implementation of ventures that fall into two categories: (1) Those not subjected to land recovery under Article 79 of the Land Law (amended), or (2) those subject to land recovery under the same article, provided the project capital is not from state budget, and the investor chooses to the form of agreement on receiving land use rights, not land recovery. These amendments under the Land Law (amended) reflect the government’s direction to encourage agreements for receiving land use rights to implement projects.

4-Using the existing land use rights of the investor for project implementation

Under the Land Law (amended), if (i) the investor proposes a project that is subjected to land recovery under Article 79 but is consistent with the land use planning, and (ii) the investor requests to change the land use purpose and the competent authority grants the approval of investment policy and investor in accordance with the investment law, then the investor can use such existing land to implement the project without land recovery.

Furthermore, investors with residential land rights, or a mix of land types, can use their land for housing projects that match land use plans and have approved investment policies. If they align with these plans, they can proceed under the Investment and Construction Laws, bypassing the government land recovery, allocation, and leasing mandates in the 2013 Land Law.

Thirdly, clarifying the eligible land types for agreement on receiving land use rights or using existing land use rights to implement residential housing projects.

The amended Law on Housing, in this case, refers to the Land Law (amended) to determine the eligible land for implementing residential housing projects in the case of agreement on receiving land use rights or using existing land use rights.

Accordingly, the Land Law (amended) allows the investors to agree on receiving residential land use rights, or use existing residential land use rights, or residential land combined with other land types, for commercial residential housing projects. This approach under the Land Law (amended) retains the policy established under the Law on Housing 2014, amended in 2020, and the discussion before passing the amended Law on Housing.

Fourthly, land used for multipurpose is introduced in the Land Law.

The regulation formalised the content outlined in Resolution No.18-NQ/TW concerning supplementing regulations on residential land combined with commerce and services purposes, agricultural land combined with commerce and services purposes, and tourism project land with spiritual elements.

The Land Law (amended) specifies the types of land permissible for multipurpose uses, including agricultural land used in combination with the purposes of commerce, services, livestock breeding, medicinal plant cultivation, or residential land used in combination with agricultural, commercial, or services purposes. It is essential to highlight that users can utilise agricultural or non-agricultural land in combination with solar power purposes, but not wind or other power facilities, which require conversion to energy land.

During the process of commenting on and finalising the Draft Land Law, the National Assembly Standing Committee explained that the regulation in this article is intended not to establish a new land type but to enhance land utilisation efficiency.

The use of land for multipurpose situations must satisfy the following requirements:

2-Not lose the necessary conditions to return to use the land for the main purpose;

3-Not affect national defence and security;

4-Minimise the impact on the conservation of natural ecosystems, biodiversity, and environmental landscape;

5-Not affect the land use of adjacent land plots;

6-Fulfill financial obligations as per the regulations;

7-Comply with relevant laws.

In the case that agricultural or residential land (or some other types of land) is used to combine with commercial and services purposes, the competent authority must approve a detailed land use plan. Such a land use plan must include information about the land plot or land area currently used, such as location, area, form of land use, land use term, total land area, land purpose, and period for multipurpose use, as well as other content satisfactory to laws on environmental protection and other related laws.

The above regulations need to be checked by the government to ensure compliance with procedures for obtaining the approval of a detailed land use plan, assess the competent authority, examine cases where the investor must fulfill financial obligations, and judge which financial obligations need to be performed.

Fifthly, Vietnamese commercial arbitration can resolve disputes arising from commercial activities related to land in accordance with law on commercial arbitration.

This new approach under the Land Law (amended) can help to resolve the current uncertainty surrounding the arbitration of disputes relating to land. The dispute on land and land-attached properties (i.e. disputes on rights and obligations of land users between two or more parties to a land relationship) would fall exclusively within the jurisdiction of the Court.

Sixthly, allowing the issuance of certificates of land use rights and ownership of assets attached to land for (1) assets that are construction components or an entire construction with mixed-purpose built on residential land with a stable long-term land use term, and (2) each construction component or part of the area of that construction component in a project with multiple construction components.

These regulations mirror the provisions in Decree No.10/2023/ND-CP and guidance in Official Letter No.3382/BTNMT-DD from the Ministry of Natural Resources and Environment.

In essence, the above new updates to the Land Law have institutionalised the principles outlined in resolution 18, with the overarching goal of fostering a transparent and equitable environment for investors when approaching the land and encouraging the enterprises to negotiate and agree with the land user to receive the land for their projects without land recovery procedures.

Fresh land law equals a brand new drive for growth Vietnam is at the juncture where the country either chooses to move forward with all possible resources or maintains the status quo but with a decreasing quality of life for its people. Vietnam has chosen the first path.

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