1. Decree guiding the Land Law

The Government issued Decree 102/2024/ND-CP dated 30 July 2024 guiding a number of articles of the Land Law 2024 (“Decree 102”).

Decree 102 took effect from 1 August 2024 and replaced Decree 43/2014/ND-CP dated 15 May 2014, Decree 01/2017/ND-CP dated 6 January 2017, Decree 148/2020/ND-CP dated 18 December 2020, Decree 10/2023/ND-CP dated 3 April 2023, Decree 42/2024/ND-CP dated 16 April 2024 and Decree 119-CP dated 16 September 1994. Below are some notable provisions of Decree 102 which may affect investment projects.

Land public service organisations

Land public service organisations, referred to in Decree 102, include land registration offices and land fund development centres. Land registration offices under the provincial Department of Natural Resources and Environment (DONRE) are responsible for registration of land, issuance of Certificate of land use right and ownership of assets attached to land (LURC), elaboration of cadastral map, operation of the land information system, and provision of public land services. Land registration office shall have branches in each district or region of the province.

Land fund development centres which are established by the provincial People’s Committees (PCs) shall, among other duties, manage land fund provided under Article 113.1 of the Land Law 2024, prepare and implement the land compensation plan upon land recovery by the State, and hold auction of land use rights (LURs).

Acquisition of LURs in access restricted areas

Access restricted areas (“khu vực hạn chế tiếp cận đất đai” in Vietnamese) mean areas within border communes, wards, and townships; coastal communes, wards, and townships; islands; and other areas that affect to national defence and security in accordance with investment laws and housing laws. The allocation or lease of land in access restricted areas to economic organisations with foreign investment capital (or FIEs) and people of Vietnamese descent residing overseas must obtain opinions of the Ministry of Defence (MOD) and the Ministry of Public Security (MPS) in accordance with investment laws.

In the case where FIEs or people of Vietnamese descent residing overseas receive transfer of LURs in industrial zones, industrial clusters, and high-tech zones, or FIEs receive capital contribution of LURs to implement projects in access restricted areas, the opinions of the MOD and MPS shall be obtained pursuant to the procedures prescribed in Decree 102. The transferee must make a written proposal to the provincial PC where the land is located to approve the transfer or capital contribution in such areas, and then the provincial PC sends a document to ask for the opinions of the MOD and MPS.

Transfer of investment capital being the value of LUR

FIEs may receive transfer of investment capital being the value of LUR from an economic organisation which is using the land allocated by the State with land use fees or the land leased from the State with lump sum rental payment for the entire lease term if the value of LUR has already been capitalised as the charter capital of the transferring economic organisation.

With respect to the transfer of investment capital being the value of LUR in access restricted areas, such transfer must comply with investment laws and relevant laws.

Procedures for land allocation, land lease, and conversion of land use purposes

Decree 102 provides the application forms and procedures for land allocation, land lease, and conversion of land use purpose for implementing investment projects. The time-limits for performance of the procedures for land allocation, land lease and conversion of land use purpose shall not exceed 20 days from the date of receipt of valid application dossiers.

LURs auction

Organisations and individuals participating in LURs auction must satisfy the conditions set out in the Land Law 2024 and Decree 102. The sequence for holding an auction session shall comply with Article 229.2 of the Land Law 2024 and the Law on Property Auction.

The relevant tax office, within 05 working days from the receipt of a decision recognising the auction winning result, sends a notice on payment of land use fees or land rentals to the auction winner. After the auction winner has fulfilled the payment of land use fees or land rentals, the relevant land management agency shall (i) propose the competent People’s Committee to issue a decision on land allocation or lease, and sign an LURC, (ii) forward the dossier to the land registration office or its branch to update the land database and cadastral records, and (iii) enter into a land lease contract in the case of land lease.

Extension of land use terms

The land users that wish to extend land use terms are required to submit application dossiers for such extension at least 06 months before the expiry of the land use terms. The sequence and procedures for extension of land use terms are set out in Decree 102.

In case of applying for amendment of land use terms of investment projects, the application dossier must contain the application form, the approval of the amendment of the project duration from the relevant authority, and either (a) a LURC or (b) a land allocation decision, land lease decision or decision permitting conversion of land use purpose.

Criteria for conversion of use purposes of rice cultivation land and forestry land

Under Decree 102, the conversion of use purposes of two (02) hectares of rice cultivation land/forestry land to other purposes for the implementation of investment projects must comply with the following criteria: (i) having an alternative afforestation plan or a document proving the fulfillment of the responsibility to pay for the replacement afforestation; (ii) having a plan on use of the topsoil; and (iii) having a preliminary environmental impact assessment or an environmental impact assessment.

The conversion of less than 02 hectares of rice cultivation land/forestry land may be subject to the criteria issued by the provincial PC.

The above criteria does not apply to projects for which the approval for conversion of rice cultivation land or forest land to other purposes has been issued by the Prime Minister or the provincial People’s Council before the effective date of Decree 102.

Other issues

Decree 102 provides the procedures for recovery of land in the following cases: (i) recovery of land related to national defence and security, (ii) recovery of land due to violations of land laws, (iii) recovery of land due to termination of land use under law, voluntary return of land or appearance of threats to human life.

Decree 102 details the regimes for land used for national defence and security purposes; land for planting, production and processing of agriculture products/ aquaculture; land for construction of apartment buildings; land for industrial zones, high-tech zones or economic zones; land for civil airports and air terminals; land for construction of works/areas with safety corridors; land for construction of underground works; and land used for mixed purposes.

2. Land rentals

The Government issued Decree 103/2024/ND-CP (“Decree 103”) dated 30 July 2024 providing for land use fees and land rentals. Decree 103 took effect on 1 August 2024 and replaced Decree 45/2014/ND-CP and Decree 46/2014/ND-CP, as amended. Following are some key points on land rentals provided by Decree 103.

Calculation of land rentals

The calculation of land rentals is based on the area of land in respect of which rental is payable, land lease term, land rental unit, the form of land lease from the State, and the State policy on land rental exemption and reduction.

The land rental unit, in the case of annual rental payment without conducting auction, is determined by multiplying the percentage (%) to calculate land rental unit by the land price. The percentage (%) to calculate land rental unit is ranged from 0.25% to 3%.

In the case of lump sum rental payment for the entire lease term without conducting auction, the land rental unit is the specific land price which is determined in accordance with Decree on land prices (with some exceptions). In the case of LURs auction, the land rental unit shall be the winning auction price.

For the land lease for the construction of underground works, the land rental unit must not exceed 30% of the land rental unit above ground. For the area of water surface land, the land rental unit is not less than 20% of the land rental unit of non-surface water area.

Payment of land rentals

The annual land rental amount is stable for 05 years pursuant to Article 153.2 of the Land Law 2024. After the stable period, the competent authority shall decide the land rental for the subsequent period based on the land price table of the year of adjustment. If the land rental is higher than the rental applicable in the stable period, the adjustment rate shall equal to the annual total consumer price index (CPI) of the country in the five (05) years preceding the time of adjustment. If the CPI increases by 10% or more in five (05) consecutive years, the Ministry of Finance, in coordination with the relevant ministries, shall report to the Government for approval of the adjustment rate.

The land lessee shall pay land rental to the State budget in accordance with the notice on land rental payment of the tax office.

Land rental exemption and reduction

Decree 103 specifies the cases eligible for land rental exemption for entire lease term, the cases eligible for land rental exemption for fix-lease term, and the cases eligible for land rental reduction.

Land rental exemption and reduction must adhere to the principles set out in Decree 103. Some of those principles include:

• If the land user is eligible for both rental exemption and reduction, the land user shall be entitled to rental exemption. If the land user is eligible for reduction of land rentals at different levels, the highest reduction shall be applied;
• Land rental exemption and reduction are carried out for each investment project, only directly applied to entities that lease land from the State and be determined based on the payable land rental, except cases not requiring formulation of investment projects; and
• Land rental exemption and reduction are not applicable in cases where the State leases out land via LURs auction.

Land users eligible for land rental exemption are not required to carry out procedures for requesting land rental exemption. Land users eligible for land rental reduction must carry out procedures to apply for the reduction.  The relevant tax office shall calculate the reduced amount and issue a decision on land rental reduction.

3. Real estate business

The Government issued Decree 96/2024/ND-CP (“Decree 96”) dated 24 July 2024 implementing the Law on Real Estate Business 2023. Decree 96 took effect on 1 August 2024 and replaced Decree 02/2022/ND-CP dated 6/1/2022. Some key points of Decree 96 are summarised below.

Further clarification on credit balance and outstanding corporate bonds

Under the Law on Real Estate Business 2023 (the “LREB 2023”), a real estate enterprise is required to ensure the ratio of credit balance and outstanding corporate bonds to the equity capital. This requirement is clarified in Decree 96 which states that (i) in case where the enterprise uses loan capital borrowed from credit institutions and/or issues corporate bonds to implement a project, the total loan balance, outstanding corporate bonds and the equity capital required for each project under the LREB 2023 must not exceed 100% of the total investment capital of that project, and (ii) the total ratio of loan balance at credit institutions and outstanding corporate bonds must not exceed 4 times the equity capital of the enterprise for each project using less than 20 hectares of land, or not more than 5.67 times the equity capital of the enterprise for each project using 20 hectares of land or more.

Standard forms of real estate business contracts

Decree 96 promulgates certain standard forms of real estate business contracts. The standard forms are mandatory and include: (a) house purchase and sale contract, house hire-purchase contract; (b) house lease contract; (c) sale and purchase contract, hire-purchase contract for construction works or floor area in construction works with function serving the purposes of tourism and accommodation; (d) contract for lease of construction works or floor area referred to in item (c) above; (dd) sale and purchase contract, hire-purchase contract for construction works or floor area in construction works with function serving the purposes of education, healthcare, sports, culture, office, commerce, service, industry and works with mixed service function; (e) contract for lease of construction works or floor areas referred to in item (dd) above; (g) contract for transfer of LURs with technical infrastructure in real estate projects; (h) contract for lease or sub-lease of LURs with technical infrastructure in real estate projects; (i) contract for transfer of a real estate project in whole; (k) contract for transfer of a real estate project in part; and (l) contract for transfer of sale and purchase contract or hire-purchase contract of houses/construction works.

Standard forms shall be used to enter into real estate business contracts only after they are publicised in accordance with Article 6 of the LREB 2023.

Transfer of a real estate project

Decree 96 sets forth the procedures to obtain the approval of a transfer of a real estate project in whole or in part from the provincial PC or the Prime Minister as provided in Article 42 of the LREB 2023. The application dossier is submitted to the provincial PC or its authorised agency.

For projects within the authority of the Prime Minister to permit the transfer, the provincial PC must consult with the Ministry of Construction and other relevant ministries and submit a proposal to the Prime Minister for approval. For projects within the authority of the provincial PC to permit the transfer, the opinions of relevant agencies in the locality must be obtained before the provincial PC approves the transfer.

In case where the transferee is an FIE as stipulated in Article 10.4 of the LREB 2023, and whole or part of the project to be transferred is located on an island or on a coastal or border commune or other area that affect to national defence and security, the provincial PC must also consult on matter of national defence and security with the MOD and the MPS.

Regulating the real estate market

When the real estate transaction index increases or decreases by over 20% for three months or when there are other market fluctuations affecting socio-economic stability, the Ministry of Construction shall coordinate with relevant ministries and provincial PCs to study and propose measures to regulate the real estate market. These measures will require approval from the Government, the National Assembly or the National Assembly’s Standing Committee.

4. Property auction

The National Assembly adopted Law No. 37/2024/QH15 dated 27 June 2024 to amend the Law on Property Auction 2016 (the “Amendment Law”). The Amendment Law takes effect from 1 January 2025. Below are some key changes of the Amendment Law.

Under the Amendment Law, the following properties, in circumstances prescribed by laws, must be auctioned: (a) land use rights; (b) mineral mining rights; (c) rights to use radio frequencies; (d) rights to use telecom code/number and national domain name “.vn”; (dd) rights to use forest or lease out forest;  (e) fixed assets of enterprises under the laws on management, use of state capital invested in manufacture, business at enterprises; (g) national reserve goods; (h) public properties; (i) properties to be enforced under civil enforcement laws; (k) secured properties; (l) properties to be distrained for executing administrative sanctioning decisions; (m) properties of cooperatives declared bankruptcy; (n) properties of enterprises declared bankrupt; (o) bad debts and the secured properties of the bad debts of 100% State owned company established by the SBV for resolving bad debts of credit institutions (VAMC); and (p) other properties to be sold via auction under the laws.

To ensure a more reliable and transparent process for auction, the Amendment Law prohibits the collusion to reduce prices, increase prices or manipulating the results of property auctions. It also prohibits auctioneers and auction practising organisations from making a list of fictitious persons registering to participate in an auction, and forging dossiers to participate in an auction.

The Amendment Law amends the penalty provisions by adding that if an entity wins the auction for the land use right to implement projects or the mineral mining right but fails to make payment of the auction winning amount which results in cancellation of the decision recognising the auction results, the entity will be prohibited from participating any auction session of such type of property from 06 months to 05 years. The agency having the authority to approve auction results is also the agency that has the authority to issue a decision prohibiting participation in auction sessions. Such decisions must be sent to the sanctioned entity, relevant organisations and agencies, and must be posted on the National Property Auction Portal.

The Amendment Law provides some general procedures for online auction. Auction practising organisations, auction councils and VAMC can hold online auction through the National Property Auction Portal, their auction websites or auction websites of another auction practising organisations. The conditions applicable to the national property auction portal and those applicable to auction websites will be regulated by the Government.