A land user who leases land from the Government with annual payment is not allowed to lease houses and building attached to the land unless such land user registers for real estate business under the Law on Real Estate Business 2014. At first, it seems quite illogical to limit the owner of an asset to lease it while still allow such asset to be sold. However, this is the position under the current land regulations. In particular,
- The Land Law 2013 is silent as to whether those using land through land lease with annual payment may lease house or building attached to such land. On the other hand, a land user, who leases land from the Government with lump sum payment, expressly has the right to lease houses and building attached to land;
- Decree 102/2014 goes further by imposing an administrative penalty on a land user who lease illegally house or building attached to land with annual lease payment; and
- It appears that the competent authority in at least one province has applied this restriction in practice.
That said, one could still rely on Articles 11.1(d) and 11.3(a) of the Law on Real Estate Business 2014 to argue that an entity who lease land with annual payment could lease its real properties attached to land provided that such entity is qualified to do real estate business. The Law on Real Estate Business 2014 provides that local entities, individuals and foreign-invested enterprises who lease land from the Government may invest in building residential houses and other construction works for lease. The Law on Real Estate Business 2014 does not distinguish between land with annual payment or lump sum payment in this context.
This post is contributed by Nguyen Bich Ngoc and is partly based on a weekly update of BASICO Law Firm.