Leasing Building Attached To Land With Annual Lease Payment In Vietnam (Further Updates)

Previously, 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. The restriction has been removed by Decree 1/2017. Decree 1/2017 has, among others, clarified the issue of right to lease buildings attached to land with annual rental payment. In particular, Decree 1/2017 provides that a land user who leases land from the State and pays annual rental may lease their assets attached to the land piece if:

(1)        the land user has been issued a Land Use Right Certificate for the land piece;

(2)        the land user has satisfied conditions under the laws on real estate business; and

(3)        the lessee must use the leased assets attached to land according to the purpose assigned to it under the relevant lease contract signed between the land user (the landlord or the lessor) with or the land lease decision issued by the competent State authority. 

Because of the third requirement, even if a lessor is exempted from conditions to do real estate business, such lessor may have to apply for changing purpose of the existing building at the competent land authority before signing lease contract with a lessee in the case such lessee wants to utilize the building for other purposes. However, it is not clear how this procedure should be applied in practice.

This post is contributed by Nguyen Bich Ngoc, a Venture North Law associate.