Vietnam’s housing market has experienced rapid growth in recent years, driven by urbanization, economic development, and increasing demand. A shortage in housing supply in some big cities currently has prompted policymakers to enhance land policies to unlock resources for housing project development. As new Land Law 2024 seems to fall short in resolving the land supply constraints for residential development, on 30 November 2024, the National Assembly adopted Resolution 171 on piloting implementation of commercial housing projects through agreements on voluntary assignment of land use rights (LUR) or use of existing LUR (Resolution 171).

With its introduction of a more flexible mechanism for commercial housing development, Resolution 171 is anticipated to address the housing supply shortage. However, developers will need to wait for a detailed decree to ensure the feasibility and compliance of their proposed projects.

In this post, we will highlight key regulations of Resolution 171 and discuss their potential implications for commercial housing developers.

Types of projects eligible for the pilot mechanisms

The following commercial housing projects (generally, “pilot project”) may enjoy the pilot policies under Resolution 171:

·         Projects by real estate business organizations acquiring LUR;

·         Projects by real estate business organizations holding existing LUR;

·         Projects by real estate business organizations both holding existing LUR and acquiring additional LUR; and

·         Projects by real estate business organizations established by entities currently using land, aimed at implementing commercial housing projects on land areas of production and business facilities that must be relocated due to environmental pollution or as required by construction or urban planning.

The regulations of Resolution 171 appear to suggest that pilot projects should be newly initiated, rather than extensions of existing commercial housing projects already approved for development. Consequently, developers of ongoing housing projects may be unable to rely on Resolution 171 to acquire adjacent land and expand their current developments.

Resolution 171 uses the term “real estate business organizations” (tổ chức kinh doanh bất động sản) to encompass all qualified developers under real estate business regulations, including domestic economic organizations and foreign-invested economic organizations (FEOs). However, in the context of acquiring LUR for implementing pilot projects, Resolution 171 appears to inadvertently exclude FEOs from its scope of application. This exclusion arises because, under Article 28 of the Land Law 2024, FEOs are permitted to receive the voluntary assignment of LUR only for land located in industrial zones, industrial clusters, and high-tech zones, where the long-term land use planning is designated for non-residential purposes.

Types of land used for pilot projects

Under Resolution 171, the developers may acquire LUR and convert land use purposes for one or more of the following types of land to implement the qualified pilot projects:

·         Agricultural land;

·         Non-agricultural land that is not residential land; and

·         Residential land and other types of land within the same parcel in cases involving agreements on voluntary assignment of LUR.

This represents a significant improvement introduced by Resolution 171 compared to the Land Law 2024. Under the Land Law 2024, a developer can only undertake commercial housing projects through either (a) acquisition of residential land or (b) conversion of other land types, provided the developer already possesses residential land.

Requirements for pilot projects

The implementation of pilot project must satisfy the following conditions:

·         The land parcel designated for the project must align with the district-level land use planning or construction and urban planning;

·         The land parcel designated for the project must align with the approved local housing development programs and plans;

·         The land parcel designated for the project must be included in the list of land areas proposed for pilot projects, as approved by the provincial People's Committee;

·         Having obtained written approval from the provincial People's Committee for agreements on acquiring LUR to implement the pilot project;

·         The developers must meet the conditions stipulated by laws on land, housing, real estate business, investment, and other relevant legal regulations; and

·         Having obtained written approval from the Ministry of National Defense or the Ministry of Public Security in case the pilot projects involving the use of defense or security land that has been reclassified and removed from defense or security land planning.

Apart from the conditions above, a pilot project may only be selected if it meets the following criteria:

·         Located in urban areas or areas designated for urban development in planning;

·         The total residential land area in pilot projects, including existing residential land and land planned for conversion to residential use, must not exceed 30% of the additional residential land allocated in the approved 2021–2030 provincial planning, compared to the current residential land use;

·         Included in or set to be added to the district's annual land use plan; and

·         Not part of the list of construction works and projects planned for land revocation, as approved by the provincial People’s Committee (in the case of an agreement on voluntary land assignment).

The requirements discussed above seem to reflect policymakers' efforts to prevent a mass acquisition of non-residential land for speculative purposes. However, such stringent requirements may also render the pilot mechanisms under Resolution 171 less attractive to potential developers.

Term of application

Resolution 171 will take effect on 1 April 2025 and will remain in force for a duration of five years. After the expiration of Resolution 171, the developers will be entitled to implement the pilot projects until their completion.

This post is written by Nguyen Hoang Duong and is edited by Nguyen Quang Vu.