NO&T Asia Legal Review
Under the current land laws of Vietnam, there are four methods for investors to acquire land for developing their projects: (i) land allocation or lease without land auction or project tendering, (ii) land auction, (iii) project tendering, (iv) agreement with existing land user.
With respect to commercial housing projects, the investors may only acquire residential land for development if they select the land acquisition through method (iv) (“Agreement Method”). However, there is an exception under the current law that they may be permitted to develop a commercial housing project if they have already acquired residential land through the Agreement Method for the entirety or a portion of the project land, before the effective date (i.e., 1 August 2024) of the Law on Land 2024 (“LOL”). If the proposed development is permitted (through issuing an Investment Policy Approval (“IPA”) and Investor Approval (“IA”) to the investors/project enterprise by the competent authority), the project enterprise must then obtain a land conversion permit (“LCP”) for the non-residential land portion (if any) to convert land use purposes from non-residential land to residential land and pay a substantial amount known as land use fees to the State. That is to say, the enterprise must hold 100% residential land to satisfy conditions (among other things) for applying the IPA/IA to develop a commercial housing project if the land is acquired after the effective date of the LOL.
As a result of the aforesaid restrictions, enterprises that already hold land use rights for non-residential land for 100% of project land before the effective date of the LOL, or acquire a certain portion of residential land (i.e., less than 100% of project land) after the effective date of the LOL, were not permitted to develop a commercial housing project. This has stalled many housing projects for several years since most of them were not able to acquire residential land for the entire project land because most of land planned for housing development is non-residential land.
To resolve this situation, the National Assembly of Vietnam issued Resolution No. 171/2024/QH15 on pilot scheme for commercial housing projects implemented through land use rights acquired via the Agreement Method or already held by project enterprises (“Resolution 171”), which took effect on 1 April 2025. The Government of Vietnam then promulgated Decree No. 75/2025/ND-CP dated 1 April 2025 detailing the implementation of Resolution 171 (“Decree 75”). Resolution 171 and Decree 75 allow certain commercial housing projects that satisfy specific conditions to be implemented on non-residential land. In this article, we will explore and discuss this pilot scheme for commercial housing projects in Vietnam.
Generally, the pilot scheme shall apply to projects carried out by real estate business enterprises in one of the following cases:
Case (1) seems to refer to those land acquisitions to be conducted through the Agreement Method after the effective date of Resolution 171, while case (2) may mention the land acquisitions by various methods (e.g., the Agreement Method or method (i) mentioned above) which land may be vacant or being used for other purposes (e.g., warehouse or sports center). Case (3) is a combination of case (1) and case (2), where the developer may wish to develop a commercial housing project on a larger land area than that of case (2). Case (4) refers to those facilities (e.g., factory, warehouse, sport center or office building) that are subject to a compulsory relocation plan.
Resolution 171 also makes clear that if the enterprise already holds residential land use rights for 100% project land, or both residential land and other types of land, the commercial housing project shall be implemented in accordance with the provisions of LOL rather than this Resolution 171.
Under Article 3 of Resolution 171, enterprises and their projects must meet the following conditions to be eligible for selection and implementation of the commercial housing projects under this pilot scheme:
Under Decree 75, the provincial land management authority (i.e., previously the department of natural resources and environment, and now the department of agriculture and environment (“DAE”)) shall open a registration book so that enterprises with eligible projects may register within a prescribed time limit. For example, the DAE of Ho Chi Minh City opened such a book recently, and the registration period ended on 30 April 2025.
After evaluating the registered projects based on criteria provided in Resolution 171 as discussed above, the DAE prepares the List of Proposed Land Plots, along with the real estate enterprises desiring to develop the pilot projects and submit the same to the provincial People’s Council for approval.
If multiple enterprises propose to implement a commercial housing project on the same land plot(s), the enterprise that already holds land use rights will be prioritized. If all enterprises fall under the category of acquiring land use rights through the Agreement Method, then priority will be given to the enterprise that has submitted the registration documents first.
Following the approval of the provincial People’s Council, the provincial People’s Committee shall publish the List of Proposed Land Plots and issue a notice of approval to the selected enterprise. The selected enterprise will then proceed to acquire land use rights through agreement (if applicable) and/or convert the land use purpose to residential land and carry out other procedures to obtain necessary approvals (e.g., IPA/IA, master plan approval, LCP, land use right certificate, construction permit, etc.) to implement the pilot project.
Notably, Article 4.13 of Decree 75 stipulates that the List of Proposed Land Plots may be supplemented after being approved by the provincial People’s Council, if a real estate enterprise proposes a new land plot that meets the eligibility criteria. The wording of this article suggests that if the total residential land area stated in the approved List of Proposed Land Plots does not exceed 30% of the additional residential land area allocated in the provincial land use plan, other enterprises may still have opportunities to register their participation.
According to Resolution 171, the pilot scheme is implemented over a period of five years from its effective date. Resolution 171 also makes clear that real estate enterprises which are implementing pilot projects in accordance with the project implementation schedule may continue to develop the project until the development is completed, regardless of the expiry of the five-year pilot program. Under current law, the enterprise is strictly required to comply with the project implementation schedule which is proposed by the enterprise and approved by the investment licensing authority. Furthermore, although the pilot program may end, the rights and obligations of those acquiring land use rights or ownership of assets attached to the land within the pilot projects will remain protected under the law in the same way as with any other land users or house purchasers.
The enactment of Resolution 171 and Decree 75 is to unlock the restrictions on the use of non-residential land for commercial housing projects, which was imposed in the past ten years (since the effective of the Law on Residential Housing (“LRH”) 2014※3) and to improve the supply of commercial housing in the country. We anticipate that hundreds of commercial housing projects in the country that have land use rights of non-residential land would be permitted to proceed with projects to develop commercial housing on these lands.
Previously, the relaxation was proposed by the Government to be stipulated under the LRH 2023 or the LOL. However, this proposal was not adopted in these laws, which as previously noted, still require the enterprises to either acquire residential land for the entirety or a portion of the project site to be able to proceed with commercial housing development, meaning that using 100% of the non-residential land for a commercial housing project is not permitted.
Since the imposition of the restrictions was made largely due to concerns over land speculation and the uncontrolled conversion of agricultural land — both of which could pose threats to land use fee collections by the State and the construction/land use zoning, it is likely that the pilot program will be temporary in nature rather than being incorporated into the LRH or the LOL as a permanent policy.
*1
Basically, most of functions and responsibilities of district-level governments are transferred to ward-level governments from 1 July 2025 according to the Law on Organization of Local Governments 2025. It appears that the district land use plan will be changed to ward/commune land use plan.
*2
The provincial People’s Council is like the legislative body of the province, while the provincial People’s Committee is like the administrative body of the province.
*3
LRH 2014 was repealed by LRH 2023.
This newsletter is given as general information for reference purposes only and therefore does not constitute our firm’s legal advice. Any opinion stated in this newsletter is a personal view of the author(s) and not our firm’s official view. For any specific matter or legal issue, please do not rely on this newsletter but make sure to consult a legal adviser. We would be delighted to answer your questions, if any.
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