1. Abolishing the land price frame - determining land prices based on market principles
The 2024 Land Law has abolished the land price framework and clearly defined the land valuation method based on market principles. Accordingly, land prices will be calculated based on the following grounds: The purpose of the land to be valued; the Term of land use; Input information to determine land prices according to land valuation methods; Other factors affecting land prices; Regulations of relevant laws at the valuation time...
In the past, the land price framework in most provinces and cities, especially large cities, differed greatly from the actual transfer price on the market. The actual transfer price was easily distorted, causing land transfer transactions to be manipulated by the buying and selling parties in a way that was beneficial to them. When the land price framework is abolished and calculated according to market principles, the asset price may be higher but is the actual value, not an artificial price, the market screening process becomes more severe, thereby also promoting the real estate market to develop more transparently and healthily, reducing speculation and land fever.
For the Government, when local land prices are promulgated following market prices, there will be no longer the phenomenon of two prices, thereby fundamentally limiting the issue of under-declaring prices to reduce the amount of taxes to be paid down, avoiding the situation of budget revenue losses... Land revenue will increase, creating a source of resources for investment development and solving other economic and social problems.
However, in addition to these benefits, there are still many challenges that need to be addressed, such as concerns that abolishing the land price framework will lead to higher land prices, higher compensation for land clearance, higher investment costs, leading to higher property sales prices, making it difficult for low-income people to access land, and especially how to determine the market price based on the market principles? These are issues that need to be implemented suitably and feasibly to ensure that they can take effect and achieve the desired results.
2. Unblocking the biggest knot in land relations in land acquisition as well as regulations on compensation, support for resettlement
Most land disputes are mainly related to land acquisition for the implementation of socio-economic development projects for national and public purposes. The reason is that the current law does not clarify the criteria for distinguishing between projects that are subject to acquisition and projects that are not. To address this situation, Article 79 of the 2024 Land Law lists 32 specific cases of land acquisition for national and public interests, along with the bases and conditions for acquisition being clearly stated in Article 80. In practice, it has been shown that the State only resumes land for public purposes in cases of real necessity, because the land acquisition mechanism will generate many complex consequences, related to the inability to harmonize economic interests between the State, the people whose land is resumed, and businesses.
In addition, the 2024 Land Law has partially unblocked the biggest knot in land relations at Article 91 on the principles of compensation, support, and resettlement and Article 110 on resettlement support projects when land is acquired, reflecting the requirements of Resolution 18-NQ/TW, which are: (i) For cases where land acquisition requires resettlement, resettlement must be completed before land acquisition. (ii) At the same time, there are specific regulations on compensation, support, and resettlement so that after land acquisition, people whose land is acquired must have a place to live, ensuring a life that is equal to or better than their old place of residence.
3. Businesses that transfer or contribute land use rights must pay back the amount of money that was waived or reduced at the time of land allocation, land lease, or land use permission conversion
According to Article 33 of the 2024 Land Law, domestic organizations that are granted land for fees by the State, lease land for a one-time payment for the entire lease period to implement a business investment project that is granted exemption or reduction of land use fees, land rent in the case of transfer or contribution of land use rights must pay to the State an amount equivalent to the amount of land use fees, land rent that has been exempted or reduced.
This is a completely new regulation compared to the regulations in the 2013 Land Law. The new regulation helps to avoid the negative aspects of taking advantage of land policy incentives, creating fairness in the implementation of State policies.
4. Land leased for a lump sum can be converted into an annual payment
According to Article 30 of the 2024 Land Law, economic organizations, individuals, people of Vietnamese descent residing abroad, and economic organizations with foreign investment that are currently being leased by the State for a lump-sum payment for the entire lease term are allowed to choose to switch to a yearly lease (Paid land rent is deducted from the annual land rent).
Previously, the 2013 Land Law only allowed economic organizations that were leased by the State for a yearly rent to switch to a lump-sum rent for the entire lease term, but there was no provision for the reverse.
This new regulation helps to create flexibility in the choices for land users, increasing the autonomy of businesses as the cost of land rent is an important factor in developing production and business plans. For the State, it will help to ensure stable revenue, avoiding the concentration of revenue leading to the risk of budget losses and unsustainability.
5. Businesses can receive the transfer of the right to use agricultural land
Based on Clause 1, Article 191, the Land Law 2013, economic organizations are not allowed to receive the transfer of the right to use agricultural land, except in cases where the land use purpose is changed according to the planning and land use plan approved by the competent state authority.
However, the Land Law 2024 has removed the prohibition on economic organizations from receiving the transfer of the right to use agricultural land. The new Law also introduces requirements related to economic organizations that are allowed to receive the transfer of the right to use agricultural land, namely, they must have a plan for using agricultural land approved by the provincial People's Committee. The required contents in the plan must include location, area, land use purpose; Agricultural production and business plan; Investment capital; Land use term; and Land use progress.
This regulation is in line with the policy of Resolution 18-NQ/TW on expanding the subjects of receiving the transfer of the right to use agricultural land, thereby promoting land concentration, land access for agricultural enterprises, people with land needs for agricultural production, and mechanisms for farmers to flexibly convert crop and animal structures, improve the efficiency of agricultural land use according to planning.
The assessment of this change will have a significant impact on the current agricultural land prices, which are trending upward. However, this new regulation also leaves farmers without land to produce, causing long-term consequences for society.
6. Allow to sell “attached assets to the land” and “land lease rights” with land leased by the State for annual land rent
According to Article 46 of the 2024 Land Law, economic organizations, individuals, people of Vietnamese descent residing abroad, and foreign-invested economic organizations are allowed to sell attached assets to the land and the lease right in the lease contract for land leased by the State for annual land rent when meeting all the conditions prescribed.
Previously, the 2013 Land Law only allowed the sale of attached assets to the land, but not the simultaneous sale of the lease right. The new regulation will facilitate the development and business of real estate, especially industrial real estate.
7. Businesses that violate Land laws can still be granted land or leased land
Under the 2013 Land Law, individuals who are granted land, leased land, or permitted to change the land use purpose to implement an investment project must meet the condition of not violating the provisions of land law.
However, the 2024 Land Law has opened up opportunities for these businesses by stipulating that businesses violating the provisions of land law but have fully rectified the violations before the time of requesting land, leasing land, or permit to change the land use purpose, will still be granted land, leased land, or permitted to change the land use purpose to implement an investment project.
The new regulation has created a great incentive for businesses to strictly comply with the decisions and judgments of state agencies against violations, and to devote all resources to remedying the consequences, thereby seizing the opportunity to make a fresh start.
8. The use of land to build dormitories for workers in industrial parks is exempt from or reduced land rent
Article 175 of the 2024 Land Law has expanded the scope of beneficiaries, recognizing the case of using land to implement housing policies for workers’ dormitories in industrial parks will be exempt from or reduced land use fees and land rent.
This is also a reasonable addition to encourage businesses to invest in building dormitories, ensuring accommodation for workers. This will increase the supply of rental real estate at a good price as the developer is exempt from or reduced land use and land rent. In the long term, it can contribute to ensuring the stability of rental prices in the market.
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