WHAT BUSINESS SHOULD NOTE WHEN THE LAND LAW 2024 COMES INTO EFFECT? - OTIS LAWYERS

On the morning of July 17th, the Ho Chi Minh City Investment and Trade Promotion Center (ITPC), in coordination with the Vietnam International Arbitration Center (VIAC), organized the seminar "Land Law 2024: Effective Implementation Solutions for Investors". At the event, Mr. Phan Duc Hieu, Standing Member of the Economic Committee of the National Assembly, outlined the new points and improvements of the Land Law 2024 for investors. Additionally, he highlighted some issues to pay attention to in understanding and applying the new land law regulations.

Specifically, Mr. Hieu stated that the Land Law 2024 approaches land resources comprehensively, focusing on balanced and reasonable development. The goal is to ensure fair development of various types of real estate, without favoring any specific segment. For instance, for commercial housing, enterprises need to have land to develop commercial housing projects.

"How to obtain land?" Mr. Hieu said and added that the State will only reclaim land for commercial housing projects, mixed-use housing and commercial, and service projects when it is an "urban area construction investment project" with synchronized functions. If the project does not fall under this category, the enterprise must negotiate. However, negotiations are only permitted for residential land transfers.

Another option for enterprises is to change the land use purpose. However, the land must meet two conditions, one of which is that a portion of the land must be residential land to change the use purpose for commercial housing development. "If the enterprise has land but none of it is residential land, the use purpose cannot be changed to commercial housing," Mr. Hieu said.

He added that this is an issue of great interest to many investors and businesses, with diverse opinions. However, the National Assembly has thoroughly discussed and decided to include this in the Law. The principle of the National Assembly in law-making is to aim for stability, generalize into law for widespread application. If any issues remain unclear, the Government will conduct pilot programs.

"National Assembly delegates understand this well, and the decision was intentional. The National Assembly discussed thoroughly, considering every detailed issue impacting each target group before making this decision," Mr. Hieu said.

Contrary to commercial housing projects, the new mechanism for social housing will be more open, creating more favorable conditions for enterprises. Specifically, if the enterprise does not have land, the State will reclaim land. If the enterprise already has land, it can proceed normally, changing the land use purpose to develop the project.

Regarding the issuance of certificates for officetel, condotel, etc., Mr. Hieu stated that investors need to distinguish between housing and construction works. Housing will be issued long-term ownership certificates, while new types of products like those mentioned above are construction works. Therefore, they will be certified according to the project's use, purpose and duration. It is essential to differentiate this clearly.

"The purpose of this Land Law is to promote the efficient and economical use of land. Therefore, investors must use land purposefully," Mr. Hieu said.

Another content of great interest to many enterprises and investors in the Land Law concerns agricultural land. Specifically, issues related to the reclamation of agricultural land, conversion of agricultural land to non-agricultural land, and transfer of agricultural land.

Addressing this content, Mr. Phan Duc Hieu said that agricultural land is also a crucial issue in the new Law. There are three main points to note.

Firstly, compensation: the general principle is to compensate for the same type of land being reclaimed. Secondly, regarding transfers: previously, individuals could transfer up to 10 times the land quota; now, it is extended to 15 times the quota. For business organizations, there is no limit if there is a specific use purpose and plan.

"The goal of the previous Law was to limit possession, speculation, and non-use of agricultural land. Now, the input is more open, but the output is restricted. Specifically, if the land is not used for its intended purpose within 12 months, it will be reclaimed," Mr. Hieu said.

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