- Three types of real estate laws come into effect
At the end of June 2024, the National Assembly voted to pass the Law amending and supplementing certain provisions of the Laws related to the real estate market.
Accordingly, the Land Law, Housing Law and Real Estate Business Law, as well as Articles 200 and 210 of the Law on Credit Institutions, will come into effect from August 1st, five months earlier than the National Assembly of Vietnam's resolution from the January 2024 session. However, certain transitional provisions in 7 Articles (from 253 to 260) of the Land Law will still come into effect from January 1st, 2025.
The newly promulgated law specifies the transitional term for investment projects that are subject to land allocation or lease without auction of land use rights and have completed procedures under the Land Law 2013.
Specifically, from August 1st, these projects must carry out the procedures for land allocation or lease under Land Law 2024 if investors were selected between July 1st, 2014, and July 31st, 2024. Alternatively, if the project submitted the investor selection application before August 1st and an investor was selected before January 1st, 2025, the new Land Law will be also applied. The procedures for selecting investors must still comply with the regulations on investment, housing, and bidding.
- New regulations on deposits for purchasing house “on paper”
Article 23 of Law on Real Estate Business 2023, taking effect from August 1st 2024, stipulates the rules of trading in future-formed houses and construction works. Accordingly, the real estate project investors are only allowed to collect a deposit of no more than 5% of the selling price or the lease-to-own price for the future-formed houses and construction works (Houses “on paper”) at the time the project has met the conditions for commercial operation. To ensure transparency in deposit rates, the law also requires that the deposit contract must clearly state the selling or lease-to-own price of the property.
A real estate project “on paper” is eligible for commercialization with one of the following documents: a Decision on land allocation, a Certificate of land use rights, Certificate of housing ownership and land use rights.
According to experts, the new regulations will tighten the management of deposits for the purchase and sale of houses “on paper”, limiting developers from collecting excessively large deposits, up to 90-95% of the property value. Because the current law does not stipulate provisions on deposits purchasing or leasing future-formed houses, deposit contracts are based on agreements between the two parties, without binding on the maximum amount or circumstances of collection. This lack of regulation can lead to fraudulent acts, causing losses for buyers.
- Tightening regulations on land lot transactions
Also in the Law on real estate business, the conditions for transferring land use rights in the land projects have been adjusted compared to the current regulations. Specifically, the project must complete the construction of technical infrastructure according to the master plan and ensure the provision of essential services such as electric, water, drainage and waste collection
The project must have a Certificate of land use right, be free of disputes or, if there are disputes, they must have been completely resolved under a judgment, decision, or arbitration award. The land use rights must not be under seizure, must not be subject to any legal restrictions on transactions, and must not be distrained or temporarily suspended from transactions.
The regulations also specify that the project must not be located in one of the 105 cities and towns where subdivision and sale of land lots are prohibited, or if the land use rights have been auctioned for investing in new residential projects, to be eligible for buying and selling land lots.
Before transferring land use rights to individuals for constructing residential houses, the project developer must publicly disclose information about the Certificate of land use right; obtain confirmation from the regulatory authority on the eligibility for transfer, and confirm the completion of the planned infrastructure development. Additionally, the developer must confirm the fulfillment of land-related financial obligations and publicly disclose any restrictions on land use rights and any mortgage on the project, if applicable.
- Mini apartments will be issued pink books (Certificate of land use right and housing ownership)
Under Law on Housing 2023, the regulations for developing multi-story, multi-unit houses (mini apartments) and the issuance of certificates for this type of property have been revised to be stricter compared to previous regulations.
Accordingly, the Law provides a clearer definition of mini apartments as residential buildings with two or more floors, with each floor designed for separate units to be sold, leased, or rented-to-own, or residential buildings with two or more floors having at least 20 units. Individuals wishing to build mini apartments must have land use rights and meet the requirements to be developers of housing projects. Units meeting these requirements will be issued certificates and can be sold, leased, or rented-to-own according to regulations.
For mini-apartments with two or more floors and fewer than 20 units, the law requires compliance with fire prevention and firefighting regulations applicable to private multi-story multi-unit houses; The complex must meet requirements set forth by provincial People’s Committees regarding roads for firefighting vehicles can reach the mini-apartment location.
- New regulations on land prices
Under Decree 71/2024/NĐ-CP, effectting on August 1st 2024, the Government sets out the procedures and content for determining land prices by four methods: comparison, income, surplus, and land price coefficient. Specifically, cases of land allocation, one-time lease, and annual lease will apply to the land price list multiplied by the adjustment coefficient at the time the competent authority issues a decision on land allocation or land lease.
In cases of a decision on land allocation or land lease is issued from July 1 to December 31, 2014, the annual rent payment will be based on the land price list multiplied by the land price coefficient for the year 2015.
The Government has also identified the factors affecting agricultural and non-agricultural land prices. For non-agricultural land, influencing factors include location, transportation conditions (road width, adjacency to one or multiple roads), conditions regarding electricity and water supply, and the land use term…
For agricultural land, the factors include location, characteristics of the land plot, the area (such as proximity to production and product consumption sites), and the land use term.
- How to calculate the price difference for land compensation and acquisition
In Decree 88/2024/NĐ-CP, the Government guides on implementing certain provisions of Land Law 2024 regarding recompense, support, and resettlement upon land expropriation, aiming to address shortcomings in the current regulations.
Accordingly, the Government stipulates the land use fees for individuals and households are calculated based on the price list at the time of approving arrangements for recompense, and support resettlement. For cases of compensation to a business organization or for lease land with a one-time payment, the land price is determined by the price set by the competent People's Committee at the time of approving the arrangements for recompense.
This document outlines two options for handling discrepancies between the compensation value and the amount to be paid for land allocation, lease, or housing purchase. Specifically, if the compensation and support amount for the land exceeds the land use or lease payment, the landowner will receive the difference. Conversely, if the compensation is less, the landowner must pay the remaining amount.
The Government also stipulates two options in case of a discrepancy between the actual land area and what is recorded on the Certificate of land use right. If the actual land area is smaller than that stated on the certificate, compensation will be based on the measured area. If the land measurement for acquisition has been completed but the land area changes afterward due to natural disasters or landslides, authorities will use the measured data to prepare the arrangements for recompense, support, and resettlement.
If the measured area is larger and the landowner does not have disputes with neighboring land users, the compensation will be based on the actual measured data. In cases the Certificate of land use right has an inaccurate location or coordinates, compensation will also be assessed based on the actual location and coordinates determined during the measurement.
Source: https://vnexpress.net/chinh-sach-noi-bat-co-hieu-luc-tu-thang-8 4776014.html
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