The Vietnamese version is available here.

One year after the Land Law 2024, the Real Estate Business Law 2023, and the Housing Law 2023 came into effect, Vietnam’s real estate legal framework has begun to show both its reform momentum and the challenges of implementation.

Vilasia, in collaboration with The Saigon Times, is pleased to present a series of analytical articles by Vilasia’s Nhung Nguyen, offering a one-year review of how these landmark laws are being implemented in practice. Through real cases and regulatory analysis, the series highlights key issues emerging in areas such as land financial obligations, project transfers, delayed projects, commercial housing development, and project implementation models. The series will aim to provide practitioners, investors, and policymakers with a clearer picture of where the new legal framework is working as intended and where further clarification and adjustment may be needed.

The series focus on five main topics:

(i) Land-Related Financial Obligations: The Strain of Balancing Interests;
(ii) Transfers of Real Estate Projects: Practical Bottlenecks in Implementation;
(iii) Delayed (“Suspended”) Projects: Responsibility Cannot Be Placed Solely on Investors;
(iv) Development and Management of Commercial Housing: Bright Spots and Persistent Bottlenecks; and
(v) Apartment Building Governance: Maintenance Funds Remain a “Hot Spot”.

Below is the first in the series entitled “Land-Related Financial Obligations: The Strain of Balancing Interests”, originally published in Vietnamese in The Saigon Times on August 8, 2025. The digital version is available here.

Land-Related Financial Obligations: The Strain of Balancing Interests

By Lawyer Nguyễn Thị Nhung (*)

(The Saigon Times) – Editorial Note: After one year in effect, the newly enacted laws – the Land Law 2024, the Real Estate Business Law 2023, and the Housing Law 2023 – have gradually been put into practice. A series of decrees, circulars, and decisions have been promulgated to provide detailed guidance, thereby creating a clear legal framework for project development under the new regime.

The implementation of these laws has been strongly promoted: The Government has issued decisive directives, while local authorities have promptly acted to minimize delays in execution. With such synchronized efforts, despite being in force for less than a year, the real estate market has already recorded positive signs of recovery and transformation. However, practical implementation still reveals many obstacles – from inconsistencies of regulations to differences in interpretation and application among regulatory authorities.

The Saigon Times introduces a series of articles analyzing several noteworthy issues arising from the enforcement of these new laws.

Improvements in Annual Land Rent Calculation

A positive signal can be observed in the significantly improved timeline for determining annual land rental fees under the new regulation, which allows the use of the land price table. Previously, in all cases where land was allocated or leased for projects, the calculation of land rent and land use fees had to be based on a specific land price. Particularly, for projects with land values ranging from VND 10-30 billion (depending on the locality), investors faced long delays due to complicated procedures for determining specific land prices through direct comparison, deduction, income, or surplus methods[1].

Furthermore, the Land Law 2024 maximizes the scope of cases eligible for annual land rental payment, while restricting lump-sum rental payments, thereby allowing more projects to benefit from applying the land price table[2].

In relation to this, most localities have already issued new land price tables applicable during the transitional period from the effective date of the Land Law 2024 until the end of 2025. Land prices in these new tables have been adjusted significantly higher, between 2 to 6 times in Hanoi, and in certain locations in former Ho Chi Minh City, more than 38 times compared to previous levels. This has sharply increased the financial burden on investors.

Nevertheless, it is generally assessed as appropriate, as the previous K-coefficient is no longer applied. Higher land prices in the official tables also help curb the phenomenon of deposit defaults and market distortion during land auctions in several localities.

However, projects subject to land allocation with land use fees or one-off rental payments still face the bottleneck of determining their financial obligations. For such projects, land use fees or lump-sum rental payments are substantial financial obligations, representing a major portion of real estate product pricing. Yet, the difficulties in applying surplus, comparison, or income methods continue to prolong the process of land price determination.

The current delay is so severe that many apartment projects have completed technical infrastructure and foundation works but cannot be offered for sale to mobilize capital because their financial obligations have yet to be finalized.

For instance, in Hanoi, one project allocated land in November 2023 had to wait until February 2025 to receive approval of its land use fee. Although investors can proceed with design and construction before paying the land use fee, the prolonged determination process has prevented project sales. In some cases, investors made provisional estimates of land use fees to announce selling prices, only to find that the officially approved fee was far higher than expected. This left them in a dilemma: keeping the original price meant losses or missed business targets; raising prices meant renegotiating contracts with buyers or forfeiting deposits.

In light of these issues, the Ministry of Natural Resources and Environment has recently proposed a comprehensive overhaul of the land pricing mechanism in the draft Amended Land Law 2024. Instead of applying market principles, land prices would once again be determined by the State through official land price tables and K-coefficients. Despite concerns over the potential resurgence of a “dual price” regime, this mechanism is expected to break the bottleneck in land price determination, much like the improvements already observed in annual rental cases.

The 5.4% Supplementary Levy – An Unjust Burden on Investors

Despite the above-mentioned delays, which primarily harm investors, Articles 50.2 and 51.9 of Decree No. 103/2024/ND-CP require investors to pay an additional 5.4% of the land use fee or land rental, calculated for the period from the date of the land allocation decision until the financial obligation is officially determined. This is not a provisional payment but a real financial obligation with no refund mechanism, even though the delays are caused by government authorities.

The core issue lies in the fact that from the moment a land allocation decision is issued, the entire process of land price determination – valuation, financial department review, appraisal council feedback, and provincial People’s Committee approval – is entirely an internal governmental procedure. Investors have no role in these steps. Nevertheless, when delays occur, investors not only suffer losses from stalled sales and frozen capital, but are also forced to pay the additional 5.4% as though they were at fault.

The draft submission accompanying the second draft amendment to Decree 103, under Official Letter No. 7127/BTC-QLCS dated May 24, 2025 from the Ministry of Finance, addressed this issue. The justification for the levy is framed as a cost-sharing mechanism, suggesting that since investors do not pay the land use fee immediately upon land allocation, they may benefit by deploying the funds elsewhere. However, this submission fails to address the State’s responsibility for the losses suffered by investors who are unable to finalize pricing for sale, resulting in capital being tied up and business operations being stalled.

Based on our opinion, any supplementary charge imposed on investors must be grounded in the principle of investor fault – namely, where the investor causes harm to the State or society, or where the charge serves as a deterrent to prevent future violations. In this case, however, the delays do not originate from the investors; on the contrary, they are the ones bearing the losses in terms of time and costs. Requiring investors to make additional financial payments under these circumstances does not accelerate the determination of land use fees or land rent, as they have no authority to intervene in this process. Therefore, such a supplementary levy – beyond increasing state budget revenues – does not provide any meaningful policy benefit; rather, it places additional fiscal pressure on investors and undermines the investment environment.

It should be further emphasized that for projects with large land reserves, where land use fees may amount to hundreds or even thousands of billions of dong, the 5.4% levy translates into tens or hundreds of billions – a massive burden during a period when investors must concentrate financial resources on licensing and construction. At a time when the real estate enterprise is in a fragile state of recovery, this levy effectively strikes at investor cash flow, slowing overall project development progress.

In the second draft amendment to Decree 103, the drafting agency asserted that eliminating the levy was beyond the Government’s authority, as it had been prescribed in the Land Law 2024. Instead, it proposed keeping the same rate but excluding the period when State authorities conduct land price determination (up to 180 days). By July 2025, in the third draft, the Ministry of Finance introduced a reduced rate of 3.6%, calculated as the average of CPI, six-month deposit rates at Vietcombank, and inflation indices between 2014 and 2024[3].

Proposals to reduce the payment rate and shorten the calculation period, as suggested by the Ministry of Finance, are meaningful in helping to alleviate part of the financial burden on investors. Nevertheless, considering the nature of the issue as analyzed above, we believe the regulation should be abolished entirely, meaning that investors should not be required to pay any supplementary amount, as they bear no fault for delays in determining land use fees or land rent.

To achieve this, the regulation on the supplementary payment under Article 257.2(d) of the Land Law 2024 must be amended. As of late July 2025, the Ministry of Natural Resources and Environment has indeed proposed abolishing the levy in the draft Amended Land Law 2024. This proposal has received bro support from investor community and legal experts, as it correctly reflects the true nature of the issue. However, we note that the amended Land Law 2024 and its implementing regulations should include transitional provisions to ensure that investors who have already paid the supplementary amount in recent years are provided with a mechanism for reimbursement or for offsetting such payments against other tax obligations. This is necessary to ensure fairness among investors and across projects, so that all may benefit equally from the State’s reasonable and humane policy.

Overall, the pace of determining land-related financial obligations has been improving – a positive sign. Nevertheless, further progress is needed, not only in implementation but also within the legal framework itself, to ensure that the investment process is truly smooth and efficient. Timely amendment of inappropriate provisions, supplementation of missing regulations, and correction of mechanisms unfavorable to investors will help mitigate risks, unlock capital flows, and instill confidence in long-term investment.

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(*) Vilasia Law Firm

[1] Article 114.4 of the Land Law 2013; Article 3.3 of Decree 45/2014/ND-CP and Article 4.4 of Decree 46/2014/ND-CP.

[2] Read our previous analysis on this policy in the article “Land Use Fees and Land Rent Have Been Strongly Reformed”, Saigon Times, available at https://thesaigontimes.vn/tien-su-dung-dat-va-tien-thue-dat-duoc-cai-cach-manh-me/ (last accessed August 3, 2025).

[3] Submission No. 431/TTr-BTC dated July 18, 2025, Ministry of Finance, Draft Government Decree.