First published under the title “Cơ chế thí điểm để phát triển nhà ở thương mại: Bước đi cởi mở và đột phá” in the print edition of Saigon Times on January 9, 2025, and on the online edition here. The Vietnamese version is available here.


On the afternoon of November 30, 2024, the National Assembly passed Resolution No. 171/2024/QH15 on piloting the implementation of commercial housing projects through agreements on land use rights or existing land use rights after several rounds of extensive discussions and amendments. The Resolution will take effect on April 1, 2025, introducing criteria and conditions that are considered highly open, meeting the high expectations of investors and the public amid prolonged challenges regarding land availability in the housing real estate market.  

Urgent Circumstances

In 2021, during the review process of the draft Land Law, the Ho Chi Minh City Real Estate Association (HOREA) raised an alarming issue: In Ho Chi Minh City, from December 2015 to August 2018, 126 commercial housing projects were not granted investor recognition. The primary reason stemmed from failing to meet the requirement of possessing 100% residential land use rights 1.  

According to Clauses 1 and 4, Article 23 of the 2014 Law on Housing, investors of commercial housing projects are only allowed to receive transfers of residential land or possess residential land use rights. Since 2021, the 2020 Law on Investment amended this regulation (further amended in 2022) expanded this scope to include the case where having the land use right of residential and other non-residential land became eligible for proposing commercial housing development projects. However, investors must still acquire a land area entirely comprising residential land. And if an investor already owns land use right, the land must include a certain area of residential land to propose a commercial housing project. 

This requirement has led to a situation where, despite holding substantial land area, many investors cannot implement projects due to the legal conditions related to land structure. As a result, housing supply has stagnated, causing significant losses to investors, the State, and the people. According to the Q3 2024 report from the Ministry of Construction2, affordable apartments priced under VND 25 million/m² in Hanoi and Ho Chi Minh City were “virtually non-existent in terms of transactions and available supply.” 

Although this situation has caused various consequences, the proposal to expand land types eligible for commercial housing projects was not included in the 2024 Land Law. Article 127 of this law continues the provisions of the 2014 Housing Law, wherein: 

  • Land use rights agreements: Applicable only to residential land use rights;
  • Existing land use rights: Applicable only to residential land or land comprising both residential and non-residential use.

Not only do the existing barriers remain, but the 2024 Land Law further tightens the conditions for land recovery by the State. Under the new regulations, the State will only recover land for urban areas with integrated technical and social infrastructure systems rather than for all new urban or rural residential areas as before. This compels investors wishing to implement commercial housing projects that do not meet the integrated urban scale to “take transfers” land from other land users or use their existing land area, which are severely restricted by these regulations. 

In this context, the Pilot Resolution for using non-residential land for commercial housing has become a solution eagerly anticipated by the public, businesses, and regulatory agencies. This policy not only resolves legal bottlenecks but also opens opportunities for sustainable housing market development, particularly in major cities like Hanoi and Ho Chi Minh City. 

An Open Pilot Mechanism 

Firstly, the pilot mechanism allows nationwide implementation, covering all urban areas or regions designated for urban development, rather than being limited to major cities. In reality, not all localities face land challenges for developing commercial housing projects—issues predominantly arise in cities with high housing demand, such as Hanoi and Ho Chi Minh City. However, the pilot mechanism is extended to all localities to avoid the “approval-seeking” dynamic between local and central governments. If there is no demand, these localities may opt not to implement the mechanism. However, when socio-economic conditions change and actual demand arises, they can immediately apply the mechanism without waiting for legal amendments.    

Regarding the types of projects subject to the pilot mechanism, the Resolution does not restrict eligibility based on when the land use rights were obtained. According to Government Report No. 756/BC-CP dated November 7, 2024, the pilot mechanism applies to all projects meeting the criteria, regardless of whether the land use rights were obtained before or after the Resolution’s effective date. This aligns with the Resolution’s goal of addressing land access difficulties faced by investors due to legal regulations both before and after its issuance.  

The types of land eligible for land use conversion under the pilot Resolution are extensive. This includes all types of land in the agricultural land group, non-agricultural land but not residential land, and mixed residential and other land within the same plot. This scope covers almost all types of land regulated under Article 9 of the 2024 Land Law, reflecting the reality that real estate projects require relatively large land areas, often containing mixed land types. For land use agreements, the pilot Resolution expands eligibility to plots containing both residential and non-residential land rather than solely residential land plots. Additionally, projects that include land areas designated for national defense and security, which have been reclassified out of planning for national defense and security land and are in line with housing development planning, will also benefit from the application of this pilot Resolution.  

Outstanding Issues to Clarify…  

The main criteria for selecting pilot projects specify that the total residential land area in all pilot projects must not exceed 30% of the additional residential land area within the provincial planning period 2021–2030 as approved. This criterion outlines the total residential land area for all projects over the five-year pilot period. However, it does not address specific, clear criteria or priority orders for selecting feasible projects or capable investors. This issue may need to be clarified in the Government’s implementing decree to prevent preferential treatment or mass land acquisitions that lead to ineffective development, leaving projects abandoned while the public remains unable to access appropriate housing.  

According to the Government’s summary in Report No. 756/BC-CP dated November 7, 2024, most localities have completed their 2021–2030 provincial planning to determine the total residential land area for pilot projects. On December 31, 2024, the Prime Minister approved Ho Chi Minh City’s planning under Decision No. 1711/QĐ-TTg. As of now, Hanoi is the only locality yet to complete its planning.   

Furthermore, concerns about widespread land use conversion have been raised, especially regarding rice-growing and forest land, due to the broad scope of eligible land conversions. During discussions, Economic Committee Chairman Vu Hong Thanh suggested safeguarding the stability of 3.5 million hectares of rice land and maintaining a 42% forest coverage rate, limiting land conversion for special-use forests, protection forests, production forests, defense, and security land3. Although this proposal was not included in the Resolution, it should still be considered during the drafting of the Government’s decree and in the Resolution’s implementation.  

Detailed guidance from the Government and oversight during implementation must also be emphasized. Specifically, the Resolution allows the Government to issue detailed implementation regulations but does not specify which issues need guidance and which do not. Additionally, since the effectiveness of resolving project issues depends heavily on local conditions, monitoring local implementation of the pilot policy, especially in major cities, is crucial to ensure its effective execution.  

Conclusion 

The pilot Resolution permitting the use of non-residential land for commercial housing presents a significant opportunity for the real estate market. However, for this policy to be truly effective, further work from the Government and localities is essential. Coordinated and synchronized efforts are required to address existing challenges, from project selection criteria and provincial planning to clear delineation of authority. This not only ensures fairness but also promotes sustainable development in the housing and land management sectors. 

Footnotes:

  1. See “Ho Chi Minh City: Hundreds of Housing Projects Awaiting Procedural Resolution”, Diễn đàn Doanh nghiệp Magazine, at https://diendandoanhnghiep.vn/tp-hcm-hang-tram-du-an-nha-o-cho-thao-go-thu-tuc-10010586.html (last accessed on January 2, 2025).
  2. See “The Ministry of Construction announces information on housing and the real estate market in the third quarter of 2024”, Ministry of Construction, at https://moc.gov.vn/vn/tin-tuc/1285/82532/bo-xay-dung-cong-bo-thong-tin-ve-nha-o-va-thi-truong-bat-dong-san-quy-iii-nam-2024.aspx (last accessed on January 2, 2025).
  3. See “National Assembly Economic Committee: The pilot use of other land for commercial housing projects needs careful consideration of its application to rice-growing land and forest land”, Electronic Magazine Market Life, at https://markettimes.vn/uy-ban-kinh-te-quoc-hoi-thi-diem-dung-dat-khac-lam-du-an-nha-o-thuong-mai-can-nghien-cuu-ky-viec-ap-dung-voi-dat-chuyen-trong-lua-va-dat-rung-69110.html (last accessed on January 2, 2025).