Resolution 171: Expanding Land Resources For Commercial Housing Development In Vietnam

Vietnam’s housing market has experienced rapid growth in recent years, driven by urbanization, economic development, and increasing demand. A shortage in housing supply in some big cities currently has prompted policymakers to enhance land policies to unlock resources for housing project development. As new Land Law 2024 seems to fall short in resolving the land supply constraints for residential development, on 30 November 2024, the National Assembly adopted Resolution 171 on piloting implementation of commercial housing projects through agreements on voluntary assignment of land use rights (LUR) or use of existing LUR (Resolution 171).

With its introduction of a more flexible mechanism for commercial housing development, Resolution 171 is anticipated to address the housing supply shortage. However, developers will need to wait for a detailed decree to ensure the feasibility and compliance of their proposed projects.

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Written by Lawyers VNLaw On In

Use Of Houses And Buildings To Secure For Performance Of Obligations Under Vietnamese Law

The most common form of security which is created over houses and buildings is mortgage (thế chấp). However, the Civil Code 2015 also provides for other forms of securities. In this blog, we will discuss whether other forms of securities could be created over houses and buildings.

Pledge (Cầm cố) – Unlikely

Pledge of property means the delivery by one party of “property” under its ownership to another party as security for the performance of an obligation. Since the term “property” includes both moveable properties and immovable properties, it is arguable that a pledge could be created over houses and buildings being immovable properties. However, Article 310.2 of the Civil Code 2015 provides that “Where an immoveable property is the subject matter of a pledge in accordance with law, the pledge of the immoveable property shall be enforceable against a third person as from the time of registration.”

Reference to “in accordance with law” suggests that pledge could only be created over an immovable property if a law specifically allows it. However, currently the Land Law 2024 and the Residentially Housing Law 2023 only specifically allow mortgages to be created over residential houses or assets attached to land.

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Written by Nguyen Quang Vu On In ,

Unusual obstacles for leasing of future properties under the Law on Real Estate Business 2023

Article 23.1 of Vietnam's 2023 Law on Real Estate Business explicitly allows real estate developers to sell future properties, such as houses, buildings, or floor areas within a building. However, the law is silent on the leasing of future properties (except for hire purchase transactions). This omission has led to uncertainty regarding the legality of such transactions.

On the one hand, leasing of future properties was clearly permitted in a similar Article of the Law on Real Estate Business 2014. Accordingly, one could argue that the omission of leasing from Article 23.1 of the Law on Real Estate Business 2023 indicates that a real estate developer cannot lease future properties.

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Written by Nguyen Quang Vu On In

The Ambiguous Definition of "Economic Organization" in the Land Law 2024

The term “economic organisation” (tổ chức kinh tế) was first introduced under the Investment Law 2014 and refers to, among other things, any company or organisation incorporated in Vietnam. Over time, the term “economic organisation” has been used consistently in other legislations and allows for a consistent application of the law. However, the Land Law 2024 has introduced significant confusion as to the meaning of the term “economic organisation”. In particular, it is not clear under the Land Law 2024, if the term “economic organisation” only refers to companies or organisations, which are not controlled by foreign investors and do not include companies or organisations which are controlled by foreign investors. The lack of clarity has important implication on how the Land Law 2024 is implemented. For example, if the term “economic organisations” under the Land Law 2024 includes organisations which are controlled by foreign investors then a foreign bank branch could have a clear legal basis to take mortgage over land use rights and assets attached to land.    

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Written by Nguyen Quang Vu On In