On August 12, 2025, Vietnam’s Ministry of Agriculture and Environment submitted a draft law amending several provisions of the Land Law 2024 (“Draft Amended Land Law” or “Draft”) for government consultation and public comment. The Draft primarily aims to address three controversial issues in Vietnam’s land regime concerning (i) land pricing, (ii) land clearance, and (iii) the allocation of land outside auctions, following policy set out by Resolution 18-NQ/TW and the newly adopted Resolution 69-NQ/TW on land governance modernization. Land pricing is potentially one of the most important areas among the proposed reforms.
The Draft, however, has notably not addressed a major concern recently raised by the public: When a project has been allocated or leased land, but the relevant authority has not yet issued the land-price decision, a “supplemental charge” continues to accrue for the entire waiting period. Under current rules, this charge is calculated at 5.4% per year on the ultimately determined land-use fee or land rent, materially shifting project economics and pricing risks to developers or end-buyers.
Core Reforms on Land Pricing
The Draft Amended Land Law sets out a number of reforms on land pricing, including the following:
- Land price tables: The Draft maintains provincial land price tables but clarifies the scope of application: They are used to determine land-related financial obligations of land users and compensation when the state recovers land; the government will detail the adjustment coefficient regime, ratios for land-use fee calculation by land type/user/form, and deductible infrastructure costs. Provincial people’s committees will continue to issue land price tables every five years, effective from January 1 of the first year in the cycle, with authority to supplement within the cycle as necessary. In provinces with cadastral maps and digital land price databases, the tables may be established down to the land-parcel level, aiming to enhance accuracy and market alignment.
- Annual adjustment coefficient: To enhance responsiveness, the Draft requires provincial people’s committees to promulgate a land price adjustment coefficient annually, effective from January 1 of each year. The committees may also adjust the coefficient within the year or apply it differently for specific areas when required. The Draft aligns cases where coefficients apply with those for the land price tables.
- Valuation inputs and deductions: Valuation inputs used for preparing land price tables and adjustment coefficients must be based on market data formed within 24 months prior to the approval of the land price table or coefficient project. The Draft also allows deduction of infrastructure construction costs when calculating land use fees or rents, aiming to reduce distortions and more accurately reflect project economics.
- Appraisal councils: The Draft establishes provincial appraisal councils for land price tables and adjustment coefficients, chaired by the chairperson or a vice chairperson of the provincial people’s committee; the head of the provincial finance authority is vice chair; members include heads of relevant provincial departments and the chairs of commune-level people’s committees where relevant. Councils may set up working groups and hire valuation organizations to advise on appraisals.
- High-Consensus Mechanism (“75% Rule”): Two options are under consideration for projects assembling land by private agreement where negotiations stall, with the drafting agency proposing the selection of Option 2:
- Option 1: If either more than 75% by land area, or more than 75% of affected land users by headcount, have agreed, the state may acquire the balance and allocate/lease it to the investor.
- Option 2: If either more than 75% by land area, or more than 75% of affected land users by headcount, have agreed, and those agreeing account for more than 50% of the project land area, the state may acquire the balance and allocate/lease it to the investor.
Other Notable Reforms
- Choice of rent-payment modality (transitional clarity): The Draft permits flexibility for projects leasing land to choose between one-off upfront rent or annual rent, with safeguards for public entities managing land used for public interests to lease land with the annual-rent option only. This safeguard aims to prevent leakage of the state’s land budget.
- Issuance of Land Use Rights Certificates (“LURCs”): The Draft streamlines procedures by allowing simultaneous LURC issuance when the underlying state decision (e.g., conversion or extension) is made, reducing processing time. It also clarifies who has the authority to issue LURCs: in most cases, provincial land-administration offices will handle the process, while commune-level chairs can issue certificates in straightforward cases or in cases serving the public interest.
- Commercial housing projects: The Draft removes the restriction under Article 127.1(b) of the Land Law 2024, which had confined developers to negotiating only for residential land when conducting site assembly for commercial housing projects. This amendment permits negotiations for other land types in line with planning and subject to land-use conversion procedures where required. Nevertheless, related provisions in Articles 127.3(b) and 127.6 remain unchanged, still referring to “residential land” as the eligible category, which may result in internal inconsistencies and practical uncertainty during implementation.
- Commune-level planning: Two options are presented; Option 1 replaces district-level planning with commune-level planning and introduces five-year commune plans; Option 2 abolishes commune-level land-use planning altogether (retaining commune five-year plans). The drafting body has expressed a preference for Option 2, aiming to simplify planning layers.
- Expanded cases of state land recovery: The Draft adds several socio‑economic development cases (e.g., urban renewal; mixed‑use/urban/tourism/service projects; logistics; free‑trade/commercial‑finance centers; “cultural industry” projects) where land may be recovered for the public interest, aiming to unlock stalled large‑scale projects. This sits alongside the 75% mechanism as a complementary path.
- Early land revocation in special situations: By default, revocation of land follows approval of compensation/resettlement plans. However, for urgent public projects or where the majority has agreed (or on‑site resettlement is feasible), the Draft permits revocation before full completion of such compensation/resettlement plans, while requiring local policies on temporary accommodation.
Opportunities for Investors and Developers
If implemented as drafted, the reforms would be able to improve project timelines and overall predictability for financiers and investors. The availability of five-year tables of land prices, which can possibly be detailed to land-parcel level in provinces with digitalized cadastral systems, would provide better clarity for real estate valuation in Vietnam. The requirement for an annual adjustment factor, operative from January 1 each year and with intra-year revision, is intended to better align the state’s land prices with true market movements, reducing the disparity which traditionally makes the viability of land pricing in Vietnam problematic for many new investors.
In the housing real estate sector, removal of the “residential-only” negotiation constraint enables developers to assemble sites from a wider variety of land types, converting where required and within the law, thereby lessening structuring frictions that previously caused projects to be held up. The proposed “75%” mechanism for preemptive land recovery in high-pressure or high-consensus scenarios could also shake loose the site assembly logjams, shortening timelines on major projects. Finally, more open delegation of LURC-granting authority and more accommodating rent-payment terms (one-time or recurring) should streamline administrative procedures and improve financing possibilities, particularly where more predictable land-fee timetables are important to underwriting.
Challenges for Investors and Developers
Even with these reforms, there is one significant shortfall; The Draft does not address the regime under which projects that have been awarded or leased land, but are still pending a land-price determination, fall under a 5.4% per annum of overdue charges based on the ultimate fee payable for utilizing the land or rent. This overcharge, having built up over decades of administrative delay, remains one of the most important hot topics for both current and near-term transactions.
Moreover, the Draft retains broad provincial discretion over annual adjustment coefficients with the potential to further exacerbate interprovincial divergence in pricing. The functioning of appraisal councils, coupled with the application of market data for the past 24 months, will play a crucial role in informing valuation outcomes, but these tools may struggle to quickly accommodate evolving market conditions. Further, while new land-revocation techniques can accelerate project implementation, they raise risks of execution in compensation and resettlement sequencing and involve proper management of stakeholders.
Finally, transitional projects that lie between the 2024 regime and the new regime will require meticulous refinancing of financing covenants, price-adjustment terms, and land-fee accrual assumptions to cut legal and financial risks down to their barest minimum.
Outlook
The Draft Amended Land Law is scheduled to be submitted to the National Assembly for consideration in late 2025, with a proposed effective date of January 1, 2026. Investors and developers need to stay tuned on how the Draft is finalized in some essential areas. One such area is the scope of cases where land price tables and annual coefficients are to be used. Another is how the annual coefficient should be computed and to what extent its disclosure is transparent. The ultimate form of the “75%” land assembly mechanism also warrants close scrutiny since it may have a material impact on project timetables. The government’s procedures for LURC issuance and planning reform direction will determine whether or not administrative processes are simplified or compounded. Finally, transitional rules will affect current projects, which will need to make provisions for how they move from the current structure to the new regime. Overall, these factors will shape compliance requirements and investment outcome certainty in Vietnam’s land market in the future.
