How does the revised Land Law affect real estate supply?

On January 18, 2024, the amended Land Law was passed by the National Assembly and came into effect on January 1, 2025. The passage of this law is expected to significantly impact the supply of the real estate market, which is in need of a boost in this cycle.

Commenting on this issue, Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in the Southern region, believes that the adoption of the amended Land Law will have positive impacts on the Vietnamese real estate market.

Firstly, land prices will increase sustainably because the amended Land Law promotes land valuation that closely reflects market prices and improves land use efficiency. Specifically, according to the amended Land Law, the land price framework will be abolished, and land prices will be determined according to market mechanisms. This will ensure compensation rights for those whose land is subject to expropriation.

How will the amended land law affect the supply of the real estate market? (Figure 1) — The real estate market is experiencing a supply shortage across many property types.

Furthermore, the bill includes provisions for land combined with multi-purpose use, conversion of agricultural land contributing to land consolidation for production; the right to lease, joint venture and partnership for public service units; receiving transfers of agricultural land for those not directly engaged in agricultural production; expanding the cases for changing land use purposes… all these regulations will improve land use efficiency, contribute to increasing the value of various types of land, from agricultural land to non-commercial land, thereby increasing real estate prices in general.

Secondly, the supply of real estate will improve. One of the reasons many projects are delayed for extended periods is the difficulty in land clearance due to inadequate compensation. A market-based pricing mechanism will support faster land development.

Previously, access to land was not clearly regulated, but now there are specific regulations in the amended Land Law, defining which types of land can be used for commercial purposes and which types must be subject to bidding and auction. With clearer methods and regulations for investors to access land, the supply to the market will no longer be as scarce as it is currently.

How will the amended land law affect the supply of the real estate market? (Figure 2) — The passage of the amended Land Law is expected to help the market recover in the medium term.

The law also includes provisions aimed at increasing access to land for more people and providing more comprehensive protection for their rights, including expanding the scope of land use rights for Vietnamese citizens, including those residing abroad; land policies for ethnic minorities; the rights and interests of those whose land is expropriated and the implementation of land use planning; administrative procedures and the issuance of certificates to individuals and businesses – for example, receiving transfers of real estate projects, and automatic renewal for agricultural land.

However, the Director of Batdongsan.com.vn in the Southern region believes that one should not expect too much from the approval of the amended Land Law, as there will be a delay of about 8-12 months for the law to be fully understood and implemented. That is also the reason why the National Assembly approved it early, so that from now until 2025, market participants can discuss, understand, and prepare adaptation and application plans.

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