How does the Land Law (amended) affect real estate supply?

On January 18, 2024, the Land Law (amended) was passed by the National Assembly and will take effect from January 1, 2025. The passage of this law is expected to strongly affect the supply of the real estate market, which is in need of a boost in the cycle.

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

Firstly, land prices will increase sustainably because the Land Law (amended) promotes land pricing close to market prices and improves land use efficiency. Specifically, according to the Land Law (amended), the land price framework will be removed and land prices will be determined according to the market mechanism. This will ensure compensation rights for subjects whose land is subject to recovery.

How does the revised land law affect the supply side of the real estate market? — The real estate market is lacking supply in many types.

In addition, the bill stipulates multi-purpose land use, conversion of agricultural land to contribute to land accumulation for production; right to lease, joint ventures and associations for public service units; receiving transfer of agricultural land for subjects who are not directly involved in agricultural production; expanding cases of land use purpose conversion... All of these provisions will improve land use efficiency, contributing to increasing land prices from agricultural land, non-commercial land, etc., thereby increasing real estate prices in general.

Second, the real estate supply will improve. One of the reasons why many projects have been delayed for a long time is the difficulty in land clearance due to inadequate compensation. The market-based pricing mechanism will support faster land fund deployment.

If in the past, access to land was not clearly regulated, now there are specific regulations in the Land Law (amended), determining which types of land are used for commercial purposes, and which types of land serve which needs, which must be through bidding and auction. When investors have clearer methods and regulations to access land funds, the supply to the market will no longer be as scarce as it is now.

The law also has provisions to increase access to land for more people, more fully protecting their rights, including expanding the scope of land use rights for Vietnamese citizens, including those residing abroad; land policies for ethnic minorities; rights and interests of people whose land is recovered, implementing land use planning; administrative procedures, granting certificates to people and businesses - for example, receiving transfers of real estate projects, automatic extension for agricultural land.

However, the Director of Batdongsan.com.vn in the Southern region said that we should not expect too much that the passage of the Land Law (amended) will make the market recover quickly because there will be a delay of about 8-12 months for the Law to be absorbed and implemented. That is also the reason why the National Assembly passed it early, so that from now until 2025, market participants can discuss, understand and prepare adaptation and application plans.

Source