The rational use of land resources plays a crucial role in boosting the socio-economic development of localities.

The revised Land Law draft: Land valuation and usage rights

Since the Land Law was passed in 1993, Vietnam’s real estate market has undergone dramatic transformation in both quality and quantity. So how are these changes in productive forces reflected in the relations of production in the land sector and in the drafting of laws aimed at building a socialist-oriented real estate market?

According to legal expert Nguyen Van Dinh, many issues remain in the management and use of land. Resolution No. 11-NQ/TW on improving the socialist-oriented market economy includes mandates for improving legal frameworks and policy mechanisms to support a well-functioning real estate market.

The 13th Party Congress called for restructuring the real estate and land markets to ensure more efficient and sustainable use of land and resources - indicating that the current system is still fraught with inefficiencies.

Resolution No. 18-NQ/TW (June 16, 2022) also outlines detailed guidelines on improving real estate market information systems, strengthening legal frameworks, encouraging cashless payments in real estate transactions, and ensuring a safe, sustainable, and transparent property market.

In the past, the real estate market was often viewed as limited to urban housing. Today, it spans agricultural land, forest land, industrial zones, and products ranging from high-rise apartments and villas to condotels and shoptels.

This evolution in the production base necessitates legal reforms. The draft Land Law, submitted to the National Assembly on August 30, aims to tackle such questions.

Valuation for what purpose, and in what market?

Traditionally, one plot of land was thought to have a single “correct” value. But valuation should vary based on the purpose - be it agricultural production, residential use, loan collateral, or compensation for land recovery.

For example, land compensation rates may be only USD 60/m² for agricultural use, while the same plot - once rezoned - may be sold for USD 800–1,200/m² or more. This discrepancy is a major source of social tension and litigation.

Clause 2, Article 158 of the draft law must therefore define not just the purpose of land use, but also the goal of each valuation - whether it is for taxation, investment, compensation, or resale.

Is “market-based” pricing realistic?

A “market” implies transactions with willing buyers and sellers. However, markets are dynamic. Using data from the past 24 months (Clause 3, Article 158) for valuation is problematic - prices may have shifted drastically since then.

Moreover, most of Vietnam’s over 10,600 communes and wards lack sufficient transaction data. Only major cities and urban centers have a volume of sales that provides reliable comparables.

Even with three or more comparables, as suggested by the draft law, land size and other factors can vary so much that accurate valuation remains difficult.

Is land a commodity or a means of production?

Land expropriation for public projects exemplifies the “conflict that drives development.” While market forces could ideally direct land use efficiently, unregulated markets can cause delays, inefficiency, and social disruption. The state’s role in zoning and planning remains crucial.

Rather than trying to define whether land is a “commodity” or “productive resource,” what matters is whether it can be legally transacted. Restricting land sales risks reverting to a command economy, which no one wants.

What defines a “standard plot”?

Clause 2, Article 159 requires that areas with digital cadastral maps and land price databases must establish detailed land price tables. Yet not all areas have up-to-date digital maps.

Instead, the law should focus on building data systems - collecting and managing land information systematically. This data-centric approach, using big data and AI, aligns with best practices globally.

A comprehensive approach to land recovery

One of the most debated issues in the 2023 Land Law draft was “land recovery for socio-economic development in the national or public interest.”

Article 79 of the draft classifies public and private projects and outlines when the state may recover land for housing developments. Yet the definition of “public interest” remains ambiguous, especially when such projects benefit private developers.

Two approaches are presented: one allows local governments to decide based on technical criteria; the other distinguishes projects by size (e.g., over or under 10 hectares) and usage.

The core issue is defining the state's role. As a neutral party, the state must balance competing interests transparently. For example, developers often face lengthy delays in site clearance, with no clear timeline or assurance of acquiring “clean” land. This causes cost overruns, legal disputes, and financial strain.

A tourism infrastructure project in Quang Binh illustrates this: despite being approved in 2016 and receiving phased land allocations in 2021 and 2022, only 75% of the total land has been delivered - scattered and incomplete - stalling progress.

To fix this, the state must act as a fair intermediary and prohibit any form of financial contribution from developers in planning processes, ensuring absolute transparency.

Mandatory real estate transactions through exchanges: Pros and cons

At a recent National Assembly session, debate centered on whether transactions for future-built properties must go through real estate exchanges. While this provision was once included in the 2006 law, it was repealed in 2014. The current draft seeks to reinstate it, applying only to future-developed properties.

The Ministry of Construction argues that mandatory use of exchanges protects buyers and supports state tax collection, money laundering prevention, and market oversight.

However, the Economic Committee of the National Assembly favors voluntary transactions, citing cost concerns and the fact that licensed developers can offer sufficient transparency. Chairman Vu Hong Thanh emphasized that buyers should retain the freedom to choose whether to transact via an exchange.

Some lawmakers, like Le Thanh Hoan, propose a third-party model involving certified notaries rather than real estate exchanges, which do not serve a regulatory function. In this model, notaries ensure compliance and provide legal protection during transactions.

The revised Land Law, Housing Law, and Real Estate Business Law are expected to reshape Vietnam’s property market. While no reform is perfect, lawmakers are expected to adopt a balanced approach that ensures transparency, efficiency, and fairness for all stakeholders.

PV