RESOLUTION 171/2024/QH15
The National Assembly has issued Resolution No. 171/2024/QH15 on piloting the implementation of commercial housing projects through agreements regarding the acquisition or possession of land use rights, which will be effective for 5 years from April 1, 2025.
Resolution 171/2024/QH15 regulates the implementation of commercial housing projects through voluntary land transfer mechanisms, including through agreements on acquiring and holding land use rights, for land that is not designated for residential use.
The previous legal framework (prior to August 1, 2024 – the effective date of the new Land Law) did not allow for the implementation of commercial housing projects through Voluntary Land Transfer Mechanisms for non-residential land.
Meanwhile, in practice, the access to residential land to develop projects in tier 1 city is relatively unfeasible, as most new and large-scale real estate projects are generally carried out on land plots that were initially non-residential.
However, the Voluntary Land Transfer Mechanisms was not addressed in the new Land Law passed by the National Assembly in 2024, which came into effect on August 1, 2024. Instead, the State established Resolution 171 with the aim of piloting the policy for a period of 5 years as a basis for evaluating its actual effectiveness. Accordingly, the two key issues of this Resolution are (1) the conditions for implementing the pilot project and (2) the criteria for selecting pilot projects.
- The conditions for implementing the pilot project
A commercial housing project eligible for the pilot policy must fully meet the conditions set forth in Article 3 of Resolution 171/2024/QH15, as follows:
- It must comply with district-level land use planning or construction planning, urban planning;
- It must align with the approved local housing development program and plan;
- It must be included in the list of land areas intended for the pilot project as approved by the provincial People’s Council;
- It must have written approval from the provincial People’s Committee regarding the agreement to acquire land use rights for the pilot project;
- The real estate business organization must meet the conditions stipulated by the relevant laws.
The Resolution 171 specifies the required approval levels as well as responsibility of local authorities, preventing risk of policy abuse – such as legitimization of violation for commercial projects that are already bearing legal issues, or the aggregation and speculation of agricultural land to carry out commercial housing projects. The Resolution mandates that provincial People’s Committees proactively review and approve agreements for acquiring land use rights for the pilot project.
In cases where national defense or security land areas that have been converted to other land use purposes, real estate business must obtain approval documents from the Ministry of National Defense for national defense land and from the Ministry of Public Security for security land. Additionally, these organizations must ensure that such land areas have been transferred to local authorities for management.
- The criteria for selecting pilot projects
To fully qualify, a commercial housing project, beside of meeting conditions for implementing a pilot projects, it must also satisfy the pilot project selection criteria outlined in Article 4 of Resolution 171 to benefit from the pilot policy.
- The project is located in an urban area or an area designated for urban development;
- The project must be included in and added to the district-level annual land use plan;
- The project must not be among the list of constructions or projects requiring land clearance approved by the provincial People’s Council (in the case of acquiring land use rights).
In addition, the Resolution 171 limits the total residential land area (both existing and planned) for pilot projects in a province to no more than 30% of the additional residential land area during the 2021-2030 planning period in that province. The formula to calculate total residential land area is shown as below:
For example, in the Dong Nai province, according to the land use planning vision 2021-2030 in the Decision No. 586/QD-TTg, it informs that:
- Existing residential land use in 2020: 6,531 km2
- Targeted residential land use in 2030: 8,444 km2
Thus, the maximum total pilotable land area of Dong Nai province according to Resolution 171 is equal to 30% x (8,444 km2 – 6,531 km2) = 573.9 km2.
Conclusion:
Resolution 171 leverages the benefits of the Voluntary Land Transfer Mechanism by enhancing mutual consent between real estate developers and land owners. This approach will reduce compliance costs, shorten the handover time, minimize administrative procedures, limit government intervention, and reduce litigation from land owners.
Since eligible projects under this pilot program will need to be proposed by provincial governments and approved by provincial People’s Committees, and the total pilot area is capped at 30% of the additional residential land in the 2021–30 master plan, specific details regarding which projects and developers will benefit remain unavailable at this moment.
The major beneficials of this Resolution theme include HDG, KDH and NLG, which are facing legal bottlenecks because land that is not designated for residential use.
Le Thang Anh Tuyen – Investment Department – PHFM