Resolution 171: Shining a Light on Vietnam’s commercial housing projects

On 30 November 2024, the National Assembly of Vietnam issued Resolution No. 171/2024/QH15 on the pilot implementation of commercial housing projects in lands whose land use rights are to be obtained via agreements or already available (“Resolution 171”). The resolution shall take effect within 05 years from 01 April 2025.

Resolution 171 governs the implementation of commercial housing projects via voluntary land transfer methods (hereafter referred to as “Voluntary Transfer Method”), including those involving non-residential lands whose land use rights are to be obtained via agreement or already available.

In the previous legal update, CNC highlighted key points in the draft of Resolution 171. Following the official promulgation of Resolution 171 by the National Assembly, CNC will provide updates on key points of this resolution in comparison to its draft.

The possibility of implementing commercial housing projects via Voluntary Transfer Methods in non-residential lands

Download PDF file here: Resolution 171: Shining a Light on Vietnam’s commercial housing projects

The new Land Law falls short of expectations

Different from other types of real estate projects, the implementation of commercial housing projects via Voluntary Transfer Methods in non-residential lands was not permitted under the previous legal framework (prior to 01 August 2024 – the effective date of the new Land Law).[1]

On the other hand, it is nearly impossible to access sufficient residential lands to implement these projects, since the majority of new and large-scale real estate projects are undertaken on lands that were originally non-residential. This dilemma obstructs the potential development of commercial housing projects.

For this reason, real estate investors in Vietnam placed high expectations on the draft of the new Law on Land, particularly regarding policies for the implementation of commercial housing projects via Voluntary Transfer Methods in non-residential lands.

However, such policies are not approved in the new Land Law officially promulgated by the National Assembly in early 2024 which later took effect on 01 August 2024. Instead, the State issued Resolution 171 for the pilot implementation of the policy over five-year period. Accordingly, two key points of this Resolution are (i) Requirements for pilot project implementation and (ii) Criteria for selecting pilot project.

Requirements for pilot project implementation under Resolution 171

For a commercial housing project to enjoy the privileges of Resolution 171, all following requirements specified in Article 3 of this resolution shall be met:

Consistent with the district-level land use plans, or construction/urban plans;
Consistent with the approved local program and plan of housing development;
Included in the list of locations approved by the provincial People’s Council for pilot project implementation;
Approved in writing by the provincial People’s Committee regarding the land transfer agreement for pilot project implementation;
Real estate enterprises’ compliance with the requirements set out by the relevant

Requirements for pilot project implementation

Regarding the list of locations for pilot project implementation, this list shall be approved by the People’s Council simultaneously with the list of constructions and projects planned for land revocation.[2]

It could be found that, Resolution 171 obligates the local authorities to prevent the risks of policy abuse such as “legalization of wrongful acts” in projects stucking with legal problems, or mass purchase and speculation of agricultural lands to implement commercial housing projects. This is most apparent in the requirement that the provincial People’s Committee must take initiative in the approval of land transfer agreements for pilot project implementation.

Additionally, in case utilizing land that was previously used for national defense or public security purposes, the real estate enterprise is required to obtain approval in writing from the Ministry of National Defense (for land used for national defense purposes) or the Ministry of Public Security (for land used for public security purposes). Furthermore, the real estate enterprise must also ensure that such land has been handed over to the local authorities.[3]

Criteria for selecting pilot project under Resolution 171

Apart from the requirements for pilot project implementation, a commercial housing project shall also satisfy the criteria for selecting a pilot project specified in Article 4 of Resolution 171.

Between 02 options presented in the draft of Resolution 171, the official resolution has approved Option 1, opting for the “upper limit” of 30% of total additional residential lands to ensure harmonization and equality with other methods of land access such as land auction and competitive bidding.[4]

Specifically, Resolution 171 limits the total residential land area (both existing and planned) for pilot projects in a province to 30% of the additional residential land area allocated in the provincial planning for 2021-2030.

The following formula will show the calculation of such total residential land area:

Furthermore, pilot projects must also satisfy the following criteria:

Located in urban areas or areas planned for urban development;
Listed in or to be supplemented to the district’s annual land use plan;
Not included in the list of construction works and projects planned for land revocation of land and such list is approved by the provincial People’s Council (in case of land transfer agreement).

Criteria for selecting pilot project in a province under Resolution 171

For example, in Dong Nai province, under the plan for land allocation and zoning for 2021-2023 specified in Decision No. 586/QD-TTg dated 03 July 2024 of the Prime Minister of Vietnam:

The existing residential land area in the urban zone in 2020 is 6.531 km2;
The land area which is planned to be allocated for residential purposes according to the needs of the province up to 2030 is 8.444 km2;

Therefore, the upper limit of the total residential land area of Dong Nai province to be used for pilot project implementation under Resolution 171 is: 30% x (8.444 km2 – 6.531 km2) = 573,9 km2.

Comments on Resolution 171

Resolution 171 utilizes the advantage of the Voluntary Transfer Methods, which is the compromise between real estate enterprises implementing projects and land use right owners. It helps to reduce significantly social costs, administrative procedures, and claims against administrative authorities due to land revocation.

Therefore, Resolution 171 is expected to address existing challenges in the real estate market, particularly the insufficient supply of real estate products.

However, some negative outcomes on the implementation of Resolution 171 may occur, such as: oversupply of real estate products; the emergence of uninhibited residential lands and buildings; the emergence where real estate investors conduct mass purchases of land to prepare for the repurposing into residential land in the next planning.[5]

To avoid such scenarios, the competent authorities specified in Article 5 of Resolution 171 shall effectively exercise their power to supervise the implementation of this policy.

[1] Article 176 of 2013 Land Law, Article 23 of 2014 Housing Law (modified in 2020 and 2022).

[2] Article 4.2 of Resolution 171.

[3] Article 3.2 and 4.3 of Resolution 171.

[4] Page 11, Report No. 86/BC-BTNMT dated 16 September 2024 of the Ministry of Natural Resources and Environment.

[5] Page 7, Report No. 221/BC-BTNMT dated 16 September 2024 of the Ministry of Natural Resources and Environment.