New regulations of Degree No. 10/2023/ND-CP on guidelines for Law on Land
On April 3rd, 2023, the Government promulgrates Degree No. 10/2023/NĐ-CP amending, supplementing some articles of degrees guiding Land Law (“Degree 10”) and would take effect on May 20th, 2023. The promulgration of Degree 10 is expected to solve some current obstacles of real estate market, as well as increase the transparency and sustainable growth of the market.
1. Issuance of ownership certificate for condotel, resort villa are officially stipulated.
Accordingly, Decree 10 stipulates for construction works used for tourist accommodation purposes in accordance with the law on tourism on commercial and service land, if all conditions are satisfied as prescribed by the law on land, the law on construction, and the law on real estate business, the ownership right of construction works shall be certified.
The owner of the construction works shall be responsible under the law for the satisfaction of all requirements in accordance with the law on construction, the law on real estate business.
This is one of the most notable contents of Decree 10, as well as creates a positive signal for the real estate market. Because even though the current legal regulations do have stipulations on the certification of non-residential construction works ownership (Article 32 Degree No.43/2014/ND-CP), as well as Dispatchment No 703/BTNMT-TCQLDD on guidelines for the land use regime and the certification of non-residential construction works ownership (promulgrated on February 14th, 2020) by Ministry of Natural Resources and Environment, the issuance of ownership certificate for condotels, resort villas,.. still facing obstacles due to the lack of clear legal regulations.
Another issue worth noting is whether with the provisions of Decree 10, officetel can be granted a certificate of ownership or not? Because Article 48 Tourism Law 2017 do not list officetel as one of the accomodation establishments. Therefore, whether or not officetel is considered to be “other accomodation establishments” specified in Article 48.8 of Law on Tourism 2017, and thereby meeting the criteria “construction works used for the purpose of tourist accommodation in accordance with the law on tourism” to be granted ownership certificate in accordance with Degree 10 is not clear and require further instructions from competent authorities.
2. Stricter regulations on land use right auction
Land use right auction is one of the most transparent and common methods to allocate or lease land to investors to implement a project. However, in practice, the land use right auction still encounters various mistakes and inadequacies, which lead to the inability to meet expectation. With the promulgation of Degree 10, the auction of land use rights will be performed more strictly and transparently, specifically:
- Increase the deposit amount for participation in land use right auction: In accordance with the current regulation at Article 39.1 of Law on Property Auction stipulates that the auction participants must deposit 5% to 20% of the starting price of the land plot. In some cases, for the purposes of gathering more auction participants, the rate of 20% is not applied. Therefore, in many localities, there has been a situation where auction participants cancel their deposit because the amount is not too large. To limit this situation, Degree 10 has set a fixed amount of deposit, which is 20% of the starting price of the land plot.
- Limit the auction participants: To avoid the “Blue team – Red team” situation during the auction, Degree 10 has further specified that enterprises with cross-ownership in accordance with the law on enterprise shall not be allowed to participate in the auction together.
- Prior to the auction of land use right, 1/500 planning must be presented: although there are plenty of oppositions during the drafting process, Degree 10 has officially supplemented approved 1/500 planning as one of the requirements to put the land plot on auction in cases the land is used for a residential construction project. On one hand, this provision is expected to boost the effectiveness of land use right auction, due to the determination of starting price is performed after 1/500 planning has been presented, the starting price would be closer to the market price. However, on another hand, the 1/500 planning made by state agencies could be unsuitable for the business demands of the investors, or the investors might need to make changes to the 1/500 planning to meet their demands, which could cost lots of time and money.
3. Clarifications on the criteria for permitting the change of land use purpose of land for rice cultivation, land with protection forest, land with special-use forest to implement investment project
In accordance with the current regulations, the requirement to permit the change of land use purpose of land for rice cultivation, land with protection forest, land with special-use forest to implement investment project include the approval of National Assembly, or Prime Minister, or provincial People’s Council (depending on the size of the land area) and the procedures specified in Article 68 Degree No. 43/2014/ND-CP (amended, supplemented by Degree No. 148/2020/ND-CP). Howerver, the criteria for the competent authority to consider and decide whether to allow the change of land use purpose or not are not clearly guided but scattered in many different legal documents (law on investment, law on land, law on environmental protection, etc.).
To remedy this problem, Degree 10 has provide clearly provision on specific requirements, criterias for permitting the change of land use purpose for land for rice cultivation, land with protection forest, land with special-use forest to implement investment project, specifically:
- Having an investment project approved for investment policies or granted an investment registration certificate.
- Appropriate with the district-level land use planning, investment projects included in the approved list of district-level annual land use plan.
- Having an alternatives forest-planting or documents recording the fufillment of alternative forest planting fund submission obligation in accordance with the law on alternatives in cases of changing land use purpose of land with protection forest, land with special-use forest to other purposes; having an plan for the use of land surface and documents recording the fufillment of financial obligation for the protection, growth of land for rice cultivation in accordance with law in cases of changing land use purposes of land for rice cultivation to other purposes.
- Having preliminary environment impact evaluation, environment impact evaluation in accordance with the law on environment protection.
4. Other new regulations
Degree 10 supplement instruction on the procedures of land allocation, land lease in cases only one person register for the auction for land use rights or the auction fails, or only one investor register for the investor selection bidding. In such cases, the competent authority will perform the land allocation or land lease similar to the case of land allocation or land lease without land use right auction.
Besides that, Degree 10 also supplement stipulation on provincial People’s Committees’ responsibility to issue decision on approval of specific land price within 90 days from the date competent authority issues decision for land allocation, land lease, change of land use purpose, permission to change from annual payment land lease to one-time payment land lease, extension of land use duration, amendment to land use duration. This provision is expected to elevate the responsibilities of competent authorities, thereby limiting the possibilites of some projects being stuck at land use price determination stage due to the competent authorities, while the Employer could not submit land use price despite his desire to do so.