In Vietnam, private ownership over land is not recognized under the Constitution and Land Law 2013. State has been representative of the entire-people ownership of land, and perform the tasks of uniform state management of land.
1/ Regulations of Vietnam Land law
Private ownership of land is not permitted in Vietnam and the people hold all ownership rights with the State as the administrator. However, the laws of Vietnam allow ownership of a right to use land. This right is called the Land Use Right (“LUR”). LUR to foreign investors allows title holders to conduct real estate transactions, including mortgages.
There are three main regimes for investors to acquire LURs from the goverment: Allocation, Recognition and Leasing.
2/ The best way for Foreign investors to use land in Vietnam
Foreign investors may not acquire the ownership rights over the land instead they are allow to use land throught land lease.
For investors keen on leasing land in Vietnam, we recommend four available methods that investors can choose from:
- Through allocation
Land users are required to pay land use fee to the government and this option is available to investors in residential housing projects and infrastructure project in cemeteries.
- The government leases the land to the land user where the user pays rent to the government
The rental may be paid in lump sum or annually. This is in many ways like the customary system of renting.
- By a lease or sub-lease agreement
By a lease or sub-lease agreement with the landlord in an industrial zone, industrial cluster, processing zone, high-tech zone or an economic zone. The landlord is typically a commercial enterprise that has obtained land use rights under the above two mentioned options.
- By an agreement on the transfer of assets that are attached to the land
By an agreement on the transfer of assets that are attached to the land with an agreement ton the transfer of land use rights, a land lease agreement or a capital contribution with an existing land user. In such cases the investor acquiring the land use rights will become the land user of the acquired land area.
Investors can choose any of these options; however, the third method is most straightforward since the landlord in the specific zone should have completed all necessary paperwork and procedures prior to renting land.
For further information please consult our website at APOLO LAWYERS.