Vietnam's 2024 Land Law, enacted by the National Assembly, has officially taken effect on January 1, 2025. With numerous innovative provisions, the Law establishes an important legal framework for improving land management and use mechanisms in a transparent manner and in line with practical realities. However, land prices listed in the land price tables of certain localities, as determined in accordance with Vietnam’s 2024 Land Law, have increased significantly compared to those under Vietnam’s 2013 Land Law. As a result, when households or individuals are granted permission by the State to convert the land use purpose from agricultural land to residential land, they are required to pay land use fees significantly higher than those previously applied. To address this issue, the Ministry of Finance has issued a proposal for a draft Decree amending and supplementing certain provisions of Decree No. 103/2024 on land use fees and land rental fees, which includes a significant reduction in financial obligations for converting adjacent garden or pond land to residential land.
Regulations on the conversion of agricultural land to residential land have evolved over different periods under the Land Law. According to the provisions on land use levies under Vietnam’s 2013 Land Law (Point a, Clause 2, Article 5 of Decree No. 45/2014/ND-CP): “In cases where households or individuals convert garden or pond land within the same land parcel containing a residential house in a residential area, which is not recognized as residential land under Clause 6, Article 103 of the Land Law, to residential land; or convert land originating from garden or pond land associated with a residential house, which was separated by the land user for ownership transfer or divided into separate parcels by survey units during the preparation of cadastral maps before July 1, 2004, to residential land, the land use levy shall be calculated as 50% of the difference between land use levy based on the residential land price and land use levy based on the agricultural land price at the time of the decision on land use purpose conversion by a competent state authority”. However, according to Clause 1, Article 121 of Vietnam’s 2024 Land Law, there are only general provisions on the conversion of agricultural land to residential land, without specifying cases of converting agricultural land, such as garden or pond land, within the same land parcel containing a residential house, to residential land..
The absence of specific provisions for garden or pond land within the same parcel as a residential house has resulted in higher land use levies for households and individuals when converting the land use purpose from agricultural land within the same parcel as a residential house (such as garden or pond land) to residential land, compared to the provisions under Vietnam’s 2013 Land Law.
In response to this situation, the Ministry of Finance has drafted supplementary provisions on the land use levy for cases involving the conversion of agricultural land, such as garden or pond land within the same land parcel as a residential house in a residential area, but not officially recognized as residential land, to residential land; or the conversion of land originating from garden or pond land attached to a residential house that has been separated by the land user for transferring land use rights (hereinafter referred to as “Conversion of agricultural land within the same parcel as a residential house to residential land”). According to Section 2.7, Part V of the second draft of the Proposal on the promulgation of the Government Decree amending and supplementing certain articles of Decree No. 103/2024/ND-CP on the collection of land use levies and land rents, and Decree No. 104/2024/ND-CP on the land development fund, the land use levy for converting agricultural land within the same parcel as a residential house to residential land shall be calculated as 50% of the difference between the levy based on the residential land price and the levy or rent based on the agricultural land price at the time the competent state authority’s decision on the change of land use purpose.
It is evident that the proposal to reduce financial obligations for changing the land use purpose not only aims to implement the reform objectives of Vietnam’s 2024 Land Law but also seeks to resolve obstacles and alleviate the financial burden on citizens in the process of legalizing residential houses and land. As legal regulations become increasingly practical, transparent, and people-centered, the law truly fulfills its role as a tool to ensure fairness, promote sustainable development, and support citizens in achieving stable lives and livelihoods.
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