Impact of Land Law 2024 on the Real Estate Market

The impact of Land Law 2024 on land prices and the real estate market creates fundamental changes in property valuation and transaction mechanisms. The new law abolishes the land price framework, replacing it with an annually updated land price list to reflect actual market values. This analysis details the new regulations and the law’s effects on the 2025 real estate market.

New Provisions of Land Law 2024 for Land Prices and the 2025 Real Estate Market

Effective from January 1, 2025, the Land Law 2024 is a comprehensive reform, introducing significant changes to Vietnam’s real estate (RE) market.

Abolition of the Land Price Framework

The Land Law 2024 completely removes the land price framework, a pivotal change in Vietnam’s land valuation system. Instead, land price lists will be developed based on actual market values as stipulated in Article 159 of the Land Law 2024, no longer dependent on a government-issued framework. This regulation marks a transition from an administrative pricing mechanism to a market-based one, realizing the objective stated in Subsection 2, Section IV of Resolution 18-NQ/TW dated June 16, 2022.

Furthermore, under Clause 5, Article 158 of the Land Law 2024, guided by Articles 4, 5, 6, and 7 of Decree 71/2024/ND-CP (effective August 1, 2024), land valuation will use four scientific and transparent methods:

• Comparison Method: Adjusting the prices of comparable land parcels (similar use purpose and influencing factors) that have been transferred on the market or successfully auctioned.
• Income Method: Dividing the average annual net income from a land area by the average 12-month savings deposit interest rate of state-owned commercial banks.
• Surplus Method: Subtracting the estimated total development costs from the estimated total development revenue of a land parcel, based on its highest and best use under approved plans.
• Coefficient Method: Multiplying the price in the land price list by a land price adjustment coefficient issued by the provincial People’s Committee, based on a comparison with common market prices.

Abolishing the land price framework is the most significant impact of Land Law 2024. This change aligns land prices with their real value, protects citizens’ rights during state land recovery, and is expected to increase transparency and reduce corruption.

Annual Updates to the Land Price List

Another groundbreaking change in the Land Law 2024 is the annual update of the land price list, replacing the previous five-year cycle.

According to Clause 3, Article 159 of the Land Law 2024, provincial People’s Committees will formulate and submit the first land price list to the People’s Council for approval, to be published and applied from January 1, 2026. Annually, the People’s Committee must submit adjustments and supplements for approval, effective from January 1 of the following year. The Ministry of Natural Resources and Environment anticipates that each locality will have different adjustment margins, affecting the real estate market.

Annual updates will have a considerable impact of Land Law 2024 on property prices, project development costs, and land-related transactions. The new price list will directly affect individuals and households through the determination of auction starting prices. Real estate projects valued using the surplus method are not directly affected, but there is an indirect impact as higher land prices for citizens lead to higher land transfer costs for developers.

New Regulations on Land Use Rights Auctions

To enhance transparency and fair competition, the Land Law 2024 tightens regulations on land use rights auctions. A key change is the clear distinction between auctions for “clean land” (cleared sites) and bidding for investors on land that has not undergone site clearance.

Under Clause 6, Article 125 of the Land Law 2024, an auction is considered unsuccessful in cases including:

• Cases specified by the Law on Property Auction.
• Only one person registers for the auction by the deadline.
• Multiple people register, but only one participates or makes a valid bid.

This replaces land allocation via administrative decision, creating a more transparent and competitive mechanism. According to Article 55 of Decree 102/2024/ND-CP (July 30, 2024), organizations participating in auctions must meet conditions including:

• Fulfill requirements in Clause 3, Article 125 of the Land Law 2024.
• Pay a deposit equal to 20% of the land parcel’s total value based on the starting price.
• A corporate group must appoint one member company to participate.
• Not be prohibited from participating in auctions under law.
• Meet housing and real estate business law requirements for relevant projects.

Individuals participating in auctions must meet conditions including ensuring the provisions of Clause 4, Article 125 of the Land Law 2024 and committing to establishing an economic organization if undertaking an investment project.

The stricter conditions, especially the 20% deposit, will filter for financially capable investors, helping to optimize state budget revenue and shape a stable, transparent, and sustainable real estate market.

Land Allocation and Lease without Auction

Based on future guidance, such as that anticipated from Clause 4, Article 7 of the prospective Decree 151/2025/ND-CP dated June 12, 2025 (effective July 1, 2025), provincial People’s Committees have the authority to decide on land allocation without auction in specific cases under Article 124 of the Land Law 2024, provided certain conditions are met:

• The project serves a public purpose with a commercial element.
• The project has been approved by the National Assembly or Prime Minister and falls under land recovery cases specified in Clause 31, Article 79 of the Land Law 2024.
• The project involves leasing land with annual payments from a land fund managed by a state agency.
• Other cases not specified in Articles 125 and 126 of the Land Law 2024.

This provision offers flexibility for special projects while ensuring state oversight, balancing competitive land access with strategic public interest needs.

Impact of Land Law 2024 on Land Prices and the Real Estate Market

The law is expected to create a fairer, more transparent playing field. However, concerns exist that new regulations may inadvertently increase real estate prices. Below is an analysis of the positive and negative impacts.

Positive Impacts

The impact of Land Law 2024 extends beyond legal adjustments, creating comprehensive positive effects:

• The annual land price list enhances market transparency and reflects the true value of land.
• Public land transactions create a level playing field for all market participants.
• Increased competition among developers helps reduce land speculation and promotes efficient land use.
• Market-based pricing for compensation accelerates site clearance for investment projects. Under the new regulations, compensation aligns with market principles, making it more agreeable to land users.
• Updated price lists streamline administrative procedures for determining specific land prices.
• It resolves administrative bottlenecks, protecting the rights and interests of land users.
• Auction-based pricing reflects true market value, eliminating subjective valuation and generating fair revenue for the state.

Negative Impacts

Despite its goals, the Land Law 2024 presents negative impacts that could drive up land and housing prices:

• First, the Ministry of Construction notes that market-based land pricing will significantly increase development costs. Land-related costs (land use fees, rent, compensation) account for 7-20% of a condominium project’s total cost and 25-50% for a villa project.
• Second, while auction regulations are strict, they may not be sufficient to curb land speculation, especially in a rising market.
• Third, the 20% deposit requirement may create a financial barrier for small and medium-sized enterprises (SMEs), potentially increasing input costs and final product prices.

In summary, the impact of Land Law 2024 is multifaceted. It faces short-term challenges, including higher investment costs from market-based valuation, financial hurdles for SMEs, and remaining loopholes in controlling land speculation.

Legal Consulting and Due Diligence Services from Long Phan Consulting Company

With the significant changes from the Land Law 2024, understanding legal regulations is critical. Long Phan Consulting Company provides comprehensive legal consulting and due diligence services for real estate projects. Our services include:

• Reviewing and assessing the legal status of project land.
• Advising on procedures for obtaining investment policy approval.
• Guiding the completion of investment approval dossiers.
• Consulting on land allocation/lease procedures.
• Providing specialized advice during design appraisal and commissioning.
• Drafting and reviewing project-related contracts.
• Acting as an authorized representative to submit dossiers, work with state agencies, and deliver results to the client.

With the motto “Trust for Solutions,” Long Phan Consulting Company is committed to helping clients achieve legal compliance and optimize benefits in real estate transactions.

Frequently Asked Questions on the Impact of Land Law 2024

The new land price list applies from 2026. How will land prices for taxes and compensation be determined in 2025?

In 2025, transitional regulations will apply. According to Clause 1, Article 257 of the Land Law 2024, the land price lists issued under Land Law No. 45/2013/QH13 will remain in effect until December 31, 2025. Provincial People’s Committees can adjust these lists if necessary to match local conditions.

Is the compensation price for state land recovery the market price?

According to Point e, Clause 1, Article 160 of the Land Law 2024, the specific land price for compensation is determined using the valuation methods in Clause 5, Article 158 (comparison, income, surplus, coefficient). This ensures the price reflects actual market value based on the principles in Point a, Clause 1, Article 158. Therefore, the compensation price is a specific land price determined by market-based principles.

What is the purpose of the auction deposit, and what happens if it is forfeited?

The deposit ensures the investor’s commitment to the auction. Clauses 3 and 4 of Article 125 of the Land Law 2024 require participants to meet the conditions of the Law on Property Auction. Referencing Article 39 of the Law on Property Auction 2016, the deposit amount is agreed upon by the auction organizer and the asset owner.

Does the new law present a challenge or an opportunity for SMEs?

The main challenge is meeting the financial and experience requirements for auctions and bidding under Articles 125 and 126. The opportunity lies in increased transparency. The abolition of the price framework creates a fairer market where competent enterprises can access land without relying on personal connections.

Do landowners need to re-issue their Land Use Rights Certificates (Red Books) under the new law?

It is not mandatory. Clause 3, Article 256 of the Land Law 2024 affirms that certificates issued before the law’s effective date remain legally valid. A new certificate is issued only upon request or when a transaction occurs.

Conclusion

The Land Law 2024 brings fundamental changes to land management, directly affecting land prices and the real estate market. The annual land price list and auction regulations will increase transparency but also raise investment costs. For expert legal advice on land matters, please contact Long Phan Consulting Company via hotline 1900 636389 for dedicated support.