Regulations on Land Fund for Social Housing Development

Regulations on land fund for social housing development have created a framework to remove lingering obstacles in preparing construction sites for social housing. Clearly defining responsibilities between local management agencies and investors contributes to ensuring that land funds are arranged promptly, synchronously, and in line with actual needs. Thereby, the implementation of social housing projects becomes more proactive, enhancing land use efficiency. In this article, Long Phan Consulting Company will clarify how this land fund allocation mechanism operates.

Principles for allocating land for social housing development

The Provincial People’s Committee is mainly responsible for determining needs and arranging land funds suitable to local conditions. This arrangement must ensure infrastructure connectivity and access to public services for residents.

According to Clause 1, Article 83 of the Housing Law 2023, land funds must be arranged according to approved provincial housing development programs/plans, including independent land funds and land funds within commercial housing projects. Specifically (Clauses 2 & 3):

• Special, Class I, II, III Urban Areas: Based on Government regulations, the Provincial People’s Committee decides that commercial housing investors must reserve a part of the residential land area (with technical infrastructure) within the project for social housing, OR arrange land funds at another location, OR pay an equivalent amount.
• Other Urban Areas: The Provincial People’s Committee decides based on local conditions.

Key Principle (Clause 4): Land funds must align with identified needs, ensure connection with the area’s technical/social infrastructure, and suit the living/working needs of beneficiaries. This prevents isolated social housing zones.

Sources of land for social housing development

The 2023 Housing Law has detailed regulations on land resources for the formation of social housing land funds. Diversifying land sources helps resolve land acquisition issues and clearly defines the responsibilities of each entity in creating clean land funds. The land source structure is clearly divided into three main groups, corresponding to different legal mechanisms to suit the practical realities of each locality.

20% of the land is allocated to commercial housing projects

 This is the dominant source. According to Clause 1, Article 17 of Decree 100/2024/ND-CP, in Special, Class I, II, and III urban areas, commercial housing investors must reserve a minimum 20% of residential land (with infrastructure) for social housing. Options for fulfilling this obligation (Clause 2, Article 83 Housing Law 2023):

• Direct Construction: Investor builds social housing on the 20% land fund.
• Handover: Transfer the 20% land fund (with infrastructure) to the State.
• Land Swap: Arrange equivalent land (with infrastructure) at another location outside the project scope.
• Payment: Pay an amount equivalent to the value of the 20% land fund (subject to strict criteria).

Land allocated directly by the State

According to Article 83 of the Housing Law 2023, this includes:

• Unused land planned for conversion.
• Land recovered/rearranged from inefficient use (relocated factories, delayed projects, public assets).
• Land in industrial parks dedicated to worker accommodation.

Land allocated from public investment projects for social housing

• The State acts as the investor using public budgets/bonds/local housing development funds (Article 80 Housing Law 2023). These projects are strictly managed for leasing, lease-purchasing, or selling at state-regulated prices.

Responsibilities of the project developer regarding land allocated for social housing

Investors fulfill obligations under Articles 84 and 85 of the Housing Law 2023:

• Construction: Must directly invest and construct according to approved planning/schedule. Transfer of land use rights as divided plots for self-construction is prohibited. Must have financial capacity/guarantees.
• Handover & Compliance: If handing over the 20% land fund, it must be “clean” land with essential infrastructure. Construction must comply with National Technical Regulations and standards.
• Consequences of Violation: Failure to perform correctly leads to land recovery, administrative penalties, or project revocation, affecting future bidding capacity.

>>> See more: Selection Of Investors for Social Housing Projects via Bidding

Responsibilities of State agencies in managing land funds for social housing

• Provincial People’s Committee: Decides on the 20% land fund obligation in Class III+ urban areas; approves land swaps/payments; arranges budgets for compensation/external infrastructure.
• Departments (Construction/Natural Resources & Environment): Advise on needs/planning; appraise investment proposals/land prices; monitor compliance; prepare bidding documents.
• Inspection: Regular checks to detect violations (misuse, abandonment) for strict handling, including coercion/recovery.

Long Phan Consulting Company provides land and social housing consulting services

Long Phan Consulting Company provides comprehensive solutions, from investment preparation to transaction completion, helping clients minimize risks. We structure our support into the following key areas:

• Land allocation obligation and investment procedures consulting: We assist investors in accurately determining the 20% land allocation obligation in commercial projects, analyzing the advantages and disadvantages of each option (construction, handover, payment) to make the optimal decision.
• Consulting on conditions and procedures for social housing transactions: For individual clients, Long Phan Consulting provides services to review documents proving eligibility, income, and residency to ensure they meet the criteria for purchasing or lease-purchasing social housing. We advise on drafting and negotiating sales contracts and lease-purchase contracts, ensuring terms regarding selling price, payment schedule, and restrictions on transfer of ownership.

Frequently Asked Questions About Regulations on land fund for social housing development

Below, Long Phan Consulting Company provides some frequently asked questions regarding regulations on land fund for social housing development. We invite interested clients to refer to this information:

Are commercial housing projects in type IV and type V cities required to allocate 20% of their land for social housing construction?

Currently, the mandatory requirement to allocate 20% of the total residential land area in projects with completed infrastructure for social housing only applies to projects in special, type I, type II, and type III urban areas. For other urban areas (types IV and V), the provincial People’s Committee will determine specific criteria based on local conditions, and will not rigidly apply this ratio as in large cities.

Legal basis: Clauses 2 and 3 of Article 83 of the Housing Law 2023; Clause 1 of Article 17 of Decree 100/2024/ND-CP, amended and supplemented by Decree 261/2025/ND-CP.

Is the developer allowed to conduct commercial business on land designated for social housing?

The investor is allowed to allocate a maximum of 20% of the total residential land area within the project, after the technical infrastructure has been invested in, for the construction of commercial, service, and housing facilities. The investor is allowed to account for this area separately and receive all profits from it to offset costs and reduce the selling price of social housing.

Legal basis: Point d, Clause 2, Article 85 of the Housing Law 2023; Article 23 of Decree 100/2024/ND-CP, amended and supplemented by Decree 261/2025/ND-CP.

What fees are included in the payment required if the investor chooses the option of paying 20% ​​of the land value?

This amount comprises two main components:

(1) Land use fees for 20% of residential land area are determined according to land law;

(2) The amount equivalent to the cost of investing in the construction of technical infrastructure systems.

Legal basis: Clause 2, Article 19 of Decree 100/2024/ND-CP, amended and supplemented by Decree 261/2025/ND-CP.

What are the conditions under which a developer can exchange land allocated for social housing for a location outside the project’s boundaries?

To be eligible for land swapping, the investor must possess other land that conforms to the land use plan and is located within the same urban area as the project. This swapped land must have an equivalent residential land area or value to the 20% land allocation in the original project and must have already had its technical infrastructure developed.

Legal basis: Clause 1, Article 18 of Decree 100/2024/ND-CP, amended and supplemented by Decree 261/2025/ND-CP.

What is the maximum profit margin allowed for developers when building social housing?

The maximum profit margin for the investor is 10% of the total construction investment cost for the social housing area. This cost includes construction costs, land compensation costs, loan interest, and other reasonable expenses allocated to the project by the enterprise.

Legal basis: Point c, Clause 2, Article 85 of the Housing Law 2023; Clause 1, Article 22 of Decree 100/2024/ND-CP, amended and supplemented by Decree 261/2025/ND-CP.

Conclusion

Compliance and flexible application of regulations on social housing land funds are key to sustainable development. Long Phan Consulting Company is ready to accompany clients to resolve complex issues. Please contact the hotline 1900636389 for professional support.