Real Estate Enterprises Reviewing Financial Obligations Under the New Land Price List

Reviewing financial obligations enables real estate enterprises to manage land costs, contingent liabilities, and M&A risks before the annual land price list takes effect on January 1, 2026. Developers, CFOs, and legal teams should compare land allocation decisions, land lease agreements, land use conversion approvals, planning adjustments, and project transfer dossiers with the Law on Enterprises and Businesses to safeguard profit margins and prevent unexpected land use fees, rental charges, or additional financial adjustments. Long Phan Consulting provides this in-depth analysis for reference.

The Impact of the Annual Construction Land Price List Mechanism on Real Estate Project Budgets

The annual construction land price list fundamentally changes how real estate enterprises formulate project budgets. Land costs are no longer variables that can be fixed long-term, particularly for projects currently awaiting land allocation, land lease, change of land use purpose, or planning adjustments.

Critical risk lies in the legal timing. The land price list is adjusted, amended, and supplemented annually for announcement and application from January 1 of the following year, as decided by the Provincial People’s Council upon submission by the Provincial People’s Committee, pursuant to Clause 1, Article 16 of Decree 71/2024/ND-CP.

For developers, the December 31, 2025, milestone must be viewed as a strategic audit point. Enterprises should immediately review legal land dossiers, land use fee notifications, rental obligations, and planning adjustment statuses to avoid being caught off-guard when the new price list alters cash flow.

For CFOs and M&A investors, the land price list is not merely administrative data. It is a variable directly affecting profit margins, collateral asset values, disbursement conditions, and price adjustment mechanisms within project transfer contracts.

Strategic Audit of Land-Related Financial Obligations for Developers under the 2024 Land Law

Auditing financial obligations must begin with each specific circumstance that triggers land use fees, land rental fees, or additional payments. The focus is not merely on amounts already paid, but on obligations potentially subject to reassessment when a project changes land use purposes, adjusts planning, or suffers from implementation delays.

Enterprises should categorize risks into three cost groups: CAPEX for changes in land use purpose, OPEX for land rented with annual payments, and additional payments due to schedule violations. This classification enables CFOs to provision budgets according to the project’s specific legal stages.

Managing Capital Expenditure (CAPEX) for Mixed-Use Land Conversion

For commercial housing projects with mixed-use land, the cost of changing land use purposes can fundamentally alter total investment efficiency. Enterprises must calculate the differential between the land use fee after conversion and the land value prior to conversion.

Pursuant to Clause 1, Article 7 of Decree 103/2024/ND-CP, as amended and supplemented by Clause 3, Article 13 of Decree 50/2026/ND-CP, the payable amount is determined by the land use fee of the post-conversion land type minus the land use fee or land rental fee of the pre-conversion land type, with the pre-conversion land value allocated proportionately to the remaining land use term.

Land fund groups that must be independently audited before financial modeling include:

• Agricultural land expected to be converted into residential land for commercial housing development.
• Non-agricultural production and business land interspersed within project boundaries.
• Residential land and other land types used as the basis for conversion requests.
• Areas subject to detailed planning adjustments that increase land use coefficients or commercial value.

Failure to quantify this differential can lead to CAPEX overruns after capital mobilization contracts, bank loans, or M&A prices have been finalized. This is a risk that must be quantified prior to investment plan approval.

Fluctuations in Operating Expenditure (OPEX) for Annual Land Rental Funds

For commercial centers, services, warehouses, logistics, and industrial zones, annual land rental fees represent long-term operating costs. When land prices change annually, enterprises must re-forecast profit margins for each lease cycle.

Pursuant to Clause 2, Article 153 of the 2024 Land Law, annual land rental fees are applied stably for a 05-year cycle from the time the State decides to lease the land or permits land use purpose changes associated with annual land rental.

Financial constraints that must be reflected in sub-lease contracts include:

• The stability of the land rental unit price cycle for 05 years, with subsequent adjustments possible.
• Adjustment rates for the next cycle must not exceed the total national annual consumer price index (CPI) of the preceding 05-year period, pursuant to Clause 2, Article 153 of the 2024 Land Law.
• Sub-lease projects must include clauses transferring land rental cost fluctuations into commercial rental prices.
• Long-term lease contracts should provision mechanisms for price adjustments when the State re-determines land rental obligations.

For revenue-generating asset groups, the risk lies not in a single payment, but in escalating OPEX across cycles while sub-lease contracts lack corresponding adjustment mechanisms.

Quantifying Additional Payments for Delays in Putting Land into Use

Projects that are slow to put land into use may incur additional payments beyond the original budget. This cost is easily overlooked when developers only audit original land use or rental fees.

Pursuant to Clause 8, Article 81 of the 2024 Land Law, the law permits land use extensions of up to 24 months when the investor is behind schedule. Upon extension, the enterprise must pay an additional amount corresponding to the extension period, pursuant to Clause 1, Article 15 and Clause 1, Article 31 of Decree 103/2024/ND-CP.

The process for quantifying these additional payments should be deployed as follows:

• Determine the area of land not yet in use or behind schedule based on project dossiers and land allocation/lease decisions.
• Verify the extension duration, capped at 24 months, to determine the billing period.
• For land use fees, apply the formula: 2% × land price in the land price list at the time of the extension decision × extension duration in months ÷ 12, pursuant to Clause 1, Article 15 of Decree 103/2024/ND-CP.
• For land rental fees, determine additional amounts based on land area, land price in the land price list, the rental unit price ratio, and the extension duration in months ÷ 12, pursuant to Point a, Clause 4, Article 30 of Decree 103/2024/ND-CP.

These additional payments are non-deductible from compensation, support, or resettlement costs and are ineligible for exemption or reduction policies, pursuant to Clause 2, Article 15 and Point b, Clause 4, Article 30 of Decree 103/2024/ND-CP. If the project remains unused after the extension expires, the State may recover the land without compensation, pursuant to Clause 8, Article 81 of the 2024 Land Law.

Risk of unfulfilled land finance obligations in the legal due diligence of M&A projects

In real estate M&A transactions, unfulfilled land financing obligations should be considered contingent liabilities. This risk can alter the purchase price, disbursement terms, transfer schedule, and post-closing liability.

Buyers need to examine the entire land record chain, not just the certificate or investment approval decision. Key documents include land allocation decisions, land lease decisions, land use fee notices, payment receipts, tax confirmations, and planning adjustment history.

Managing Contingent Liabilities in Real Estate M&A Project Due Diligence

In real estate M&A transactions, unfulfilled land-related financial obligations must be treated as contingent liabilities. These risks can necessitate modifications to purchase prices, disbursement conditions, transfer timelines, and post-closing indemnity responsibilities.

Buyers must audit the entire land dossier chain, not merely rely on Certificates of Land Use Rights or Investment Policy Approval decisions. Critical documents include land allocation and lease decisions, land use fee notifications, payment vouchers, tax confirmations, and the history of planning adjustments.

Mandatory Tax and Land Use Fee Conditions for Project Transfers

Land-related financial obligations serve as a rigid legal prerequisite for project transfer transactions. If the transferor has not fulfilled these obligations, the buyer risks facing transaction rejection or inheriting land debts post-transfer.

Pursuant to Clause 3, Article 40 of the 2023 Law on Real Estate Business, the investor transferring all or part of a project must fulfill land-related financial obligations to the State, including land use fees, land rental fees, taxes, charges, and fees related to the transferred land area.

Transfer dossiers must include clear financial evidence to mitigate audit risks. A written confirmation from the tax authority regarding the completion of land-related financial obligations and receipts for relevant fees and charges are mandatory dossier components, pursuant to Point h, Clause 3, Article 10 of Decree 96/2024/ND-CP.

From an investment perspective, buyers must synchronize requirements under land law, real estate business law, and investment law. Project transfer transactions must satisfy conditions stipulated by laws on land, housing, real estate business, and related regulations, pursuant to Point c, Clause 1, Article 34 of the 2025 Investment Law.

Structuring Indemnity and Purchase Price Adjustment Clauses

When land-related financial obligations cannot be definitively determined prior to signing, M&A contracts must translate these risks into specific commercial mechanisms. The appropriate approach involves quantifying risks, linking them to conditions precedent, and adjusting payment cash flows.

Buyers should demand the following clause groups in Share Purchase Agreements (SPA) or Asset Purchase Agreements (APA):

• Conditions Precedent (CPs): The seller must provide confirmation of completed land-related financial obligations prior to closing or before each payment tranche.
• Representations and Warranties: The seller confirms there are no outstanding debts for land use fees, land rental fees, late payment interest, or additional obligations due to planning adjustments.
• Holdback: Retaining a portion of the purchase price to secure obligations regarding tax arrears, re-determined land values, or administrative litigation related to financial obligations.
• Indemnity: The seller indemnifies the buyer against all losses if state agencies collect obligations arising from the pre-closing period.
• Purchase Price Adjustment: The purchase price is adjusted if land use fees, land rental fees, or additional payments exceed figures in the due diligence dossier.

These clauses do not replace mandatory legal obligations. Their value lies in the financial risk allocation, protecting the buyer against land-related obligations arising after the project’s control has been transferred.

Leveraging Transitional Provisions to Optimize Project Financial Obligations

Transitional provisions are cost management tools, not merely mechanisms for processing backlog dossiers. Enterprises with projects awaiting land allocation, land use purpose changes, land valuation, or project transfers must immediately review these to select financial scenarios with lower risk profiles.

Transitional Scenarios Offering Budgetary Advantages

Transitional scenarios can create budgetary advantages that require proactive assessment:

• Land debt already notified: For enterprises with land allocation decisions, land use purpose changes, or planning adjustments issued before the new law took effect but yet to pay the remaining balance, they must pay the remaining amount and late payment interest, pursuant to Clause 1, Article 50 of Decree 103/2024/ND-CP.
• Decisions issued but land value pending: Cases with decisions on land use purpose changes or detailed planning adjustments yet to have a decided land value must be handled via the transitional mechanism and pay an amount equivalent to late payment interest, pursuant to Clause 9, Article 51 and Clause 4, Article 52 of Decree 103/2024/ND-CP.
• Land allocated with land use fees: Economic organizations having completed financial obligations and now categorized under land leasing may continue using the land for the remaining term, without being forced to switch to land leasing, pursuant to Clause 2, Article 255 of the 2024 Land Law.
• Voluntary transition to land leasing: Enterprises wishing to switch to land leasing are not required to pay land rental fees for the remaining land use term, pursuant to Clause 6, Article 51 of Decree 103/2024/ND-CP.
• Dossiers submitted but pending decision: Enterprises may continue applying old regulations or request execution under new regulations if desired, pursuant to Clause 7, Article 255 of the 2024 Land Law.
• M&A dossiers under review: Valid project transfer dossiers received under old laws but lacking results before the new law took effect shall continue to be processed under old regulations, pursuant to Clause 3, Article 83 of the 2023 Law on Real Estate Business.

The commercial value of transitional provisions lies in the right to select the timing and mechanism of application. If analysis is delayed, enterprises may miss opportunities to lock in costs, prolong late payment obligations, or decrease M&A transaction values.

Legal Appraisal and Financial Obligation Review Services at Long Phan Consulting Company

Land-related financial obligations for real estate projects are often scattered across land allocation decisions, tax dossiers, land use fee notifications, payment vouchers, and planning adjustment histories. Long Phan Consulting Company assists enterprises in simultaneously evaluating legal risks, cash flow, and the feasibility of completing M&A transactions.

Our advisory scope is designed for developers, CFOs, in-house legal counsel, and investors considering project transfers:

• Conducting legal appraisals of land allocation, land lease, change of land use purpose decisions, and detailed planning adjustment dossiers.
• Reviewing land-related financial obligations, including land use fees, land rental fees, late payment interest, additional payments, and outstanding budget debts.
• Assessing transitional risks before the annual construction land price list implementation date, particularly for dossiers awaiting land valuation.
• Establishing M&A risk matrices regarding unfulfilled land financial obligations, potential retroactive collections, and transaction approval conditions.
• Consulting on the structure of Conditions Precedent (CPs), Holdback, Indemnity, and Purchase Price Adjustment in SPAs or APAs to protect buyers against post-closing obligations.
• Representing clients in negotiations with transaction partners, financial advisors, and internal legal departments regarding land risk allocation.
• Drafting and reviewing project transfer contracts and explanatory dossiers on financial obligations for legal due diligence.

For preliminary evaluation, please send project dossiers, financial obligation notifications, land allocation decisions, or M&A dossiers via Email: info@longphanpmt.com or Zalo: 0906.735.386 to Long Phan Consulting Company.

Frequently asked questions about real estate businesses: What financial obligations need to be reviewed when applying the new land price list?

The “financial obligations review” process goes beyond simply calculating basic cash flows; it also requires businesses to thoroughly address legal risks arising from transitional clauses. Changes in pricing mechanisms or potential schedule breaches can disrupt the entire acquisition structure. Investors and investment funds need to understand the guidelines for handling specific situations to maximize commercial protection.

Conclusion

Auditing land financial obligations for Vietnam real estate projects is a vital strategic measure to control land costs, cash flow, project transfer conditions, and contingent liabilities ahead of the new annual land pricing mechanism. To avoid significant capital overruns, retroactive tax arrears, or fractured M&A deals, developers and investors must simultaneously synchronize their audits of land use fees, rental obligations, conversion costs, and transitional regulatory dossiers. Bypassing this foundational financial and legal appraisal directly triggers disastrous profit margin erosion and operational paralysis. Secure your investment by partnering with elite legal experts at Long Phan Consulting Company. Contact our senior partners immediately via Hotline 1900636389 to engineer a resilient financial and legal strategy tailored to your specific project objectives.