That is what experts have responded to the recent proposal of the Ministry of Planning and Investment which amends the conditions for being qualified as the developer of a housing project. Specifically, the amended condition relates to land source for project implementation, which is a hot issue at the moment.

According to the prevailing provisions of the 2014 Law on Housing, one of the conditions for an investor to be recognized as the developer of a commercial housing project is to lawfully possess a residential land source [1]. As a result, investors who do not own residential land fund or those who hold mixed-purpose land fund (where residential land is mixed with other types of land) must conduct several complicated legal procedures, namely procedures for land use conversion according to the laws on land, and procedures to obtain investment approval principle according to the law on investment before carrying out the procedures for recognition as the developer and implementing the project.

To address this problem, the 2020 Law on Investment (effective from 01 January 2021) has amended Article 23.1 of the 2014 Law on Housing in the direction that investors are only required to “have the lawful land use right over residential land and other types of land, which are permitted to change their use purpose to residential land by competent authorities.” [2]. As such, investors, who hold a mixed-purpose land fund with part of which is residential land, could also be recognized as project developers. However, such amendment only solves half of the problem since the land source for project development is still compelled to be partly residential land. Therefore, projects with non-residential land must go through the same complicated procedures as before, even though the area’s land use planning and zoning allow for "developing commercial housing projects".

Therefore, in the Official letter 6278/BKHDT-PC dated 17 September 2021, the Ministry of Planning and Investment proposed to further amend Article 23.1 of the Law on Housing to “1. Having the lawful land use right over residential land or other types of land, which are in conformity with the land use planning and zoning approved by competent authorities pursuant to the laws on land”. It means that investors whose land source is not residential land could also be recognized as the developer to conduct housing projects on that land, if the implementation of the project is in accordance with the approved land use planning and zoning.

If this proposal is approved, it shall be an essential change, a landmark that pose a dramatically impact on the real estate market. In addition to enriching the land source to cope with the shortage of residential land in urban areas, this regulation also helps shorten the project implementation process, diversify the housing supply leading to lowering housing price and revival of the real estate business, which has been heavily affected during the recent Covid-19 pandemic.

Than Trong Ly - Senior Associate

Hoang Thi My Huyen - Paralegal

[1] Article 23.1 and Article 22.2 of the 2014 Law on Housing

[2] Article 75.1(c) of the 2020 Law on Investment