LAND FUND FOR CONSTRUCTION AND DEVELOPMENT OF SOCIAL HOUSING IN VIETNAM 2025
THE REGULATION REGARDING LAND FUND FOR CONSTRUCTION AND DEVELOPMENT OF SOCIAL HOUSING IN VIETNAM – CURRENT SITUATION AND SOLUTIONS
Luu Phi Yen
National Economics University
Abstract: In Vietnam, social housing is a highly humane social welfare policy that ensures everyone’s right to shelter. In the process of constructing and developing this type of housing, land funds are one of the most critical and essential conditions.
However, in the context of the Vietnamese real estate market experiencing many fluctuations and changes in the legal framework regarding land funds, along with observing the allocation and formation of land funds for social housing still facing many issues, more decisive actions are required.
This article focuses on studying the legal regulations on land funds for social housing construction, combining with the summary of the implementation process of this model, and observing the practical reality to evaluate and point out that the law and the implementation of the law on land funds for social housing have achieved some successes, but there are still limitations that need to be addressed.
Therefore, the article proposes several recommendations and insights on improving the legal framework and enhancing the implementation of laws on land funds for this type of housing in the future.
Keywords: social housing, land funds, real estate market.
Introduction
The Urgency of the Topic
In recent years, social housing policy has received increasing attention as the economy faces crises and epidemics, making people’s lives more difficult. Although nominally increasing, the basic wages do not reflect the real situation, as people’s income does not increase and may even decrease due to economic downturns and high inflation. The national land fund is limited, while the population continues to grow, leading to very high land prices, which restricts many people’s ability to access housing.
Given the volatile socio-economic situation, policies and regulations related to investment and enjoyment of social housing in Vietnam have been adjusted and improved. However, the policies and legal regulations on land funds for social housing construction still have many gaps and limitations.
The application of these policies and regulations in practice still faces many inadequacies and is not truly effective, especially when witnessing the fluctuations in the domestic real estate market. This leads to obstacles and hindrances in the management and operation of this specific housing model.
The socio-economic and legal context described is the reason for the article focusing on the topic “Laws on Land Funds for the Construction and Development of Social Housing in Vietnam – Reality and Solutions.” The aim is to analyze several related legal issues and evaluate the practical application of legal regulations to propose recommendations and suggestions, contributing to improving the legal framework for the allocation and formation of land funds for social housing and enhancing the effective implementation of social housing policies in Vietnam in the future.
Research Objectives
The article studies theoretical and practical issues on the topic to propose directions and recommendations to improve the effectiveness of law implementation.
Research Subjects
The article examines legal regulations on land funds for social housing construction, combined with the practical allocation and formation of land funds for this type of housing.
Research Methods
– Theoretical Research Method: This method involves collecting information through reading books, newspapers, and documents to identify concepts and ideas that form a theoretical foundation for the topic.
– Document Inheritance Method: This method selectively inherits existing documents related to the research problem, using available materials to build and develop the necessary data for the study.
– Practical Research Method: These methods directly impact the practical subjects to clarify their nature and laws.
– Synthesis, Analysis, and Comparison Method: The process of studying and processing data to synthesize information, analyze, and summarize information from various sources to draw valuable conclusions and insights for the research objectives.
Research Scope
The article studies the period from 2014 to 2024.
I. Legal Provisions on Land Funds for Social Housing Construction
- Overview of Land Funds for Social Housing Development
Vietnamese law has specific regulations on land in general and in various specific fields, reflected in different legal institutions, including those on the formation and development of land funds.
Land funds can be understood as land areas managed by competent state agencies, allocated for appropriate use and exploitation purposes. The land allocation plan must comply with legal regulations, formed based on the specific conditions of each locality, such as topography, population-society, planning, budget, development goals, and other factors.
In the field of social housing, land funds are one of the essential conditions, a foundational resource, and play a decisive role in the construction and development of this model. Generally, land funds for social housing are formed from two main sources according to the 2023 Law on Housing: independent land funds for social housing development and land funds within commercial housing development projects as stipulated in Clause 1, Article 83 of this Law.
The regulation on land funds for nhà ở xã hội development is stipulated with a clear area ratio from Decree No. 188/2013/ND-CP. From here, allocating a 20% proportion of housing project land for nhà ở xã hội has become an obligation for investors, binding responsibility to localities.
Decree No. 100/2015/ND-CP (Decree 100) and Decree No. 49/2021/ND-CP (Decree 49) amending and supplementing Decree 100, fundamentally maintain the 20% ratio but expand, detail, and specify the applicable subjects, and supplement regulations on handling measures when the 20% land fund is not suitable with the local planning and development orientation.
These regulations are crucial in ensuring that social housing projects have sufficient land resources, promoting their development, and addressing housing needs for various socio-economic groups in Vietnam.
- Sources of Land Funds for Social Housing Development
– Land Funds for Social Housing within Commercial Housing Projects and Urban Development Projects:
According to Article 5 of Decree 100, as amended and supplemented by Decree 49, the obligation to create land funds for social housing is carried out by investors in commercial housing construction projects and urban development projects with a land use scale of 2 hectares or more in special and Class I urban areas, or 5 hectares or more in Class II and III urban areas.
This regulation requires each project to allocate 20% of the total residential land area within detailed planning schemes approved by competent authorities, which have invested in technical infrastructure systems for social housing construction.
Notably, Clause 2, Article 5 of this Decree, as amended and supplemented by Clause 4, Article 1 of Decree 49, states: “For commercial housing projects and urban development projects with a land use scale of less than 2 hectares in special and Class I urban areas or less than 5 hectares in Class II and III urban areas, the investor is not required to allocate 20% land funds and has the obligation to pay land use fees for the entire project according to regulations.”
Due to the practical implementation of regulations allowing projects with an area of less than 10 hectares to choose the form of fulfilling social housing obligations under Decree 100, a land fund shortage arose. Thus, Decree 49 amended the project scale requiring land funds for social housing (smaller projects are allowed to pay money according to land law).
This amendment stipulates that projects with a land use scale of 2 hectares or more in special and Class I urban areas, or 5 hectares or more in Class II and III urban areas, must allocate land funds for social housing to address the shortage of 20% land funds for social housing development. A major cause of this shortage was that most investors chose, and localities allowed, projects under 10 hectares to fulfill obligations by paying money.
During the allocation of the 20% land area for social housing construction, if changes in general planning, sub-zone planning, or detailed planning make the 20% land fund allocation inappropriate, the provincial People’s Committee must report to the Prime Minister for consideration and approval.
When approved, the provincial People’s Committee is responsible for clearly identifying the location and area of land to be reallocated at another site within the locality. They will handle the allocation, leasing, and determination of land use fees for the 20% land fund of the project following land and related legal regulations. The revenue generated must be added to the local budget for investing in social housing construction within the locality.
Additionally, for commercial housing and urban development projects that selected investors before the effective date of this Decree but do not yet have the 20% land fund, if the project is reassigned to another investor after the Decree takes effect, the new project investor must prepare and adjust the planning to allocate the 20% land fund as required.
For social housing projects invested by the state budget and directly implemented by the State, the provincial People’s Committee must comply with these regulations. Depending on the central budget scale allocated to the project, the provincial People’s Committee has the authority to independently determine the land fund or collaborate with the Ministry of Construction.
– Land Funds Outside Commercial Housing Projects and Urban Development Projects for Social Housing Construction:
According to Article 56 of the 2014 Law on Housing regarding land funds for social housing development, besides land funds within commercial housing and urban development projects, it also includes: state-allocated land for rental, lease-purchase, or sale; state-leased land for rental housing construction; legally owned residential land of organizations, households, and individuals for social housing construction.
The land must meet specific conditions prescribed by relevant laws. For example, legally owned residential land of organizations, households, and individuals for social housing construction needs to meet construction planning conditions and other legal regulations such as: “…complying with construction planning; not located in prohibited construction areas; not violating protection corridors of transportation, irrigation, dike, energy works, historical-cultural relics, and other protected areas under the law; not in areas prone to landslides, flash floods, inundation, or polluted by industrial waste, landfill, cemetery; not encroaching public land and free from land disputes.” It should have a posted usage regulation in a visible place and ensure the construction of essential works.
These minimum requirements establish a framework for investing in social housing projects, ensuring housing standards. Additionally, each locality has different conditions and requirements depending on their land use planning and geographical, economic, and social conditions.
For social housing and worker housing in industrial zones, according to Official Letter 261/BXD-QLN in 2022, when planning and approving the construction of an industrial zone, the competent authority must clearly determine the suitable land area for building social housing and union facilities to ensure synchronization of technical and social infrastructure, targeting workers and laborers in the industrial zone.
Article 6 of Decree 100, as amended and supplemented by Clause 5, Article 1 of Decree 49, stipulates that if an industrial zone is being formed, the provincial People’s Committee is responsible for directing and organizing land clearance and investing in the technical infrastructure of the social housing area for workers and laborers in that industrial zone according to the approved planning and transferring it to the social housing project investor.
If an industrial zone has been established but does not meet the housing needs of workers and laborers, the provincial People’s Committee must organize, appraise, and approve (or adjust) the planning to supplement suitable land funds for social housing development. They must also handle compensation, land clearance, and land recovery to allocate to the social housing project investor.
If industrial zones have not fully utilized their industrial land area, the competent state authority has the right to adjust the industrial zone planning to allocate land for social housing and union facilities for workers and laborers in that industrial zone as specified in Clause 9, Article 77 of the 2020 Investment Law.
The 2023 Law on Housing essentially maintains the sources of land funds as stipulated in points a, b, and c, Clause 3, Article 56 of the 2014 Law on Housing. However, legally owned residential land by organizations for social housing investment is narrowed by the new regulation at point d, Clause 6, Article 83 of the 2023 Law on Housing: enterprises, cooperatives, and cooperative unions meeting statutory conditions.
Additionally, legally owned residential land by households is not subject to this regulation. Thus, the regulations on land for social housing development in the 2023 Law on Housing are specific, narrowing the scope, and focusing on the main sources, emphasizing the key land resources for social housing development.
The 2014 Law on Housing assigns the provincial People’s Committee the responsibility for identifying the land fund for social housing development. However, the 2023 Law on Housing requires the provincial People’s Committee to fulfill land allocation obligations in one of three forms: deciding that commercial housing project investors must allocate part of the residential land area, allocate social housing land funds outside the project scope, or pay an equivalent amount of money for the land fund value as stipulated in Article 83 of this Law.
Thus, while the 2014 Law on Housing had a broad scope regarding land funds, the new law introduces a common framework for determining and allocating land funds, limiting the forms of obligation fulfillment for localities. This change aims to facilitate management and maximize the effective utilization of land resources.
II. Current Situation of Land Fund Allocation and Related Incentive Policies
In compliance with the regulations in Decree 100, as amended and supplemented by Decree 49, which tightens the formation of land funds for social housing development, localities have been implementing suitable allocation and planning according to their specific characteristics.
Overall, a certain extent of land funds for social housing has been established and allocated to facilitate investors in implementing projects.
Several localities have shown significant interest in developing social housing and have excelled in mobilizing resources, such as Binh Duong, Quang Ninh, and Hai Phong, with projects focused on rational planning and allocation. For instance, Viglacera Corporation implemented a project in Quang Ninh in October 2023, located in a prime area on a hill overlooking Ha Long Bay, a “golden” land plot in the city center of Ha Long with synchronized and modern technical infrastructure.
However, many localities still face difficulties in creating, allocating, and using land funds according to legal regulations. Establishing land funds remains challenging and lacks sufficient attention and thoroughness, despite the crucial goal of utilizing land resources effectively in investment and construction.
Firstly, the regulation requiring a 20% land fund in commercial housing and urban development projects for social housing and the implementation guidelines have not been fully effective, creating difficulties in social housing construction and causing a lack of proactivity in land fund establishment:
– For commercial housing and urban development projects, allocating 20% of residential land for social housing as required by law can result in poor aesthetics, lack of uniformity and consistency within the same system, reduce investment efficiency, and make it difficult to meet and provide services and amenities for residents.
According to the Ho Chi Minh City Department of Planning and Architecture’s report on promoting social housing and worker housing in industrial zones, having both social housing and commercial housing in the same project creates challenges for investors in business, operation, and exploitation.
Even when investors use different methods to meet and ensure living needs, the disparity in form and quality can still lead to discrimination risks.
– From the investors’ perspective, many are reluctant to build social housing alongside commercial housing within the same project’s planning because it lowers the project’s value and the selling price of commercial apartments. In reality, housing value is determined not only by construction costs and housing quality but also by location and accompanying social amenities.
Meeting the needs of two different groups with varying incomes and payment capabilities within the same housing system remains a difficult problem. Additionally, Decree 49 allows for the exchange of the 20% land fund, leading many commercial housing project investors to propose exchanging the 20% land fund due to planning incompatibility. The time for the Prime Minister to consider approval extends the project implementation time for investors.
– From the perspective of the beneficiaries, they are also indirectly affected by the current regulation on land allocation. In reality, mid- and high-end commercial housing projects often incur very high costs for land fund creation and infrastructure investment, making the selling price of social housing exceed the financial capability of the beneficiaries.
Moreover, placing social housing buyers in the same projects as commercial housing can create difficulties for social housing buyers due to the high service prices, costs, and living standards in commercial projects, which workers cannot afford.
– Regarding localities, the article suggests that the issuance of general regulations does not truly suit the specific characteristics of each locality, leading to unreasonable allocation of social housing resources.
The regulation in the 49th Decree is considered unnecessary for certain areas nationwide. Specifically, in large urban areas such as Hanoi, Ho Chi Minh City, and Hai Phong, where the demand for housing is increasing with high population density, allocating 20% of the land fund for social housing investment is important and necessary.
However, in other provinces and cities, where land is abundant and people do not have the habit of living in concentrated apartment buildings and urban areas, requiring commercial housing projects to allocate 20% of the land fund for social housing development is not truly reasonable, causing significant waste.
– From the perspective of local authorities, the lack of initiative in allocating independent land funds for social housing development, while relying on or focusing only on developing commercial housing and urban projects with the 20% land fund allocation from those areas, has become a “bottleneck” in implementing the social housing model.
In fact, it should be affirmed that it is not due to a lack of land funds for development, but rather, localities have not given adequate attention, nor have they established reasonable land fund plans for social housing development. Instead, they mainly focus on locations and land funds for other types of real estate to improve urban landscapes and economic development.
Additionally, localities are responsible for allocating funds obtained from land use fees but often use them for other activities. This can be said to be the main reason, playing a decisive and influencing role in the effective allocation and use of land funds for the development of the social housing model in localities.
Secondly, regarding certain incentives related to land funds, there are some drawbacks that have not been sufficient to attract investors:
The abolition of the incentive “allocating 20% of the total land area for housing construction within the scope of social housing projects for commercial construction investment” according to the 2023 Law on Decree 35 has caused certain disadvantages.
The article does not deny that building commercial facilities: if it is housing, located in the middle of social housing areas, the appeal to customers will be lower; if it is another business facility that is not housing, the average income of residents does not promise to bring high business profits.
Therefore, this incentive is not attractive enough to draw investors towards the social housing segment. However, for investors, this is also a notable profitable land area, contributing to offsetting the costs incurred.
This incentive provides the opportunity for beneficiary groups to access high-quality social services and amenities from the commercial construction within the framework of this 20% of the total land area, thereby increasing the attractiveness of social housing projects and improving the quality of life and living standards of residents. The article suggests that this is one of the reasons for the reinstatement of this incentive in the 2023 Law on Housing.
Additionally, the incentives related to land funds to compensate for significant construction investment costs are essentially unrealistic. Although there are many financial incentives for investors, under the regulation on determining the selling price, leasing, and rent-purchase of social housing, for the items incentivized by the State such as land use fee exemption and tax reduction, investors are not allowed to include these in the selling price, leasing, and rent-purchase prices.
Thus, financial incentives may help the State achieve its goal of reducing the cost of social housing, but in reality, this benefit is enjoyed by the people, not the investors, even though it still takes the form of State incentives for investors.
III. Recommendations and Proposals for Developing Land Funds for Social Housing
- Completing regulations on land funds
The 2023 Law on Housing allows localities to independently plan land use; however, the article recommends setting a minimum figure (a floor level) to ensure supply and optimally utilize land resources.
Depending on regional characteristics and the socio-economic context of each area, the Provincial People’s Committee needs to calculate appropriate plans.
It is important to emphasize that meeting the minimum level is not enough; localities need to actively create land funds and determine specific figures and develop provincial housing development programs and plans according to Article 27 of the 2023 Law on Housing, including the projected area of land for social housing development as stipulated in point c clause 1 of this article, for submission to the Prime Minister for consideration and decision.
During inspections, if it is found that localities have clean land funds but lack sufficient grounds to prove that the land area is unsuitable for housing investment, strict measures should be taken, and the Provincial People’s Committee should be required to propose solutions.
Overall, it is necessary to establish a legal framework, from laws to decrees, circulars guiding the laws, and detailed documents, to ensure consistency among the documents. Land resources are limited while housing demand is high, necessitating the rational and effective use and allocation of land resources to avoid waste, profiteering, and difficulties for all levels of government in controlling and managing land use.
- Enhancing state management of land resources
In recent years, the supply of real estate has sharply decreased while the demand for land and housing from stakeholders has significantly increased, making the real estate market hotter than ever. Therefore, state management of land resources must be strictly implemented, specifically:
– First, improving the state management apparatus of land resources. This can be said to be a key task to accurately implement state power. This aims to enhance the professional capacity, skills, and ethics of the state apparatus operating in the field of land resources, streamline the apparatus, effectively assign tasks, and ensure unified management and implementation.
– Second, focusing on tightly organizing the management of land resource databases and housing issues; actively reviewing and continuously updating changes to grasp, assess the situation, and predict future trends of the real estate market along with the capability of creating land funds for social housing.
– Third, inspecting and rectifying activities related to land resources such as bidding, land use rights auctions, investment-related activities, and construction projects; ensuring transparency, fairness, and competition.
– Fourth, tightening the implementation of regulations on forming land funds for social housing, utilizing abandoned land resources, and addressing slow construction progress.
IV. Conclusion
Social housing has been and continues to be a highlight, representing a humane policy of the nation, reflecting the concern and care for the people’s lives by all levels of government. Aimed at the vulnerable groups in society, the social housing policy contributes significantly to building a government truly of the people, by the people, and for the people, according to the Party’s ideology and viewpoint.
Within the scope of the research, the article focuses on exploring and drawing several general conclusions as follows:
– First, the construction of legal corridors from Laws, Decrees, Circulars to other detailed regulations has laid the foundation for the positive results achieved by the Party, the State, and the people in recent times. However, the application of legal regulations on this housing model still faces certain challenges, requiring continuous innovation and improvement of the management apparatus and legal tools.
– Second, the article offers a practical perspective. It can be said that the state of policy and implementation of social housing land funds in recent times provides valuable experience in improving the national social security system, calling for practical, modern, new, and creative measures in the future.
– Third, the article has limitations in deeply and comprehensively researching the entire field of social housing and the real estate market in the long term. This could be a direction for further development by the article or other researchers in the future.
For social housing to truly become a housing solution serving the needs of the people, besides a robust legal framework, there needs to be cooperation between State agencies and other economic sectors.
With continuous efforts to improve the laws and policy mechanisms for the implementation of land funds, Vietnam can expect a future where people in need of housing assistance all have the opportunity to access the social housing model, thereby contributing to enhancing the quality of life and promoting national development.
References
Legal Documents
- – National Assembly (2013), Constitution of the Socialist Republic of Vietnam
- – National Assembly (2005), the 2005 Law on Housing No. 56/2015/QH11
- – National Assembly (2014), the 2014 Law on Housing No. 65/2014/QH13
- – National Assembly (2023), the 2023 Law on Housing No. 27/2023/QH15
- – National Assembly (2020), the 2020 Law on Investment No. 61/2020/QH14
- – Government (2013), Decree 188/2013/ND-CP on the Development and Management of Social Housing, issued on November 20, 2013
- – Government (2015), Decree 100/2015/ND-CP on the Development and Management of Social Housing, issued on October 20, 2015
- – Government (2021), Decree 49/2021/ND-CP amending and supplementing several articles of Decree No. 100/2015/ND-CP, issued on April 1, 2021
- – Ministry of Construction (2016), Circular 20/2016/TT-BXD of the Ministry of Construction guiding the implementation of Decree 100/2015/ND-CP
Scientific Articles
- – “Unleashing Resources for the Development of Social Housing,” Nhân Dân Newspaper (2023) https://nhandan.vn/khoi-thong-nguon-luc-phat-trien-nha-o-xa-hoi-post772066.html
- – Hai Van (2023), “Solutions to Promote the Development of Social Housing in Vietnam,” VTV Online Newspaper https://vtv.vn/kinh-te/giai-phap-thuc-day-phat-trien-nha-o-xa-hoi-tai-viet-nam-20230717115944693.htm
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