Land Use Purpose Conversion under the 2024 Land Law: Cases Requiring Permission, New Approval Authority and Financial Obligations

Land use purpose conversion is the legal procedure that changes the permitted function of a land parcel — from agricultural land to residential land, from rice-cultivation land to production and business land, or from non-residential non-agricultural land to residential land. Behind every permission decision lies a substantial change in asset value: an agricultural parcel converted to residential land may multiply in value, and correspondingly the land user must discharge financial obligations reflecting that differential. Precisely because it is tied directly to significant economic interests and to planning order, this is one of the institutions that Land Law No. 31/2024/QH15 (effective from 1 August 2024) has redesigned far more clearly and transparently than before.

In its advisory practice, HTIC Law Firm observes that most difficulties encountered by both individuals and enterprises stem from three misconceptions: assuming that holding land automatically entitles one to convert its purpose; confusing cases that require permission with those that do not; and failing to anticipate the financial obligation, resulting in disrupted cash-flow plans when the land use levy notice arrives. This article analyses the framework of Article 121 of the 2024 Land Law and the changes in approval authority since the two-tier local government model came into operation.

Mục 01Seven cases requiring permission: the boundary between the land user’s rights and State control

Clause 1, Article 121 of the 2024 Land Law enumerates the cases of land use purpose conversion that must be permitted by a competent State authority, including: conversion of rice-cultivation land, special-use forest land, protection forest land or production forest land to another land type within the agricultural land group; conversion of agricultural land to non-agricultural land; conversion of other land types to concentrated livestock-raising land for large-scale concentrated livestock projects; conversion of non-agricultural land allocated by the State without land use levy to another type of non-agricultural land allocated with levy or leased; conversion of non-agricultural land other than residential land to residential land; conversion of land for public-service works or land used for public purposes with commercial elements to non-agricultural production and business land; and conversion of non-agricultural production and business land other than commercial and service land to commercial and service land.

A close reading of this list reveals the legislature’s consistent logic: the State retains control wherever a change of purpose touches food security (rice land), ecological safety (forest land), or generates significant land-rent differentials (conversion to residential or commercial and service land). An important advance of the 2024 Law is that it governs the remainder by explicit exclusion: conversions not falling within Clause 1 do not require permission, enabling land users to determine their obligations for themselves instead of depending on each locality’s interpretation. That said, not requiring permission does not mean absolute freedom: the land user must still complete land change registration so the authorities can update the cadastral records, and post-conversion use must still conform to planning.

Mục 02New authority under the two-tier local government model: individuals’ applications move to commune level

A change that many individuals — and even enterprises — have yet to catch up with is the shift of authority since the two-tier local government model came into operation on 1 July 2025. Under Decree No. 151/2025/NĐ-CP on the delimitation of authority of two-tier local government in the land sector, the authority to permit land use purpose conversion for individuals — previously vested in district-level People’s Committees — is now assigned to commune-level People’s Committees. For domestic organisations, authority rests in principle with provincial-level People’s Committees. This shift brings the procedure closer to the people and shortens administrative layers, but in the initial phase of operation it also creates certain disparities in processing capacity among communes and wards, particularly for files with complex issues of land origin or planning.

Practical guidance for this transitional period: before filing, the land user should obtain planning information on the parcel from the local land administration authority, because the prerequisite for permission is conformity with the approved land use planning and related plannings. Filing while the parcel does not yet conform to planning is the most common ground for refusal, costing time and sometimes the business opportunity itself. For enterprises acquiring land funds for project development, the assessment of convertibility must be carried out before signing the transfer contract, because the risk of being unable to convert the purpose is a risk that can collapse the entire investment plan; this is a core component of the legal due diligence services provided by the real estate lawyers of HTIC.

Mục 03Financial obligations: the largest and most frequently overlooked cost

When permitted to convert to a land type of higher value, the land user must pay land use levy or land rent calculated on the differential between the two purposes, determined according to the land price table or the specific land price depending on the case, in accordance with the law on land finance. A particularly noteworthy new context is that the 2024 Land Law abolished the land price framework and requires land price tables to approximate market levels and to be updated annually; in many localities the new land price tables are considerably higher than in the previous period, driving conversion payments up correspondingly. An illustrative scenario: a household applies to convert 200m2 of garden land to residential land in an area where the residential land price under the table is VND 15 million/m2 and the agricultural land price is VND 300,000/m2; the land use levy calculated on the differential may reach approximately VND 2.9 billion — a figure that, if not anticipated, leaves the applicant in a bind once the permission decision has been issued and the payment deadline has started to run.

The correct sequence of thinking when planning a conversion is therefore to estimate the financial obligation first and file afterwards. Land users should consult the locality’s current land price table, estimate the total payable — land use levy, registration fee and related charges — and weigh the filing time against the annual adjustment cycle of the land price table. For large parcels or complex intended uses, phasing the conversion according to actual use needs is also a lawful solution for spreading the financial burden, instead of converting the entire area at once and leaving the unused portion idle.

Mục 04Frequently asked questions

Does converting garden or pond land within the same parcel as a house to residential land require permission?

Garden and pond land belongs to the agricultural land group, so its conversion to residential land is a conversion from agricultural to non-agricultural land — a case requiring permission from the competent authority under Clause 1, Article 121 of the 2024 Land Law. The prospect of approval depends on local planning and residential land quotas; the financial obligation is calculated on the price differential between residential and agricultural land under current regulations.

Does converting perennial-crop land to annual-crop land require permission?

Conversion among land types within the agricultural land group requires permission only in the cases prescribed by law, typically conversion from rice-cultivation land or forest land to other types within the agricultural group. Other intra-group conversions falling outside Clause 1 of Article 121 do not require permission, yet land change registration is still necessary so that the cadastral records reflect the actual status, avoiding complications in transactions or upon State land recovery and compensation.

May FDI enterprises convert land use purpose?

Foreign-invested economic organisations use land in Vietnam in the forms prescribed by law, and any change of land use purpose is closely bound to the objectives of the approved investment project. When seeking to change the function of a site, an FDI enterprise typically must simultaneously adjust its investment policy approval or investment registration certificate and carry out the corresponding land procedures. This is a complex inter-agency chain of procedures and should be planned holistically with in-depth legal support from the outset.

Mục 05Contact HTIC Law Firm

HTIC Law Firm advises on the conditions and procedures for land use purpose conversion, estimates financial obligations and represents individuals, domestic enterprises and FDI enterprises in dealings with State authorities. Fixed-fee quotation for each case/project — Hotline +84 379 044 299.