Must a Commercial Housing Project Include Residential Land? The Pilot Mechanism under Resolution 171/2024/QH15

For years, one of the greatest bottlenecks in Vietnam’s housing development market lay in a seemingly technical question: must the land parcel already contain residential land before an enterprise may develop a commercial housing project? Under the housing legislation of the preceding period, an investor could only be approved to develop a commercial housing project if it held land use rights over residential land, or residential land combined with other land — meaning that countless parcels of agricultural land or production and business land, perfectly consistent with urban planning in terms of location but containing not a single square metre of residential land, were excluded from the game entirely, even where the investor was fully prepared to negotiate the purchase of land use rights from local residents at market prices. Hundreds of projects across the country ground to a halt over this obstacle, further tightening an already scarce housing supply.

Resolution No. 171/2024/QH15, adopted by the National Assembly on 30 November 2024 and effective from 1 April 2025, was enacted precisely to untie that knot through a five-year pilot mechanism. HTIC Law Firm analyses the substance of this mechanism and the conditions enterprises must satisfy to benefit from it.

Mục 01The pilot mechanism: opening the way for commercial housing projects on land without residential land

The core of Resolution 171/2024/QH15 is to permit real estate business organisations to implement commercial housing projects through agreements on receiving land use rights, or on the basis of land use rights they currently hold, over agricultural land, non-agricultural land that is not residential land, or a combination of land types — something the former Law on Housing and land legislation did not allow where the parcel contained no residential land component. In other words, within the scope of the pilot, the civil-agreement route for land assembly for commercial housing has been reopened, standing alongside the two traditional routes of State land recovery for auction of land use rights and tendering to select investors.

The commercial significance of this mechanism is considerable. Under the agreement route, the investor controls the pace of land assembly and negotiates directly with land users on a voluntary basis, avoiding both competition at auction and the social complications of compulsory land recovery. In return, the State maintains control through a system of strict conditions and through the time-limited pilot nature of the mechanism itself: the Resolution is effective for only five years from 1 April 2025. This finite window is itself a strategic message to enterprises — the window of opportunity is open but will not remain open indefinitely, and projects seeking to pass through it should start early, as the listing, approval and negotiation stages alone can consume years.

Mục 02Conditions for a project to proceed under the pilot mechanism

Holding land is not, by itself, enough to implement a project under Resolution 171/2024/QH15. The land parcel and the project must simultaneously satisfy a chain of conditions. First come the planning conditions: the parcel must be consistent with district-level land use planning or construction planning and urban planning, and must also conform to the approved local housing development programme and plan. Next is the listing condition: the parcel must appear in the list of land areas proposed for pilot projects approved by the provincial People’s Council. Where land use rights are to be received by agreement, a written approval from the provincial People’s Committee for the agreement on receiving land use rights is also required. Finally, the real estate business organisation itself must satisfy the conditions prescribed by the laws on land, housing, real estate business and investment.

For parcels originating from national defence or security land or other special land categories, the Resolution imposes separate restrictions that enterprises must review carefully. What deserves emphasis in practice is the role of provincial authorities: the pilot land list is decided by the provincial People’s Council, and the written approval for the agreement is issued by the provincial People’s Committee — meaning that how wide the pilot door opens depends significantly on the initiative of each locality. Enterprises holding promising parcels should closely monitor the resolutions of the People’s Council of the province where the land is located and proactively propose the inclusion of their parcels in the list, rather than passively waiting for the list to be published before acting.

Mục 03The 30% cap: the safety valve of the pilot mechanism

To prevent the pilot mechanism from being abused into a wave of indiscriminate land conversion, Resolution 171/2024/QH15 sets a quantitative cap: the total residential land area within pilot projects — including existing residential land and land expected to be converted to residential use — must not exceed 30% of the additional residential land area in the planning period compared with the current state of residential land use, under the land allocation and zoning plan in the approved provincial planning for the 2021–2030 period. To illustrate: if the provincial planning allows the province as a whole to add 1,000 hectares of residential land in the planning period, the total land fund available to all pilot-mechanism projects in that province cannot exceed 300 hectares.

This cap creates an implicit competition for slots in the list among investors within the same province: the 30% quota is finite, and whoever enters the list first occupies the space first. This is a further reason why speed of preparation becomes a genuine competitive advantage. At the same time, enterprises must assess the risk of list adjustment: the list approved by the provincial People’s Council may be reviewed, supplemented or have parcels removed according to actual circumstances, so major financial commitments — deposits for land assembly, acquisitions of land-holding companies — should be made only when the legal status of the parcel within the list is sufficiently certain, and ideally after the provincial People’s Committee has issued its written approval.

Mục 04From pilot approval to project implementation: steps that cannot be skipped

Approval under the pilot mechanism does not exempt the project from other procedures. After completing the agreement on receiving land use rights, the investor must still pass through the full chain of investment procedures — approval of investment policy simultaneously with approval of the investor under investment legislation, change of land use purpose and performance of land-related financial obligations under the 2024 Land Law, approval of detailed planning, and design and permit procedures under construction legislation — before satisfying the conditions for sale under the 2023 Law on Real Estate Business, including the rules on sale of future-formed housing and bank guarantees analysed in our earlier articles. The land-related financial obligations in this scenario are far from trivial: on conversion from agricultural or production land to residential land, land use levies are determined according to the land price table or specific land prices depending on the case, and with the new land price levels under the 2024 Land Law, this cost must be factored into the feasibility analysis at the investment decision stage — not after land assembly is complete.

One final strategic point: because this is a five-year pilot, enterprises should prepare for the legal scenario after the pilot period ends — projects approved within the pilot period will continue to be implemented, but land assembly plans that fail to complete their procedures before the mechanism expires may fall into a legal vacuum. Investment phasing and procedural timeline management must therefore track the Resolution’s expiry date closely.

Mục 05Frequently asked questions

Must a commercial housing project currently include residential land? Under the ordinary mechanism, the use of land for commercial housing projects remains tied to land-type requirements under housing and land legislation. However, during the five-year pilot period from 1 April 2025, Resolution 171/2024/QH15 permits projects on agricultural land and non-agricultural land that is not residential land through agreements on receiving land use rights, provided the parcel is included in the list approved by the provincial People’s Council and satisfies the conditions on planning and approval by competent authorities.

May FDI enterprises participate in this pilot mechanism? The entities implementing pilot projects are real estate business organisations satisfying the conditions under the laws on land, housing, real estate business and investment. For foreign-invested economic organisations, the restrictions on the forms in which the FDI sector may receive land use rights under the 2024 Land Law and the permitted business scope under the 2023 Law on Real Estate Business must additionally be examined; in practice, a common structure is cooperation with a domestic enterprise acting as the transferee of land use rights. Each structure requires its own legal due diligence.

My parcel conforms to planning but is not yet in the provincial list — what should I do? Enterprises may proactively propose to the competent local authorities that the parcel be considered for inclusion in the list submitted to the provincial People’s Council at its nearest session. The proposal dossier should clearly demonstrate conformity with land use planning, urban planning and the local housing development programme, together with the investor’s capacity — the quality of the dossier at this stage significantly determines the probability of approval.

Mục 06Contact HTIC

HTIC Law Firm advises on assessing land parcel eligibility under Resolution 171/2024/QH15, preparing proposal dossiers for inclusion in the pilot list, structuring land use right acquisition transactions and implementing commercial housing project procedures for domestic and foreign investors. See our real estate lawyer services in Vietnam. Fixed fee quotations per matter/project — Hotline +84 379 044 299.