Vietnam Proposes Progressive Fees on Idle Project Land to Curb Speculation

Vietnam's Ministry of Justice is proposing significant amendments to the Land Law, introducing a progressive fee system for project land that remains unused or is delayed in development. Under this new mechanism, developers who leave project land idle or face delays will be subject to annual fees that increase over time. Crucially, if the land remains unused for over 60 months, the state will have the authority to confiscate it. This proposed change represents a substantial tightening of regulations compared to the current Land Law of 2024. Existing provisions stipulate land confiscation if land is continuously unused for 12 months from handover or if there's a 24-month delay in its use compared to the project plan. Developers are currently allowed a maximum 24-month extension, requiring them to pay additional land use or rent fees for that period. The new draft, however, aims to impose a progressively increasing financial burden throughout the entire period of non-use or delay, making land hoarding for speculative purposes significantly more costly. The Ministry of Justice stated that this mechanism is intended to institutionalize Resolution 21 of the Central Committee, which calls for policy designs that make land hoarding more expensive than the profits derived from speculation. Drafting agencies noted that the current legislation lacks clear definitions for "failure to use land" and "24-month delay in land use progress compared to the project plan." This ambiguity creates difficulties in identifying violations and enforcing penalties, particularly for projects that are deliberately left unused and require decisive action for recovery. During the consultation process, several agencies requested clarification on the start date for determining delayed land use and the timeframes for calculating progressive fees and confiscation. The drafting agency has accepted these suggestions, proposing to enshrine the principles of progressive fees and the 60-month confiscation deadline in the law, while delegating specific criteria, conditions, and calculation methods to the Government for detailed guidance. The draft also includes a provision to exclude periods affected by force majeure events when determining delays in land use for potential confiscation. The amended Land Law project is expected to be further considered and approved by the National Assembly in its October session. In Vietnam's one-party system, land policy is a critical tool for balancing economic growth objectives with socio-economic stability. Rapid economic development and urbanization have led to concerns about property market overheating and speculative practices, which can exacerbate social inequality and hinder sustainable development. This proposed legal amendment is seen as a measure to address these challenges and promote more efficient and equitable land resource allocation. Source: VnExpress