Answer
Question: We were leased land with lump sum rent payment by the State of Vietnam for implementation of a 100% foreign invested project on construction of dwelling houses for sale in 2007. We know that, under the laws of Vietnam, residential land is permitted to use on a stable and long term basis. However, the lease term of our land is definite. When buying dwelling houses from our project, can our clients own the houses with long term of land use? Do we or our clients have to fulfill any additional financial obligation in order to convert the definite term of leased land into long term of land use?
Answer:
It is provided for in Item 1, Article 81 of Decree No.181/2004/ND-CP dated October 29, 2004 of the Government on the implementation of the Land Law (“Decree 181”) that “Purchasers of dwelling houses attached to the right to use residential land under investment projects on construction of dwelling houses for sale, which are executed by overseas Vietnamese, foreign organizations or foreigners shall be granted the stable and long term land use right certificates”. Therefore, clients who buy dwelling houses in your project shall have the right to use the land with stable and long term use despite the definite term of your land use right.
In case the amount of the lump sum rent paid by you is equal to the amount of land use fee payable as if your land use right had been allocated with collection of land use fee as stipulated in Item 1, Article 32 of Decree 84/2007/ND-CP dated May 25, 2007 of the Government promulgating additional provisions on issuance of land use right certificates, land recovery, exercise of land use rights, order and procedures for compensation, assistance and resettlement when the State recovers land and resolution of complaints about land, you or your clients shall not be required to pay the monetary difference between leased land and stable and long-term land use. Otherwise, according to Item 2, Article 81 of Decree 181, you have to pay to the State the difference between the land use fee and land rent already paid to the State as follows:
- The land use fee is calculated at the land prices set by the provincial/municipal People's Committees at the time of payment of the difference;
- For villas, the difference amounts must be paid at the time of selling the houses;
- For apartments, the difference amounts must be paid at the time of project completion at the latest.
