Driving resolution for stalled real estate projects in Vietnam

Vu Le Bang 
Nishimura & Asahi, Ho Chi Minh City
v.l.bang@nishimura.com

In recent years, the National Assembly has introduced a series of targeted legislative instruments to address prolonged real estate project delays and legal bottlenecks, notably Resolutions No 170/2024/QH15, No 171/2024/QH15, No 254/2025/QH15 and most recently No 29/2026/QH16 (‘Resolution 29’).  

In line with these efforts, Resolution 29 establishes a framework for addressing long-standing legal issues affecting projects with land-related irregularities, particularly where violations result from errors by state authorities or from joint faults involving both authorities and investors. Such measures must:

• comply with state policies;
• safeguard national security and legitimate interests of third parties;
• ensure that investors fulfil all financial obligations and project requirements; and
• be implemented in parallel with accountability processes, without giving rise to new violations and with appropriate remediation of any damages.

This article outlines key measures for resolving stalled real estate projects introduced under the most recent Resolution 29, with a view to providing an update on Vietnam’s efforts to address obstacles to real estate projects, facilitate the recovery of the real estate market and attract continued investment, including from foreign investors.

Key measures for installed real estate projects

Treatment of projects with improperly issued Land Use Rights Certificates (LURCs)  

This mechanism addresses cases in which LURCs have been issued by state authorities for land use purposes inconsistent with applicable land laws. In particular, it covers situations in which land is described in LURCs using classifications such as ‘residential land (not forming a residential unit)’, or ‘residential land (for real estate development and tourism business)’. These classifications do not exist under Vietnamese land laws and related regulations.

Such irregularities have been commonly observed in condotel and resort real estate projects. In practice, during the rapid expansion of condotel developments between 2015 and 2018, certain localities (eg, Khanh Hoa and Binh Dinh) adopted hybrid land classifications combining characteristics of residential land (intended for residential purposes) and commercial and service land (intended for tourism and business activities). These hybrid classifications were subsequently recorded in LURCs. However, later inspections by higher-level authorities determined that such practices were non-compliant with the law. As a result, many condotel projects have encountered significant legal obstacles, leading to prolonged stagnation and, in numerous cases, suspension of project implementation.

To address these issues, Resolution 29 provides a mechanism allowing Provincial People’s Committees to review the relevant planning framework and determine the appropriate treatment of affected projects based on their alignment with the land use planning:

PROJECTS ALIGNED WITH RESIDENTIAL LAND PLANNING

Where a project is consistent with planning for residential development, the authorities may permit the adjustment of the land use purpose in LURC to residential land, subject to the developer fulfilling additional financial obligations calculated based on the prevailing land price policies at the time of adjustment.

Specifically, the additional amount payable is determined based on the difference between: (1) the land use fees or land rental calculated under the adjusted residential land use purpose at the time of adjustment; and (2) the amount previously determined under the improperly recorded land use purpose, with both amounts calculated in accordance with prevailing land pricing policies. Notably, no refund from the state will be made if the amount previously paid exceeds the recalculated amount.  

PROJECTS NOT ELIGIBLE FOR RESIDENTIAL LAND USE

Where the project does not meet the conditions for residential use, the LURC may be adjusted to reflect commercial and service land. The land use term granted to the developers shall be determined in accordance with applicable land laws and calculated from the time of issuance of the construction permit or, where no permit is required, from the date of actual commencement of construction. The land use term granted to purchasers of real estate products shall be 50 years, calculated from the date of transfer of the land use rights from the developer.

In both scenarios, developers are required to complete all outstanding financial obligations and demonstrate their sufficient capacity to continue project implementation.

Treatment of projects with violations involving investor selection and land procedures 

Over the years, several projects have been non-compliant with regulations governing investor selection and land procedures. Common violations include selecting investors without conducting legally required land-use rights auctions or investor bidding procedures, as well as irregularities in the conversion of land-use purposes and other aspects of land management and use. As these violations have increasingly become subject to review, inspection and intervention by higher-level authorities, many affected projects have been delayed, suspended or unable to proceed, resulting in prolonged legal uncertainty and substantial socio-economic consequences.

To address these issues, Resolution 29 establishes a mechanism to facilitate the continued implementation of certain non-compliant projects. Under this mechanism, Provincial People's Committees are authorised to review affected projects and determine whether they qualify for the application of the special remedial measures set out in Articles 4 and 5 of Resolution No 170/2024/QH1, which was originally enacted to remove legal obstacles affecting projects and land-related matters in Ho Chi Minh City, Da Nang City and Khanh Hoa Province. 

Generally speaking, a project may be permitted to continue if, following the prescribed review process and completion of all relevant procedures relating to land, investment, construction and other applicable matters, it satisfies the statutory requirements, including compliance with planning regulations, the investor’s implementation capacity and the fulfilment of all financial obligations, among others.

The mechanism applies to five categories of projects that are non-compliant:

1. First, it covers projects in which an investor was selected without a land-use rights auction or investor selection tender, and construction commenced before any land allocation or land lease decision had been issued. 
2. Second, it applies to projects where an investor was similarly selected without the required auction or tender process; still, the state subsequently issued land allocation or land lease decisions for part or all of the project area. 
3. Third, it covers projects that had received land allocation or land lease decisions and had commenced construction, but whose allocations or leases were later revoked. 
4. Fourth, it applies to projects where the investor advanced all or part of the compensation, support and resettlement costs, directly carried out compensation and resettlement activities to facilitate state land recovery, or paid a project performance security deposit, but no subsequent land allocation or land lease decision was issued. 
5. Fifth, it covers residential housing, urban area and residential community development projects that obtained investment policy approval and approval for conversion to residential land use in circumstances where the investor had acquired land-use rights through private agreements but did not possess any residential land.

For projects falling within the first and second categories, Resolution 29 provides that no new land-use rights auction or investor selection tender is required. This effectively regularises the continued implementation of projects that would otherwise face legal uncertainty due to deficiencies in the original investor selection process.

For projects falling within the third and fourth categories, where procedures relating to investment policy approval, investment approval or investor selection have not yet been completed, the authorities may conduct a consolidated procedure that simultaneously approves the investment policy and the investor for project implementation. 

Nevertheless, the continuation of such projects remains contingent on the investor's ability to carry them out. If the existing investor is determined to lack the necessary capacity, the Provincial People's Committee must organise the selection of a replacement investor in accordance with applicable law. In such cases, the authorities are also responsible for reimbursing the original investor for compensation, support and resettlement expenses previously advanced, as well as construction costs already incurred on the project land. 

Treatment of projects on unlawfully recovered land 

This mechanism addresses situations in which an investment project is implemented on land recovered by the state without a proper legal basis, and the developer has already incurred costs to acquire the entire project land. In such circumstances, Resolution 29 allows the project to continue, rather than being terminated, subject to the satisfaction of the following conditions:

• The investor meets the legal capacity and eligibility requirements for project implementation under applicable law and is managing, using and undertaking construction investment on a land area that has been identified as involving irregularities in land recovery procedures, with a portion of the fault attributable to state authorities, as determined in inspection conclusions, audit findings or court judgments.
• The project is free from disputes or complaints, or any such issues (if any) must have been fully resolved.
• The project is consistent with applicable planning frameworks.

If the project fails to satisfy the prescribed conditions, the state will terminate its implementation. In such circumstances, the investor will be reimbursed for the costs already incurred in acquiring the land. In addition, any assets attached to the land, such as buildings or construction works, will be handled in accordance with applicable laws.

Treatment of projects involving violations of the land use purpose 

This mechanism addresses situations in which an investment project violates the land-use purpose but is consistent with the applicable land-use, forestry, national defence, security, or urban and rural planning. In such cases, the Provincial People's Committee may review and adjust the project objectives, land allocation or land lease decisions, and permit the conversion of land-use purpose to enable the project to continue in accordance with the law. The investor is required to fulfil all land-related financial obligations.

Notwithstanding the regularisation of the project, the investor remains subject to administrative penalties for the land-use violation. However, works and structures that are consistent with the relevant planning are not required to be demolished, and the investor is not required to restore the land to its original condition. The investor must, nevertheless, surrender any unlawful gains derived from the violation.

Conclusion

Resolution 29 is expected to play an important role in addressing many of the legal issues that have delayed real estate projects in recent years. By creating a pathway for eligible stalled projects to move forward, the Resolution may help increase housing and real estate supply, improve market competition and ease price pressures. It may also have positive effects beyond the real estate sector by helping to restore cash flow to developers, improve their financial position and reduce pressure on the banking system caused by delayed projects and bad debts. 

However, the effectiveness of the Resolution will depend largely on how local authorities implement it. Some experts are of the view that, given the responsibility of Provincial People's Committees to review and resolve affected projects, their capacity, responsiveness and commitment to consistent enforcement will be critical to ensuring that the Resolution achieves its intended objectives. Nonetheless, the Resolution shows a positive shift in Vietnam's stance toward supporting the real estate market recovery, investor confidence and attracting more investment in the time to come.