Question: We understand foreign investors can apply for a grant of leasehold interest in land for real estate development, and the land rent can be fully paid upfront of annually. However, the rights accorded are different. Can you explain to us the differences in rights accorded to the land owner based on upfront land rent payment and annual rent payment? Can the land use rights for land leased on annual rent payment be injected into the company? If not, how does it certify the owner’s ownership of the land? In both cases, are Owners issued with a red book? Also, does it have any impact on the investment licenses of the foreign enterprise?
(2) On land title (“Red Book”) and building title (“Pink Book”)
a. We understand there are plans to introduce one title deed for both land use rights and building ownership, has this been passed?
b. If (a) has not been passed, is it mandatory for developers to “return” the red book upon building completion in exchange for the pink book? When are pink books typically issued by the authorities? The reason being when we bought into a bareshell building back in 2011, the redbook for the land was injected into the company. Once the building has been completed, will we be issued pink books? Is it necessary to own pink books now that we already own the red book?
c. We understand there were some new land laws that were passed recently that complicates/lengthens the pink book application process, what are these laws and what are their impact?
d. Is there a difference in ownership rights between owning a red book and a pink book?
Answer: Disclaim: Under Vietnam Law, there is no private land own right recognized, but land use right. In this case, for ease of reference, “land owner” shall be understood as organization or person obtained land use right under Vietnam Law.
(1) Difference in rights accorded to the land owner based on upfront land rent payment and annual rent payment:
The land owner based on upfront land rent payment shall enjoy following special right:
– To transfer land use lights and land-attached assets under their ownership;
– To lease land use rights and land-attached assets under their ownership in case of being allocated with land use levy by the State and to sublease land use rights and land-attached assets under their ownership in case of being leased land with full one-off rental payment for the entire lease period by the State;
– To donate land use rights to the State and communities for construction of facilities for common public interests of the communities and donate land-attached gratitude houses in accordance with law;
– To mortgage with land use rights and land-attached assets under their ownership at credit institutions which are licensed to operate in Vietnam;
– To contribute land use rights and land-attached assets under their ownership as capital for cooperation in production and business with organizations, individuals, overseas Vietnamese or foreign-invested enterprises in accordance with law.
In case, land owners are allocated land with land use levy or leased land with full one-off rental payment for the entire lease period by the State, but are entitled to exemption from or reduction of land use levy or land rental, have the following rights and obligations:
– If the organization is allocated or leased land by the State for implementation of projects on construction of and trading in houses and is entitled to exemption from or reduction of land use levy or land rental, it has the same rights and obligations as being not entitled to exemption from or reduction of land use levy or land rental;
– If the organization is allocated or leased land by the State for implementation of investment projects for profit purpose that is not prescribed at Point a of this Clause, and is allowed to pay a reduced land use levy or land rental, it has the same rights and obligations as being not entitled to exemption from or reduction of land use levy or land rental for the land type with similar land use purpose;
– If the organization is allocated or leased land by the State for implementation of investment projects for profit purpose that is not prescribed at Point a of this Clause, and is exempted from land use levy or land rental, it has the same rights and obligations as leasing land with annual rental payment for the land type with similar land use purpose.
Meanwhile, land owner based on annual rent payment shall only enjoy following rights:
– To mortgage their assets attached to the leased land at credit institutions which are licensed to operate in Vietnam;
– To sell their assets attached to the leased land upon the satisfaction of the conditions prescribed in Article 189 of this Law. The buyer of these assets may continue to be leased land for determined land use purpose by the State;
d / To contribute their assets attached to the leased land as capital. The recipient of these assets may continue to be leased land for determined land use purpose by the State;
e) To sublease land use rights with annual rental payment for the land with completely constructed infrastructure in case they are permitted to invest in the construction and commercial operation of infrastructure in industrial parks, industrial clusters, export processing zones, hi-tech zones or economic zones.
(2) Land use right for land leased on annual rent payment can be granted to the Company.
(3) In both cases, the Land Owner shall be granted Certificate of Land Use Right or Red Book.
(4) It does not impact on Investment License of the foreign enterprise.
(5) Yes. According to the Article No. 11 of the Housing Law 2005, in cases where house owners are concurrently residential land users or condominium apartment owners, a single house ownership right and residential-land use right certificate (or red book) shall be granted. In cases where you were granted red book before completion of building, you can ask the competent authority to additional record your ownership of building in the red book.
(6) In fact, on 15 May 2014, Vietnam Government issued the Decree No. 43/2014/ND-CP detailing a number of articles of Land Law. The Decree actually simplify the administrative procedures for obtaining pink book. You can see the Article 31 of Decree No. 43/2014/ND-CP as attached herewith for further information.
(7) The main difference between Red Book and Pink Book is follows:
Red Book is a certificate of land use right. In case the owner of Land Use Right is concurrently owner of Land-attached Assets, such Owner shall be granted Red Book recording Ownership of Land Use Right and Ownership of Land-attached assets. Meanwhile, Pink Book is the Certificate of Land-Attached Assets only. The Pink Book therefore shall be granted if the Owner of Land-Attached Assets is not Owner of Land Use Right.
