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Legal Update

New Regulations on Development and Management of Resettlement Housing

22 August 2013
Mayer Brown JSM Legal Update

On 25 July 2013, the Government of Vietnam issued Decree 84/2013/ND-CP providing guidance on development and management of resettlement housing (Decree 84).

Eligible households and individuals of resettlement housing are those who have to move when the state revokes lands for projects of national defence, national security, national benefits and public benefits in accordance with approved master planning.

Under Decree 84, there are three ways for developing resettlement housing, namely: direct investment; build-transfer (BT) contract; and buying commercial housing for resettlement purpose.

In general, the decision to appoint investors for government-funded resettlement housing projects shall be made by the chairman of the provincial-level People's Committee (PC) where the project is located. For those projects of national importance, the decision to appoint the investor will be made by the Prime Minister.

In the case of BT projects, the provincial PC shall, on behalf of the state, be a party to the contract. The provincial Department of Construction shall prepare a list of BT projects for approval by the provincial PC which will then be publicised and opened for registration to potential investors. BT investors once appointed shall use their own capital for site clearance and project implementation and upon transfer shall be refunded either with cash from the national budget or land use rights or other forms of assets equivalent to the investment capital for the infrastructured land area or the total value of the resettlement housing transferred to the competent authorities of the state.

With regards to buying commercial housing for resettlement purpose projects, the profits made by commercial housing sellers, after deducting legitimate input costs, shall be capped at 15 percent, where the project land is directly managed or compensated by the state, and at 10 percent where the project land compensation was prepaid by the investor. The provincial Department of Construction shall be responsible for evaluating the specifics and pricing in this type of project, and for submitting such to the provincial PC for approval.

It is not required that the sale and lease of resettlement housing be conducted though real estate trading floors. The sale price for resettlement housing will be set in accordance with the resettlement solution of each project while the lease price shall be mutually agreed between the lessors and lessees. Lease contracts can only be signed once the construction works have been completed and have passed quality control tests by the competent authorities, and shall have the minimum duration of three years.

Decree 84 comes into effect on 30 September 2013.

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