Guidelines for compensation and resettlement for apartments in Vietnam

Guidelines for compensation and resettlement for apartments in Vietnam​ (Image from the Internet)

1. Guidelines for compensation and resettlement for apartments in Vietnam

According to Article 28 of Decree 98/2024/ND-CP, the compensation and resettlement for apartments in Vietnam are regulated as follows:

- Compensation and resettlement for apartments in old apartment buildings, as prescribed in Clause 10 Article 2 of the Housing Law 2023, but not being public property, shall be executed as follows:

+ For apartments on the 1st floor, the owner is compensated with a factor k from 1 to 2 times the usable area of the demolished apartment as stated in the documents proving land use rights, property ownership attached to land through different periods, or eligible for granting such certificate according to land law, housing law; based on the k factor prescribed at this point, the Provincial People's Committee determines the k factor applicable to each position and area requiring renovation, reconstruction of apartment buildings, serving as a basis for the owner and project investor to agree on the recompensable area according to the k factor to include in the compensation, resettlement plan.

In cases where the owner of the apartment on the 1st floor uses part of the apartment for business purposes and the project allocates part of the area for business services, commercial purposes according to the approved plan, in addition to being compensated as prescribed at this point, if the owner desires, they can purchase or lease the business services, commercial floor area according to the approved design for business; the selling price of this area is calculated based on the construction investment per m2 of the business services, commercial floor (including infrastructure construction costs of the area with commercial floors) according to construction law, plus a set profit rate of 10% of the total investment cost for the business services, commercial area at the project's design approval time; the lease price for this business services, commercial area is agreed upon by the parties;

Purchase or lease of the business services, commercial area specified at this point must be stated in the compensation, resettlement plan;

+ For apartments from the 2nd floor upwards, the owner is compensated with a factor k from 1 to 1.5 times the usable area of the demolished apartment as stated in the documents proving land use rights, ownership of assets attached to land over different periods, or enough to get this certificate under land law, housing law; based on the k factor prescribed at this point, the Provincial People's Committee determines the k factor applicable to each position, area requiring reconstruction, renovation of apartment buildings, serving as a basis for the owners and the project investor to agree on the recompensable area according to the k factor to include in the compensation, resettlement plan;

+ In cases where there is used area beyond the area recorded in the documents proving ownership of housing, land use rights as prescribed at point a, point b of this clause but enough to issue a land use right certificate under the land law, this area is compensated according to the k factor prescribed at point a, point b of Clause 1 Article 28 Decree 98/2024/ND-CP; the other area not covered under this provision shall not be compensated according to the k factor for the apartment's usable area specified at point a, point b of Clause 1 Article 28 Decree 98/2024/ND-CP but might be financially assisted by the investor for the construction costs invested on that area.

The resettlement apartment area after calculating compensation according to the k factor prescribed at point a or point b Clause 1 Article 28 Decree 98/2024/ND-CP is clearly stated in the compensation, resettlement plan.

- In cases where the compensation, resettlement plan agreed upon by the parties confirms that the resettlement apartment area per design is larger than the apartment area reimbursed according to the k factor prescribed in Clause 1 Article 28 Decree 98/2024/ND-CP, the owner has to pay the additional value difference of this area; if after the compensation, resettlement plan is approved the owner does not purchase or rent the difference area, resettlement apartment arrangement is not made, and the investor is allowed to pay the owner the entire value of the apartment as per the price stipulated in Clause 4 Article 28 Decree 98/2024/ND-CP and may sell the resettlement apartment commercially to other entities. If the parties agree that the resettlement apartment area per design is smaller than the apartment area compensated according to the k factor prescribed in Clause 1 Article 28 Decree 98/2024/ND-CP, the investor has to pay the owner the value difference of this area.

The calculation of the area value difference prescribed in this clause shall be determined by multiplying (x) the area difference (m2) with the new construction housing price issued by the Provincial People's Committee effective at the time of developing the compensation, resettlement plan and is settled at the time of handover of the apartment.

- In cases where the apartment owner does not need a resettlement at the site but the investor has housing, land in another location to arrange resettlement and the owner requires, the parties can agree on the resettlement arrangement at that location according to the mechanism stipulated in Clause 1 and Clause 2 Article 28 Decree 98/2024/ND-CP.

- In cases where the apartment owner does not need resettlement according to the stipulations in Clause 1 or Clause 3 Article 28 Decree 98/2024/ND-CP, they shall be compensated in cash according to the resettlement flat selling price proposed by the investor and unified in the compensation, resettlement plan; receiving cash compensation for the apartment is implemented after the compensation, resettlement plan is approved by the competent authority.

In cases where the apartment owner wishes to purchase, lease purchase social housing and meets the conditions to buy, lease purchase social housing, they shall be allocated to buy or lease purchase social housing according to the provisions of laws on development and management of social housing.

- For cases where the apartment is collateral for a credit institution, handling the resettlement apartment after reconstruction or handling the compensatory amount is done as per civil law on ensuring the fulfillment of obligations.

2. Regulations on compensation and resettlement for other areas in apartment buildings in Vietnam

According to Article 29 of Decree 98/2024/ND-CP, regulations on compensation, resettlement for other areas in apartment buildings in Vietnam are as follows:

- In cases where, according to the approved plan, the project continues to rebuild the business services, commercial area, the owner of that area will be allocated that area again according to the approved plan; the compensation for this area is executed under the principle of applying k factor = 1 times the old usable area.

- In cases where, according to the approved plan, the project does not continue to rebuild the business services, commercial area, compensation is executed under the principle of applying k factor = 1 times the used area multiplied (x) by the newly built housing price issued by the Provincial People's Committee that is effective at the time of developing the compensation plan multiplied (x) by the remaining quality rate of that housing.

The remaining quality rate of the housing is determined as with the remaining quality rate of housing as public assets stipulated in Clause 1 Article 34 Decree 98/2024/ND-CP.

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