When land is expropriated by the State, affected persons not only lose their land use rights but may also lose assets attached to the land. To avoid disadvantages, it is essential that affected persons clearly understand the levels of compensation prescribed by current law. This article clarifies the relevant provisions, enabling land users to be proactive in protecting their rights when faced with a land expropriation decision.
1. Subjects of Application
According to Article 2 of Decree No. 88/2024/NĐ-CP, the provisions on compensation when the State expropriates land apply to the following entities:
- State authorities exercising powers and responsibilities of representing the ownership of all the people with respect to land, carrying out the unified management of land on behalf of the State; and units or organizations tasked with compensation, support, and resettlement.
- Persons whose land is expropriated and owners of assets attached to the expropriated land.
- Other entities related to compensation, support, and resettlement upon State expropriation of land.
Previously, “commune-level cadastral officials” were listed as one of the relevant State actors. However, Clause 2 Article 7 of Decree No. 226/2025/NĐ-CP abolished this term. This demonstrates that instead of delegating responsibilities to dispersed local officials, the State has centralized the primary responsibility for land compensation to specialized commune-level units for handling.
2. Regulations on Compensation Levels
According to Point b Clause 2 Article 102 of the Land Law 2024, compensation levels are determined as follows:
b) With respect to houses and other structures dismantled or demolished not falling within the case specified at Point a of this Clause, compensation shall be made for actual damages.
In addition, pursuant to the latest provisions under Point a Clause 1 Article 14 of Decree No. 88/2024/NĐ-CP:
a) Compensation for houses and other structures shall be equal to the existing value of the damaged house or structure plus an amount calculated as a percentage of such existing value.
The percentage-based amount of compensation is determined by the provincial People’s Committee, provided that the total compensation shall not exceed 100% of the construction cost of a new house or structure meeting technical standards equivalent to the damaged house or structure.
Accordingly, the formula for calculation is as follows:
Compensation Amount (CA) = EV + (EV × % rate)
Where:
- CA: Compensation amount for house or other structure
- EV: Existing value of the damaged house or structure
- % rate: Percentage of the construction cost of the new asset as prescribed by the provincial People’s Committee (depending on locality, ranging from 0% to 100%).
3. Competent Authority
- Legal basis: Clause 4, Article 102 of the Land Law 2024
- Authority: Provincial People’s Committee
- Activities:
– Issuing Decisions on compensation unit prices for damage to houses and construction works when the State recovers land within the province.– Such document shall serve as the basis for calculating the total compensation amount upon land recovery.
– Compensation unit prices must ensure conformity with market prices.
– Land fluctuations must be considered to make appropriate adjustments before applying unit prices.
4. Formula for Determining the Current Value of Damaged Assets
According to Point b, Clause 1, Article 14 of Decree No. 88/2024/ND-CP, if the depreciation method is applied, the current value of houses and other construction works shall be determined as follows:
Tgt = G1 – ( G1 / T ) x T1
Where:
- Tgt: Current value of the damaged house or construction work.
- G1: Reconstruction value of the damaged house or construction work with equivalent technical standards in accordance with construction law.
- T: Depreciation period applicable to the damaged house or construction work.
- T1: Actual period of use of the damaged house or construction work.
5. Notes
– Point c, Clause 1, Article 14 stipulates cases where houses or other construction works are partially dismantled or demolished but the remaining part still exists and can be used.
→ Compensation: The value of the demolished portion and the costs necessary to repair and complete the remaining part in accordance with technical standards equivalent to those of the asset prior to demolition.
– If it can be proven that the house or construction work fails to meet technical standards as prescribed by specialized regulations:
→ The Provincial People’s Committee shall provide specific compensation levels appropriate to local conditions.
– In cases where, after dismantling or demolishing houses or construction works that are public assets, materials, supplies, or assets remain usable:
→ State agencies or organizations shall sell such materials or supplies for liquidation in accordance with regulations on the management and use of public property. The proceeds, after deducting relevant expenses, shall be remitted to the local State budget.
Understanding the principles and formulas for calculating compensation upon State land recovery is essential for citizens to safeguard their legitimate rights. Compensation is not only based on the actual value of the affected assets but also includes additional support as prescribed by law.
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