To convert agricultural land into residential land for house building, land users need not only the authorities’ permission for land purpose conversion but also must pay a land use fee — and from 2026, the calculation of this fee has changed significantly in favor of citizens.
This article analyzes the conditions for converting agricultural land to residential land and how the payable amount is calculated under the latest rules.
1. Conditions for conversion to residential land
Converting agricultural land to residential land requires permission from the competent state authority (not a mere change registration). Two core conditions:
- Consistency with land use planning and plans: the parcel must sit in an area planned as residential land (shown in district-level land use planning and annual land use plans);
- Legitimate residential land need: the land user files an application for purpose conversion, enclosed with the land use right Certificate and related papers, submitted to the land management authority.
If the parcel is not planned as residential land, the application will be rejected — the most common reason conversion requests fail.
2. Calculation principle: pay the difference
Clause 1, Article 156 of the Land Law 2024 provides: upon land purpose conversion, the land user pays a land use fee equal to the difference between the land use fee of the land type after conversion and that of the land type before conversion.
Formula: Payable amount = (Residential land price − Agricultural land price) x Converted area, calculated at the time of the conversion permission decision.
3. Major change from 01/01/2026: 30%/50%/100% tiers
Under the original framework in Article 8 of Decree 103/2024/ND-CP, households and individuals converting agricultural land to residential land had to pay 100% of the difference above. However, as new price tables pushed amounts sharply higher in many localities, Resolution 254/2025/QH15 (effective 01/01/2026) substantially reduced this burden — but only for garden/pond land and agricultural land within the same parcel that already has residential land converted to residential land, not for all agricultural land in general:
- Area within the local residential land allocation quota: pay only 30% of the difference (a 70% reduction);
- Area exceeding the quota but not more than one quota: pay 50% of the difference;
- Area exceeding one quota: still 100% of the difference.
Illustrative example (hypothetical figures): converting 200 sqm, residential land price VND 4 million/sqm, agricultural land price VND 100,000/sqm → difference of VND 3.9 million/sqm. Within quota, from 2026 the payer owes 30% x 3.9 million x 200 sqm ≈ VND 234 million (instead of VND 780 million under the old framework).
Further example for the 50% tier (hypothetical figures, local residential land quota of 200 sqm): converting 300 sqm of garden land within a parcel that already has residential land → 200 sqm x VND 3.9 million/sqm x 30% = VND 234 million; 100 sqm above the quota (not more than one quota) x VND 3.9 million/sqm x 50% = VND 195 million; total land use fee payable ≈ VND 429 million.
4. Application dossier and procedure
- Application for land purpose conversion permission (standard form);
- Original land use right Certificate;
- Cadastral extract of the parcel (if boundaries/area need re-determination);
- Land user’s identity papers.
After the conversion permission decision is issued, the tax authority determines and notifies the payable land use fee; upon payment, the land user registers the change and receives an updated Certificate reflecting the new land purpose.
Frequently asked questions
Q: Can mortgaged agricultural land be converted?
A: In principle yes, if planning conditions are met, but the mortgagee’s consent is needed and the security registration must be updated. Work with the bank first.
Q: Can only part of a parcel be converted?
A: Yes, if that part is planned as residential land. This usually requires a cadastral extract and parcel subdivision before applying for conversion.
Q: Does the 30% rate apply to land converted before 2026 but with unpaid fees?
A: Whether 30% or 100% applies depends on the time the financial obligation is determined under the conversion permission decision. Pending files need case-by-case comparison against the transitional rules.
Q: I received a conversion permission decision between 01/08/2024 and 01/01/2026 but have not paid the fee yet — which rate applies?
A: Under the transitional rule in Clause 10, Article 4 of Resolution 254/2025/QH15, cases with a conversion permission decision issued from 01/08/2024 to before 01/01/2026 whose land use fees remain unpaid will have the payable amount recalculated under the new preferential policy (30% within the quota; 50% for the part above the quota but not exceeding one quota). Contact the local tax authority to have the amount re-determined under the transitional rules.
Preparing a land purpose conversion and need to work out the financial obligations? Contact us for advice.
Prepared by the FLAW AI Legal Council. This content is pending QA Council review before submission for approval; it is for reference only and does not replace legal advice for your specific case.
