Extension is the default when a land lease nears expiry, but it is not always the cheapest choice. This article identifies when negotiating a fresh lease — on site or at a new location — serves an FDI company better.
The essential difference between extension and a new lease
Extension prolongs the existing lease on the same parcel, keeping location, assets on land and settled procedures intact; its conditions and term follow the Land Law 31/2024/QH15 and the project’s implementation status. A new lease establishes a different land relationship — at a new site, or restructured in place where land law allows — bringing fresh appraisal as a new land project and the possibility of revisiting lease conditions, unit prices and project-linked incentives. Extension optimises continuity; a new lease optimises the ability to renegotiate the whole package.
When a new lease yields better price and terms
Three typical situations: the current site has lost its edge — extension priced at a new high level while an alternative location is cheaper; the company needs more area or a function change the old lease structure cannot hold; or the new site sits in an area with higher investment incentives under Investment Law 143/2025/QH15 than the old one. Conversely, where the plant carries large remaining book value and the supply chain is welded to the location, a new lease’s price edge rarely offsets relocation cost and production interruption.
Relocation cost must be counted in full
An honest comparison table includes: dismantling, transport and reinstallation of machinery; production stoppage and lost revenue during the move; land, environmental and fire procedures at the new site; asset handling and site restoration at the old site under its contract; and people cost — retaining the team when the workplace moves. Only when this total still falls below the new lease’s price and incentive benefit over the remaining lifecycle is moving genuinely advantageous.
Does a new lease earn new-project incentives
Not automatically. Incentives attach to the investment project: a newly licensed or expansion-adjusted project may be considered for incentives under Investment Law 143/2025/QH15 and the sector and area incentive rules, while merely replacing a land lease contract creates no incentive by itself. To enjoy a new location’s incentives, the company must structure the project dossier accordingly and obtain the competent authority’s confirmation, rather than assuming a new lease equals a new project. Clarify this with the registration authority before deciding to move.
Frequently asked questions
When should you negotiate a new land lease instead of extending the old land?
When the old site has lost its price edge, when expansion or a function change cannot fit the old lease, or when a new site carries higher investment incentives — and the total benefit still exceeds fully counted relocation cost.
Can a new lease get a better price than an extension?
It can, if extension is priced at a new high level while an alternative site is quoting lower; but deduct relocation, production stoppage and new-site procedure costs before concluding it is truly cheaper.
What is the cost of relocating compared with extending in place?
Dismantling, transport and reinstallation of machinery, revenue lost during stoppage, land, environmental and fire procedures at the new site, restoring the old site, and team-retention cost.
Can a new lease enjoy incentives like a new project?
Not automatically. Incentives attach to a newly licensed or expansion-adjusted investment project under Investment Law 143/2025/QH15; merely replacing a land lease creates none, so structure the project dossier and obtain confirmation.
This article has been quality-reviewed by the FLAW AI Legal Council
