VIETNAM, August 29 –

HÀ NỘI — Removing the government-issued land price framework will make the market more transparent and prevent real estate from skyrocketing, according to Minister of Natural Resources and Environment Trần Hồng Hà.

The minister asserted that removing the land price framework is the right policy to amend the land law as the existing land price table has revealed many problems.

When the state land price framework is abolished, only land price grids established by localities will be maintained, and grid prices will be closer to market prices.

With land prices approaching real market prices, the financial responsibility of companies and land users could increase, and the state budget would also increase. This helps the state to invest more in socio-economic development, for the benefit of the people.

Meanwhile, land users will be compensated for the correct land values ​​when the state recovers, which is a direct benefit to land users.

Businesses and government also enjoy many benefits. The new land price table will encourage companies to shorten site clearance time, save resources and shorten investment project implementation time.

However, in the draft law, there are regulatory mechanisms so that land prices are not too high, avoiding increasing the costs of production inputs and the prices of products that reduce competitiveness.

“The price of land is determined by supply and demand in the market, so the removal of the land price framework will not affect the real estate market,” Hà said. “Land allocation or land leasing is mainly done in the form of public auctions and tenders for projects.”

“The State does not intervene in land prices on the market. However, the State will manage and regulate the real estate market through solutions such as an increase in the land supply for the market, strict management of the land-use planning and the use of tax tools.”

According to the Minister, regulating the market is also a means of combating land speculation due to forecasts of rising land prices. If the market supply is really scarce, leading to an increase in real estate prices, the state needs a land fund to regulate this market.

The land price framework stipulates only the minimum and maximum levels according to the regions and geographical areas of the region, serving as a basis for the localities for the establishment of local land prices with an adjustment coefficient of at most 30% of this base rate issued by the Ministry of Natural Resources and Environment.

Meanwhile, the domestic real estate market is constantly changing, making this land price chart quickly out of date with market prices, especially in cities.

For example, in the land price table, the highest land price in special urban areas is 129.6 million VNĐ per m², according to Hà.

This price is allowed to fluctuate by a maximum of 30% to reach more than 164 million VNĐ per m², which is low compared to market prices in Hàng Ngang and Hàng Đào streets, Hà Nội or the central areas of District 1 , City of Ho Chi Minh City.

Consequently, localities find it difficult to promulgate land price grids in line with actual land prices on the market.

The removal of the government-issued land price framework should help local authorities to establish their land price tables that approximate market prices. This will eliminate the two-price mechanism and increase state budget revenue.

Minister Hà said that the draft amendment to the land law contains specific provisions on the annual table of land prices.

This land price table calculates land use fees, land use change fees and all kinds of land related taxes.

It also calculates land rents from agricultural land and compensation when the State recovers land.

Going forward, the government will apply financial and fiscal tools to limit land speculators, Hà said. State management agencies will consider imposing a tax on land that is slowly being used after auction because investors wait for prices to rise.

The state will impose a higher tax on speculators who sell real estate products immediately after purchase.

Land is now abandoned in many places due to projects being put on hold to wait for an increase in land prices and unused farmland, according to Hà.

“The ministry is focusing on building a table of land prices based on land value for each region by mapping land prices. The region having many land transactions will soon build a database for land valuation,” Hà said, adding that in 2025, to have a land database, including a land price map.

Việt Nam will also have a new land pricing system within the next five years, according to Hà.

He said the task of amending the land law this time is to build a multi-purpose land information system. It is a solution to reform administrative procedures, ensure transparency and control land resources. It is also a channel that provides information on land policies and guidelines for the population.

The Minister affirmed that land is an important resource of the country. The land law is revised this time to solve the difficulties and create a new motivation for socio-economic development.

This means that beyond strict management, the State must develop a system of simple and transparent management tools, particularly in determining land scales in localities.

The government plans to submit the revised land bill to the National Assembly in October. By 2023, the land law amendment of 2013 must be completed. —VNS