Proper land valuation vital to removing property bottlenecks

VIR's seminar "Proper land valuation to remove project bottlenecks"

Dao Trung Chinh, director of the Department of Planning and Land Resource Development under the Ministry of Natural Resources and Environment (MONRE) said that there were some loopholes in the task of deciding land prices.

Many localities have authorised the district People's Committees to determine land prices. However, the Land Law clearly stipulates that the provincial People's Committee is responsible for thiS. The Ministry of Justice has warned a number of localities on this issue.

"Therefore, the government has issued Resolution 73/NQ-CP 2023 on authorisation for deciding the specific land prices. It allows the provinces to authorise the district People's Committee to decide the land prices based on the actual situation in the localities. The government assigned the MONRE to amend Decree 44/2014/ND-CP on authority to set land prices.

"Nevertheless, some localities faced obstacles when determining the valuation. Thus, the government assigned the MONRE to continue amending Decree 44/2014/ND-CP and Circular 36 comprehensively," he added.

According to Tran Quoc Dung, deputy general director of Hung Thinh Corporation, as a property developer, Hung Thinh strongly hopes that Vietnam will have a method of calculating land use fees transparently. There is a clear formula for businesses to calculate investment costs, and people can determine their financial obligations. Meanwhile, the state agencies can remove the psychological burden and fear of responsibility from the law enforcement process.

"We expect the calculation method of land use fees to ensure mutual interests between the state, businesses, and people. The formula and method of money calculation should be specified in the Law on Land. As there are different land valuation methods in place, we suggest the government consider applying one valuation method to avoid overlaps," he said.

Lawyer Nguyen Hong Chung, chairman of the Board of Directors of DVL Ventures and vice chairman of Hanoi Real Estate Club pointed out that there are only three methods for deciding land prices: comparison, income, and the land price adjustment coefficient.

However, these three options fail to replace the surplus method when deciding land prices for mixed-use projects. Investors must invest in social infrastructure works such as electric lines, substations, and service works, which are handed over to the state for exploitation. It is also difficult to use the methods of comparison and land coefficient to determine land prices for off-plan properties.

He noted that the drafting agency considered that there was a lack of databases for deciding and assigning land prices based on assumptions. There may be subjective factors, like humans, in the identification of parties involved in the land valuation.

Professor Hoang Van Cuong, member of the National Assembly Finance-Budget Committee, said, "Everyone expects a simple and clear pricing method without risks and controversies. This is very challenging, as land valuation is a very difficult profession. Currently, Vietnam has five methods for determining land prices. If you want to remove the bottlenecks, you can add one more method. I think it's not the method but the person. Even if we remove one method, we can't fix the problem."

"Currently, most localities are pleased with the method of land price adjustment coefficient. Everyone can use this method, as it is simple, easy to use, and safe. However, to determine land prices transparently, we need to adhere to market principles. In addition, we should consider the interests of all parties without causing damage to landowners, businesses, or the state itself," he said.

According to Nguyen Quoc Hiep, chairman of GP Investment and chairman of Vietnam Association of Construction Contractors, land valuation is a hot topic as it is the cause of much congestion in the market. Each option has pros and cons. The surplus method is all assumptions. The accuracy depends to a degree on the subjective factors like the land appraisers, which may lead to budget losses.

He added that for the land price adjustment coefficient, it requires the land prices for the routes. However, many roads have yet to be built. If all factors are not considered, it will create more bottlenecks for the real estate market. The land valuation method will be based on a land price map, which will be released by 2025. All land valuation methods are provisional until 2025. Therefore, the government should be more flexible in land valuation.

Capitalise land and review land valuation Experts at the Vietnam Socioeconomic Forum 2022 on September 18 provided a multi-dimensional view and analysis of the regulations on land management and valuation, contributing to overcoming the income trap and boosting sustainable development.

Valuation: A tough issue for amending the Land Law Regarding amending the Land Law, land value is one of the biggest concerns the National Assembly is discussing.

Amended Land Law to provide land value index close to market value Both society and the economy may benefit from a land price index that closely reflects market prices.