Southern hub to play with a straight bat

The city is looking to keep its property market vibrant

According to the proposed 2011 land price list sent to the municipal legislative body by the city’s people’s committee, the southern hub will have 118 new streets added to the list, raising the city’s total street number to 3,003. Of which prices for 2,885 will be kept the same together with no adjustment to the highest and lowest pricing levels.

The list, which is expected to be put into force from January 1, 2011, will see District 1’s Nguyen Hue, Dong Khoi and Le Loi streets still holding the highest pricing level of VND81 million ($4,400) per square metre while the lowest price of VND1.2 million ($62) per square metre will be also held for Can Gio district.

For land used for production and commercial purposes, prices will be as much as 60 per cent lower than the ones applicable for residential purposes at a specific location. The prices for agricultural land, which range between VND43,200-VND190,000 ($2.3-$10) per square metre in 2010, will be the same in 2011.

The land price list will be the basis for the city to calculate land use fees,  property transfer profit gains taxes and property ownership licencing fees applicable to land-related dispute violators.

Ho Chi Minh City’s real estate market in 2010 has not seen many fluctuations to result in remarkable changes to its land valuations, so the same land price list is expected to help stabilise its real estate market, accelerate property investment in 2011 and speed up land use certificate issuance work, which has been stuck due to many low-incomers’ delay in paying land use fees.

However, Dat Lanh Real Estate Company director Nguyen Van Duc said: “This move will not help at all as the real or market-based land clearance prices have doubled or even tripled the prices set in the list. We [real estate traders] still have to accept the reality of two-price mechanism in Vietnam.”

He said the only way to boost land clearance work was the city’s reduction in administrative procedures during licencing and authorities staying side-by-side with developers during the land clearance processes.  

The southern economic hub has still been hit with land use right fee disputes, such as the one between Phu My Hung Corporation and more than 5,000 homebuyers which centred on land use taxes defined on the basis of District 7’s land price list in 2009 being so high that most homebuyers could not afford them. Paying land use taxes is a prerequisite for homebuyers to get property ownership certificates.

Phu My Hung area’s land use fees in 2008 was VND1.7 million-VND6.4 million ($99-$370) per square metre, while in 2009 the tariff was between VND1.8 million-VND12.1 million ($100-$700). The tariff almost doubled from 2008 to 2009.

However, Deputy Prime Minister Hoang Trung Hai also recently directed local authorities to calculate land use fees in the area based on the time the homebuyers signed contracts with the developer Phu My Hung.

Accordingly, if the contract was signed before November 16, 2004, the fees will be counted in accordance with Decision 112 issued in 2002. If the contact was made within November 16, 2004 and July 1, 2007, the fees will be decided as regulated in the Decree No.181. The land use fees will be up to Decree 84 if the contracts were signed from July onwards.

Most of real estate insiders support the government’s direction as it will be more favoured for the homebuyers as most of their contracts were signed by 2005 when the land prices in the area were much lower than now.