Unlocking the Potential: Navigating Land Valuation Hurdles for Smooth Real Estate Ventures

On July 5-7, the Ho Chi Minh City Department of Natural Resources and Environment organized a conference to deploy Decree No. 71/ND-CP, dated June 27, 2024, of the Government on land prices.

Mr. Dao Quang Duong, Deputy Head of the Land Economy Department – Department of Natural Resources and Environment, said that the main point of Decree 71 is to guide in detail the Articles 158, 159, 160, 162, and 257 of the Land Law (amended) – which will take effect from August 1.

Decree 71 has four important new points, including a more specific and comprehensive method for calculating surplus, covering various types of costs and revenues. This will make it easier to establish land prices. The authority to issue land price decisions now rests with the chairpersons of the People’s Committees at the provincial and district levels, a change from the previous regulation. Adjusting the new price list does not require the approval of the Standing Committee of the Provincial People’s Council. Annual land lease does not depend on the regulation of above or below 30 trillion VND for real estate value.

According to Mr. Duong, the new surplus method is very open, practical, and clearer in calculating enterprise costs, including loan interest expenses, expected price fluctuation provisions, and land investment costs.

“In the past, land price determination has left many problems unresolved. It is very challenging to obtain complete information for land price determination, and some units have failed to find a pricing unit after 30 attempts. This is because there are many unique cases that are difficult to be objective about, such as determining land prices for parks, hospitals, schools, and zoos,” emphasized Mr. Duong.

At the conference, the Natural Resources and Environment Departments of the districts suggested the need for specific guidance on the source of funding for consulting fees for land price determination. Thu Duc City requires specific guidance on land prices because it is a combination of three administrative units, and there are significant price discrepancies on the same street, causing confusion. They also proposed that the Department of Finance guide the organization’s price appraisal costs, especially in handling cases where the appraisal unit is rented for more than 100 million VND and must be auctioned. If the appraisal unit is rented and the people do not agree to rent the appraisal unit, how will the cost be calculated?

Presiding over the conference, Mr. Nguyen Toan Thang, Director of the Department of Natural Resources and Environment of Ho Chi Minh City, said that, in the past, the districts had faced many difficulties in determining land prices. Decree 71 will resolve many of these problems.

Mr. Thang requested that the departments, branches, and districts, when encountering problems, send documents so that the parties could coordinate to deploy Decree 71 well. For now, the districts should use the old land price list with adjustments to suit the new decree. The department will establish three working groups to coordinate with the districts and review to adjust the land price list to be applied until December 31, 2025, following the market price. When Decree 71 takes effect, it will resolve many pending dossiers related to land pricing.