“Finding Stability in the Real Estate Market”

In a recent meeting with local authorities to review the three-year implementation of Resolution 18 on land management and usage on June 26, Deputy Prime Minister Tran Hong Ha suggested that Vietnam needs to review its tax policies, especially regarding vacant and inefficiently used land.

However, the Deputy Prime Minister emphasized that the taxation should avoid conflicting with the policy of land accumulation in agriculture. Taxes must target property speculators and not be applied indiscriminately.

According to the Ministry of Construction, in the first quarter, real estate transactions for apartments, detached houses, and land lots increased by 16-32% compared to the previous quarter, while prices for various types of real estate continued to show upward trends. The real estate market is also facing an imbalance between supply and demand, with an inappropriate product structure.

Speaking to
Tien Phong

journalists, Mr. Nguyen Anh Que, a member of the Vietnam Real Estate Association, analyzed that the recent surge in housing and land prices in Hanoi, Ho Chi Minh City, and surrounding areas has impacted people’s accessibility. Therefore, the government has tasked the Ministry of Finance with studying the imposition of real estate taxes to stabilize housing and land prices.

However, Mr. Que pointed out that the country aims for double-digit growth, and production risks facing higher taxes than before, along with significant public investment. This highlights the crucial role of the real estate sector in driving economic growth. Faced with these dual challenges, the government must navigate a delicate balance between taxing to stabilize the real estate market and creating conditions for its further development.

Mr. Que proposed that the taxation should apply to second and subsequent properties, including land and houses. In cases where one of the properties is inherited from parents for worship purposes, it should be exempt from taxation. If a person has two or more properties intended for their children, the necessary procedures for gifting to children should be followed.

According to Mr. Que, this taxation should be piloted in Hanoi and Ho Chi Minh City first, with progressive tax rates based on the number of properties or their value.

Additionally, Mr. Que suggested imposing taxes on vacant properties, with clear criteria to define what constitutes a vacant property and the authority responsible for assessment. He also recommended a progressive tax structure based on the holding period: less than 6 months – 6%, less than 12 months but from 6 months – 5%, less than 18 months but from 12 months – 4%, less than 24 months but from 18 months – 3%, and over 24 months – 2%.

Economist Pham The Anh agreed that taxing second homes would curb speculation and hoarding of real estate, which has led to “ghost towns” and a shortage of supply in the secondary market, driving up house and land prices unreasonably. Vietnam should consider imposing a tax on second homes and beyond due to the multiple benefits this tax could bring.

“When the cost of owning a second home increases due to taxation, hoarders will be inclined to use their properties more efficiently by renting them out, putting them into production or business, or being compelled to sell,” said Mr. The Anh.

According to Mr. The Anh, taxation will increase the supply, help cool down housing prices, promote a healthy market, and prevent resource wastage.