The Ho Chi Minh City Real Estate Association (HoREA) has submitted a proposal to the National Assembly regarding the draft Resolution on mechanisms and policies to address challenges in the implementation of the Land Law.
In the document, HoREA Chairman Le Hoang Chau highlighted that several localities are calculating land use fees and land rent by multiplying the land price table with a land price adjustment coefficient. This method significantly increases the financial obligations of businesses compared to the surplus method.
Analysis of specific examples reveals a substantial disparity between the two calculation methods, sometimes by several folds. For instance, a 1-hectare plot on Nguyen Xien Street (Thu Duc City) has a land price of 56.6 million VND/m², with an adjustment coefficient of approximately 1.4. This results in a calculated land price of 80 million VND/m².
However, applying the surplus method to a high-rise apartment project (based on project revenue minus construction, management, loan interest, and profit) yields a surplus value of only 35 million VND/m². This is 2.28 times lower than the 80 million VND/m² calculated earlier.
High land costs force developers to increase apartment prices. Photo: Hong Khanh |
HoREA calculates that to avoid losses, developers would need to raise selling prices to over 100 million VND/m² if they pay land use fees based on the adjusted land price method.
Another case on Dang Cong Binh Street (former Hoc Mon District) shows an even larger discrepancy. The land price is 18.5 million VND/m², with an adjustment coefficient of approximately 2, resulting in a price of around 37 million VND/m².
However, the surplus method yields only 9 million VND/m², six times lower than the 37 million VND/m². According to HoREA, to avoid losses, developers would need to increase apartment prices to over 70 million VND/m².
The association also cited the Ho Chi Minh City Department of Agriculture and Environment, which opined that determining land prices by multiplying the land price table with an adjustment coefficient is inappropriate and requires careful study to analyze its economic impacts.
Based on these real-world calculations, HoREA argues that applying the land price formula of the price table multiplied by the adjustment coefficient (K1) is unsuitable for large-scale real estate projects with high land use coefficients and complex technical specifications.
Pricing land for high-rise real estate projects, urban areas, or commercial housing differs significantly from pricing small plots or individual houses.
HoREA notes that the vast differences in land use scale, land use coefficients, and investment rates among affordable, mid-range, and luxury housing segments make a uniform adjustment coefficient impractical.
HoREA suggests dividing the coefficient K into three groups: K1 as the general adjustment coefficient applied from January 1 each year, K2 for compensation when the state recovers land, and K3 as a specific coefficient for calculating land use fees and land rent for real estate projects.
Specifically, coefficient K3 should be determined by the provincial People’s Committee for each project or project type. For example, for the Nguyen Xien Street plot, if K1 is 1.4 but K3 is 0.4, the land price would decrease from 80 million to 32 million VND/m².
Additionally, HoREA proposes that the City People’s Committee issue specific decisions on land price adjustment coefficients for project groups of the same type in the same area or for individual large or unique projects.
Hong Khanh
– 22:09 01/12/2025
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