4 Compelling Reasons to Adjust Land Price Tables

Issued on January 16, 2020, the land price table currently in use in Ho Chi Minh City basically meets the requirements for management and budget revenue generation. However, the Ho Chi Minh City Department of Natural Resources and Environment (TN-MT) believes that when the Land Law of 2024 takes effect on August 1, the current land price table has four limitations.

Firstly, it is constrained by the regulations on the land price framework, with a maximum land price of only VND 162 million per square meter, which is not market-based. Secondly, it is only used for 8 cases of administrative procedures related to land. Thirdly, the application cycle of the current land price table is five years, making it difficult to update market fluctuations. And finally, it lacks resettlement land prices.

Previously, the land price table was constrained by the price framework, resulting in a maximum residential land price of VND 162 million per square meter in Ho Chi Minh City. Photo: Ngoc Thanh

Choose One of the Four Options

Based on the provisions of the 2024 Land Law, Ho Chi Minh City can continue to apply the current land price table until the end of 2025 or adjust the land price table according to the new law to suit the actual situation of local land prices.

According to the TN-MT Department, if the land price table is adjusted, the valuation must ensure market principles, meaning there will be no more provisions on the land price framework. Four options have been proposed by the department.

Option 1: Keep the current land price table without any adjustments. If this option is chosen, the prices in the land price table will be much lower than the actual compensation prices, resulting in unfairness among land users.

Option 2: Adjust by multiplying the prices in the current land price table with the latest land price adjustment coefficient (K). As a result, the land prices will still be quite low compared to the actual land prices.

Option 3: To address the lack of resettlement land prices, adjust the land prices according to the actual prices for roads planned for resettlement. For roads already included in the current land price table, calculate the land price by multiplying the price with the coefficient K.

Calculating the land price of roads already included in the current land price table by multiplying the price with coefficient K will have the same limitations as Option 2. Moreover, adjusting the land price of roads planned for resettlement according to actual prices will result in two significantly different price levels on the same road or between two adjacent residential areas, despite having the same infrastructure conditions.

In addition, there will be unfairness among land users. Previously, the price of resettlement land was determined based on market prices, but now it must be based on the land price table.

Option 4: Adjust the land price table according to the provisions of the 2024 Land Law to suit the actual situation of land prices in Ho Chi Minh City. This option was chosen for the development of the draft decision to adjust the land price table.

The data source for this option is selected from various sources, including compensation land prices, specific land prices approved by local authorities, actual land transfer prices from land registration agencies and tax departments.

Director of Ho Chi Minh City’s TN-MT Department, Nguyen Toan Thang, shares about the four options for adjusting land prices. Photo: Ho Van

Cases Affected by the Adjustment of the Land Price Table

There are 12 cases of land use that will be impacted when Ho Chi Minh City applies the adjusted land price table. Among them, the two most affected groups are as follows:

Firstly, those who are allocated resettlement land will be able to immediately determine the price of the resettlement land lot based on the adjusted land price table. This creates transparency and fairness in land acquisition and resettlement allocation.

Secondly, individuals who are recognized by the state for their land use rights and are allowed to change the land use purpose. In terms of recognition of land use rights, the adjusted land price table will have an impact when individuals go through this procedure, but the amount and rate of collection depend on the time of land use.

For changing the land use purpose, the impact of the adjusted land price table can be divided into two groups:

Group 1 includes 13 districts (Districts 1, 3, 4, 5, 6, 7, 8, 10, 11, Phu Nhuan, Binh Thanh, Go Vap, and Tan Binh) that are not affected as there is no agricultural land or the remaining agricultural land belongs to project boundaries.

Group 2 comprises the remaining 9 districts and counties, along with Thu Duc City, which are affected due to a total of 111,090.9 hectares of agricultural land.

The adjusted land price table will impact the collection of land use fees when individuals change the land use purpose for the area within the residential land limit. The area outside the residential land limit is not significantly affected because it has always been determined based on market prices. Now, this price is updated in the adjusted price table.

Preventing Double-Pricing and Reducing Land Speculation

In addition to the impacts mentioned above, Ho Chi Minh City’s adjusted land price table also affects the collection, payment, and penalties of five types of taxes and fees.

If the adjusted land price table is applied, individuals will have to pay higher income taxes when transferring land use rights. However, this is in line with the land price level in Ho Chi Minh City and helps prevent the declaration of selling prices that are much lower than actual transaction prices to avoid taxes.

The adjusted land price table will also increase the fines for administrative violations in the field of land and compensation to the state for causing damage in the management and use of land.

With the increase in illegal benefits to be returned and compensation, there will be a reduction in land speculation and delays in putting land into use.

With the application of the adjusted land price table, individuals have to pay higher income taxes when buying and selling houses and land. Photo: Hoang Ha

What About the 7,779 Land Lots That Have Not Been Certified for the First Time?

According to statistics, Ho Chi Minh City currently has 1,728,639 land lots. As of June 2024, the TN-MT Department has granted certificates for 99.55% of these land lots. The remaining 7,779 land lots that have not been certified are mainly in the outskirts of the city.

If the above 7,779 land lots are certified for the first time through the procedure for recognizing land use rights, they will fall into the group of six cases that are exempt from land use fees or the group of four cases where land use fees are paid at a rate of 10% to 60% of the adjusted land price.

In case of not meeting the conditions for land use fee payment, it is possible to defer the payment, and the fee can be paid when the land lot is transferred, in accordance with the regulations.

The Adjusted Land Price Table Ensures Harmonization of Interests

Through analysis and impact assessment, the Ho Chi Minh City Department of TN-MT believes that the adjusted land price table will supplement the price of resettlement land to avoid capital disbursement bottlenecks for key projects of the city.

At the same time, it will have a positive impact, creating fairness among different land user groups. When recognizing land use rights for households and individuals with a history of land use, the impact will not be significant.

“The issuance of the adjusted land price table is in line with the actual land prices in Ho Chi Minh City and complies with the 2024 Land Law. This ensures a balance of interests between the state, land users, and investors,” the TN-MT Department stated.

Anh Phuong

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