If approved, the price of land in Ho Chi Minh City will increase sharply. In some cases, directly affected by new land prices, housing prices will also increase.
Groups of people directly affected
Regarding the draft decision to adjust the land price list in 2020 of the Department of Natural Resources and Environment of Ho Chi Minh City, many opinions are concerned about the increase in land prices, causing people to pay more land use fees.
According to the Department of Natural Resources and Environment of Ho Chi Minh City, after synthesizing opinions, the unit will finalize the draft and submit it to the People’s Committee of Ho Chi Minh City for consideration. After that, the draft will be submitted to the City People’s Council for approval.
The Department of Natural Resources and Environment of Ho Chi Minh City said that the adjustment of the land price list in 2020 is carried out in accordance with the Land Law in 2024, based on market principles and when applied, it will affect 12 groups of subjects.
For the group of cases arranged for resettlement, the adjusted land price list will ensure the similarity of specific land prices and in accordance with the market price.
For the remaining 11 subjects according to regulations, the adjusted land price list will directly affect many groups of subjects.
First, the group of households and individuals that are recognized and change the land use purpose will apply the land price list to all areas regardless of whether they are inside or outside the quota.
In particular, the land area outside the quota is not affected because the land price list is built according to market principles. However, with the land area within the quota, there will be consideration of land use timelines to determine the collection rate on the basis of the land price list.
Next is the group of subjects subject to land use tax. Previously, the land use tax rate was applied at 0.03% of the land price in the land price list. In the near future, the land price list will be adjusted to approach the market price, so the land use tax rate will increase.
The new land price list will be applied to cases such as: Calculation of fees in land management and use; calculation of fines for administrative violations in the field of land.
Calculate compensation for the State when causing damage in land management and use; calculation of land use levy for the case of sale of state-owned houses to current tenants.
People whose land is recovered are commensurately compensated, it is forecasted that house prices will increase
Sharing with VietNamNet reporter, Dr. Le Ba Chi Nhan – an economist, said that he supports the adjustment of the land price list by the People’s Committee of Ho Chi Minh City in the direction of increasing the price of all types of land. Because the increase in land prices will bring many benefits such as the State increasing tax revenue, transparent market, and balancing interests between parties participating in real estate transactions.
According to Dr. Le Ba Chi Nhan, the group that benefits first when the land price list increases is those who have their land expropriated. The price of new land built in the direction of proximity to the market will help the compensation for people whose land is recovered more commensurate than before.
Regarding the opinion that the increase in land prices will lead to an escalation of housing prices, Mr. Nhan said that house prices in the coming time will increase but not significantly. Because when the land price list is close to the market, all transactions will become more transparent.
“It is necessary to separate land prices and house prices. I have not seen anywhere where real estate investors are as profitable as in our country. Recently, house prices have been pushed up mainly by investors and secondary investors. Now the game will be more transparent,” the economist said.
According to Mr. Le Hoang Chau – Chairman of the Ho Chi Minh City Real Estate Association (HoREA), the increase in land prices will immediately impact the real estate market. At that time, housing prices will increase accordingly. House prices are constituted by many factors, including the cost of fulfilling financial obligations on land to the State.
The Chairman of HoREA said that land use levy usually accounts for about 10% of the cost of apartments in apartment projects. This figure in the type of townhouses and villas is 30% and 50% respectively. Land use levy is also the basis for investors to decide on the selling price.
According to Mr. Chau, the increase in housing prices will reduce the scale of the total demand for affordable housing, because a part of customers can no longer afford to buy a house.
If housing prices increase too sharply, it can lead to a decrease in the size of transactions in the real estate market, affecting the high-end real estate segment first. In addition, the size of the secondary investment market will also be narrowed.
