Overview of Implementing A Land Price List That Reflects Market Value

A necessary change

For an extended period, the land price list has been significantly lower than actual market values. This disparity has entrenched a "dual pricing" system, which has led to several serious consequences.

Firstly, the management of land by the state has become increasingly complex. For instance, the discrepancy between the declared price on notarised contracts and the actual transaction price, often aimed at reducing land transfer taxes, has caused inefficiencies. In other cases, annual land lease payments based on outdated and lower-than-market prices have contributed to budgetary losses for the state.

Secondly, the development of real estate projects has been fraught with challenges, particularly in the phases of land acquisition and clearance. Compensation based on undervalued price lists has frequently resulted in delays, dissatisfaction, and financial loss for affected residents, ultimately leading to protracted disputes and land-related litigation.

Given these longstanding issues, adopting a land price list that is aligned with market realities is both inevitable and necessary. This progressive shift will address previous shortcomings, ensuring more transparency and fairness in the system. Crucially, a market-driven land price list is expected to facilitate smoother compensation processes, particularly in key infrastructure development projects, by fostering greater public consensus on compensation and support mechanisms.

When considering specific locations, it becomes evident that there is still a significant gap between the proposed land prices and actual market transactions. For example, on Cao Thang Street in District 3, the market price is approximately VND 525 million/m², while the proposed land price stands at VND 330 million/m². Similarly, in Tan Thang, Tan Phu District, market prices hover around VND 150 million/m², compared to the proposed VND 90 million/m². Thus, the proposed prices are roughly 60%, some other areas reach 70%, of the current market value in these areas, indicating that there remains a notable discrepancy.

Impact On Stakeholders

The 2024 Land Law, as outlined in Article 159, stipulates that the Land Price List will apply in 11 distinct scenarios. In Ho Chi Minh City, the proposed land price list will have varied effects on different groups:

Beneficiaries: Those eligible for state compensation and resettlement support (as stipulated in Articles 109 and 111 of the 2024 Land Law) are likely to benefit from the updated price list.

Opinion On These Changes In Ho Chi Minh City

The proposed land price list for Ho Chi Minh City, initially slated to take effect on August 1, 2024, has been delayed for further consideration. This postponement is appropriate, given the sharp increase in proposed prices compared to the current list, alongside the short timeframe for implementation. The rapid introduction would impose considerable financial pressure on affected groups. Therefore, the development and application of the land price list must carefully balance the interests of all stakeholders, with particular attention to ensuring the welfare of citizens.

In high-value areas, the approach to setting land prices appears to be an arbitrary multiplication of previous prices by a set factor for all streets. For example, in District 1, a uniform factor of 5.0 has been applied to all roads and locations. As a result, Dong Khoi Street is proposed at VND 810 million/m² (up from VND 162 million/m²), and Hai Ba Trung Street (from Ben Bach Dang to Nguyen Thi Minh Khai) at VND 484 million/m² (up from VND 96.8 million/m²). Similarly, District 4 has seen a factor increase of 11.3, and District 5 by 5.58. This method effectively replicates the old price list with a simple "K coefficient" multiplication, failing to reflect the true market value of specific streets or areas as envisioned by the Land Law.

In conclusion, while the initiative to update the land price list to reflect market values is an important step forward, the current proposal requires further refinement. The methodology needs to be more nuanced and tailored to specific regions, rather than relying on blanket multipliers. A gradual and transparent transition, taking into account the interests of all stakeholders, is essential to ensure the new system’s long-term success.