Brian Jeffrey
The 2024 Land Law introduces significant modifications, notably retiring the previous land price framework and modifying land price lists. Now, these prices will be updated annually, reflecting actual market values more accurately.
Land price lists play a crucial role in determining various fees, including land use fees, rental charges, taxes on land transfers, and penalties for legal infractions related to land. They also set the starting prices for land use rights at auctions.
A newly released land price list by Hanoi’s People’s Committee shows price increases of 2 to 6 times compared to earlier rates, effective immediately until late 2025.
Vu Cuong Quyet, CEO of Dat Xanh Mien Bac, mentioned that the refreshed land price list offers a closer alignment with market realities, aiding businesses in calculating taxes on land.
However, if taxes are aligned with market levels, there’s a likelihood of increased land conversion taxes, which could lead to higher real estate prices.
Quyet believes that this updated list will facilitate faster calculations of land use fees for ongoing developments, potentially increasing the housing supply. With a greater supply, realtors may be less inclined to raise housing prices excessively, helping maintain a more balanced market.
He also noted that the revised list could help eliminate the long-standing issue of ‘dual pricing’, ultimately improving tax collection.
As local authorities set land prices in closer relation to actual market values, starting prices in land auctions will rise, leading to higher deposit requirements for bidders and enhancing auction transparency.
A current challenge is that starting prices for land auctions are often too low, resulting in winning bids that are significantly higher. “The new pricing will encourage bidders to be more careful, given the increased deposit costs,” Quyet explained.
Vu Kim Giang, Chair of SGO Group, expressed optimism that the revision would promote better transparency in land pricing and aid in evaluating land, which has faced challenges over the years, unlocking stalled development projects.
However, he cautioned that the increased project costs linked to the new pricing structure would mean that only financially robust real estate firms with significant experience could effectively manage their land portfolios.
“When costs align with market rates, plus developers’ expected profits, real estate prices are likely to rise depending on location,” Giang stated.
Additionally, landlords of office and commercial spaces will need to revise their rental rates due to increased land leasing costs from the government.
The Hanoi Department of Natural Resources and the Environment indicated that the new price levels were informed by market price surveys over the past two years.
In contrast, Nguyen Van Dinh, deputy chair of the Vietnam Real Estate Association, argued that the elevated land prices in Hanoi could hinder market activity, as many prospective homebuyers find the prices prohibitively high. This has led to a market dominated by investors and speculators, with some unable to resell properties purchased at inflated prices.
“It’s unwise to base official land price levels on transaction prices, which are often artificially inflated by speculation,” he commented, warning that such high prices could deter legitimate buyers.
