The Ministry of Natural Resources and Environment is drafting a Decree amending and supplementing a number of articles of Decree No. 44/2014/ND-CP dated May 15, 2014 of the Government regulating land prices and Decree No. 10/2023/ND-CP dated April 3, 2023 of the Government amending and supplementing a number of articles of the Decrees guiding the implementation of the Land Law.
Currently, according to Decree No. 44/2014/ND-CP, there are 5 land valuation methods: direct comparison method; deduction method; income method; surplus method and land price adjustment coefficient method.
However, in the draft, the Ministry of Natural Resources and Environment proposed 4 methods of land valuation.
Firstly, the comparison method is implemented by adjusting the price of land plots with the same land use purpose that have been successfully transferred on the market, winning the auction of land use rights (comparative land plots) through analyzing and comparing factors affecting land prices after excluding the value of assets attached to the land (if any) to determine the price of the land plot to be appraised.
Second, the income method is calculated by dividing the average annual net income per land area by the average savings interest rate (r) of 12-month deposits in Vietnamese Dong (VND) at commercial banks with more than 50% of charter capital owned by the State in the province for 3 consecutive years (calculated from January 1 to December 31) before the valuation time.
Third, the surplus method is implemented by taking the total estimated development revenue minus the total estimated development cost of the land plot or land area on the basis of the most efficient land use (land use coefficient, construction density, maximum number of floors of the building) according to the land use planning and detailed construction planning approved by the competent state agency.
Fourth, the land price adjustment coefficient method is implemented by multiplying the land price in the land price table by the land price adjustment coefficient. The land price adjustment coefficient is issued by the People's Committee of the province or centrally-run city (Provincial People's Committee) through comparing the land price in the land price table with the common land price on the market.
Conditions for applying land valuation methods
The comparative method is applied to determine land prices when there are at least 3 comparable plots of land that have been transferred on the market or won the auction for land use rights, except for the cases specified in Clauses 2 and 3 and Points a, b, c and d, Clause 4, Article 5.
The income method is applied to land valuation when determining income and expenses from land use, except for the cases specified in Clauses 1 and 3 and Points a, b, c and d, Clause 4, Article 5.
The surplus method is applied to value land plots and land areas with development potential due to changes in land use purposes or planning changes when total development revenue and total development costs are determined, except for the cases specified in Clauses 1 and 2 and Points a, b, c and d, Clause 4, Article 5.
The land price adjustment coefficient method is applied to determine the price of land plots and land areas in the following cases: Cases specified in Point a, Clause 4, Article 114 and Clause 3, Article 189 of the Land Law; Calculating annual land rent in cases where the State leases land without auctioning land use rights; Starting price for auctioning land use rights when the State allocates land or leases land in cases where land plots and land areas have been invested in technical infrastructure according to detailed construction planning. With this provision, the Ministry of Natural Resources and Environment proposes 2 options:
Option 1: Determine the land price of the land plot or land area that needs to be appraised with a total value calculated according to the land price in the land price list for the area subject to land use fees and land rent of less than 90 billion VND for centrally-run cities, less than 30 billion VND for mountainous and highland provinces, less than 60 billion VND for the remaining provinces in the cases specified in Points b and d, Clause 4, Article 114, Clause 2, Article 172 of the Land Law and the case of calculating land rent paid in one lump sum for the entire lease term when the State leases land without auctioning land use rights;
Option 2: Determine the land price of the land plot or land area that needs to be appraised to calculate land use fees and land rent for households and individuals in the cases specified in Point b, Clause 4, Article 114; Clause 2, Article 172 of the Land Law and the case of calculating land rent paid in one lump sum for the entire lease term when the State leases land without auctioning land use rights.
Determine specific land prices to calculate compensation when the State reclaims land in cases eligible for compensation according to the provisions of the Land Law but not eligible to apply the land valuation method prescribed in Clause 1, Article 5.
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