Cannot immediately stop "buying and selling real estate at two prices"

The Vietnam Confederation of Commerce and Industry (VCCI) has responded in writing to Official Dispatch No. 2298/UBKT15 of the National Assembly Economic Committee regarding the request for comments on the Draft Land Law (hereinafter referred to as the Draft). In particular, VCCI comments on the principles, bases, and methods of land valuation (Article 159 of the Draft Land Law).

First, input information to determine land prices according to land valuation methods.

Point a, b, Clause 3, Article 159 of the Draft stipulates input information for determining land prices according to land valuation methods including: Land prices recorded in notarized and certified land use right transfer contracts; land prices won at land use right auctions that are not affected by factors causing sudden price increases or decreases, transactions involving blood relations or other incentives recorded in the national land database; In cases where there is no land price information in the national land database, land price information is collected through investigation and survey.

VCCI believes that the above regulation, which will be applied immediately when the Law comes into effect, will be difficult to implement. VCCI explains that “Land prices recorded in notarized and certified land use rights transfer contracts” will not be consistent with reality, because currently real estate transactions still have two prices and it will take a certain amount of time to change this situation.

On the other hand, it is difficult to determine how "affected by factors causing sudden price increases" while the auction is conducted by the State and still has to ensure market principles.

The rigid regulation that “in cases where there is no land price information in the national land database, land price information must be collected through investigation and survey” may cause difficulties in practical application. Because, if during the land valuation process, the person implementing the valuation finds that there is “land price in the national land database” but it is not close to the market, then according to this regulation, it is impossible to “collect land price information through investigation and survey”.

"In short, the rigid regulation that only land databases or contract prices and auction prices can be used will reduce the flexibility of specific land valuation methods and ensure market principles," VCCI commented.

VCCI proposes to consider amending the above regulation in the following direction: In cases where there is no land price information in the national land database or the person conducting land valuation (valuator, member of the Land Valuation Council) finds that the price in the national land database does not ensure market principles, they have the right to collect land price information through investigation and survey.

Second, apply land valuation methods.

Point c, Clause 5, Article 159 stipulates: “The surplus method is applied to determine the price of land plots and non-agricultural land areas that have not been invested in technical infrastructure or have not been invested in construction works according to detailed construction planning, except for the case specified in Point d of this Clause”.

Thus, compared with current regulations, the cases of applying the surplus method have narrowed significantly. This needs to be reconsidered.

Because, the surplus method is a method of determining land prices based on the purpose of use with potential for future development. This method can be applied to value land plots that have not been invested in technical infrastructure, have not been invested in construction works or have been invested in construction works but these works can be demolished to build new works with the best and most effective use. Narrowing the application conditions of the surplus method can make the determination of land valuation methods inappropriate for a land plot or land plot with development potential.

VCCI proposed to consider regulating the conditions for applying the surplus method as currently regulated, that is, "The surplus method is applied to value land plots with development potential due to planning changes or land use purpose changes when the total assumed development revenue and total estimated costs are determined".

Wisdom

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