Boosting the real estate market from the amendment of the Land Law

VCN - The Land Law (amended) is expected to be approved by the National Assembly in October this year, concurrently with the Law on Real Estate Business (amended) and the Law on Housing (amended). These are considered important laws to promote the real estate market, which is still facing many obstacles and difficulties in development.
Need to control real estate prices Need to control real estate prices
Vietnamese real estate remain attractive to foreign investors Vietnamese real estate remain attractive to foreign investors
Using Tax policy to regulate real estate market Using Tax policy to regulate real estate market
The real estate market will gradually warm up and stabilize until the end of the year The real estate market will gradually warm up and stabilize until the end of the year
Boosting the real estate market from the amendment of the Land Law
It is necessary to improve institutions and policies to improve the efficiency of land use and management. Illustration: H.D

Towards market transparency

In recent statements, both management agencies and real estate businesses have said that 70% of problems of real estate businesses are related to legal procedures which are too many and complicated; although it has been a problem for many years, it has not been solved.

Although there are still many risks, it must be recognized that real estate is still one of the important economic sectors, playing a large role in the economy, making a great contribution to the state budget.

According to Mr. Pham Tan Cong, Chairman of the Vietnam Confederation of Commerce and Industry (VCCI), the real estate market in the past few years has had fluctuations, including a state of hot growth, freezing and stagnation.

While many legal issues related to land finance, the rights of enterprises in land use reveal inadequacies, so according to VCCI leaders, this poses new problems for sustainable development.

To solve this problem, businesses believe that it is necessary to amend the legal and institutional framework. In mid-2022, Resolution No. 18-NQ/TW of the Party Central Committee on continuing to renovate and perfect institutions and policies, and improve the effectiveness and efficiency of land management and use, etc., was issued.

This is considered an important orientation for the amendment and promulgation of the Land Law (amended), and an important premise to pave the way for policies on land management, use and capitalization.

Also during this time, the Prime Minister issued Directive 13/CT-TTg with many specific solutions to promote the safe and healthy development of the real estate market, including focusing on improving the quality of the real estate market and completing the legal system for the real estate market.

Therefore, the Draft Land Law (amended) is being widely commented on, given very specific comments by experts and businesses, focusing on key issues for market development of real estate market such as land lease; regulations on compensation and support upon land recovery; auction of land use rights, bidding for projects using land; principles of land price determination, land price list, specific land price; cases of exemption or reduction of land use fees, land rents, etc.

One of the policies that are expected to have the greatest impact on the real estate market is the government's removal of the land price bracket. Because in the past, the Government issued the lowest and highest prices for each specific type of land on a 5-year cycle, leading to a land price frame that was often different compared to market developments. Considering removing the land price bracket will help the market be more transparent, speed up the compensation process and build new projects, create a basis for full tax calculation, and increase revenue for the budget.

According to economic expert Dr. Can Van Luc, the land finance issue has many new points in the Draft Land Law (amended), but needs to be focused on solving in a more comprehensive, more fundamental, more thorough and consistent manner while "following market rules and principles", ensuring both scientific and practical suitability, and ensuring the legitimate rights as well as interests of the state, organizations, businesses and people.

This expert said that it is necessary to regulate the land price list that will be published annually. Regarding the regulation of revenue from land, it is advisable to supplement the purpose of regulating land revenue, including the use of revenue to serve land acquisition, resettlement, etc. Regarding land valuation methods, Dr. Can Van Luc said that only about three methods should be limited and should consider having a roadmap to apply land prices close to market prices. In addition, in order to be able to build a standard land price close to the market, it is necessary to standardize the land pricing process.

Limit the situation of double prices

The draft Land Law (amended) stipulates that the State invests in the development of land funds to meet the land use needs of investment projects, and auctions land use rights to generate revenue for the state budget; the land fund development is carried out according to investment projects decided by competent state agencies on investment policies, which must be for the right purposes, openly, transparently, effectively and according to the provisions of law.

Investment and real estate legal expert Nguyen Van Dinh said that the draft Land Law proposes stronger and more substantive regulations on the task of developing the State's land fund, helping the State exploit the "disparity to increase budget revenue, create investment capital and develop infrastructure. This is a new point in thinking and theory, which is expected to create a breakthrough in land policy in the coming period. However, regulations on land acquisition according to master plans on land use to create a land fund need to be carefully and objectively studied and evaluated.

Also related to this issue, Prof. Hoang Van Cuong, Vice President of National Economics University, acknowledged that, in fact, real estate transactions have two prices, the actual payment price between the buyer and the seller is always higher than the price stated in the contracts, affecting tax collection, causing budget loss.

Therefore, Mr. Cuong said that clear regulations on land development funds will certainly limit the situation of "two prices", the state budget will no longer worry about loss of revenue in real estate transactions, reducing pressure on investors. When building a local land price list, it must be close to the market price because the market price has been determined quite accurately in real estate transaction contracts.

Along with the above issues, Mr. Nguyen Van Dinh said that in order to effectively implement the new policy, it is not only encapsulated in the provisions of the Land Law but also related to the Law on Public Investment and the Law on State Budget.

The rampant implementation of land fund development projects in the form of public investment also has potential risks of loss, waste, and delays.

Therefore, the amendment of the Law Land needs to be associated with the synchronous amendment of relevant laws to create a legal framework for implementation.

At the seminar to collect comments for the Land Law (amended) recently held by VCCI, Deputy Prime Minister Tran Hong Ha emphasized the issue of control for effective land exploitation and use; control and regulate the land market stably without abuse to generate revenue from land resources.

Therefore, the Deputy Prime Minister suggested that the suggestions should be specific to create conditions for businesses, to commercialize the land, but it must be controlled and not let businesses take advantage.

By Minh Chi/Bui Diep

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