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HoREA proposes changes to Land Law

Released at: 15:13, 27/07/2017

HoREA proposes changes to Land Law

Illustrative image (Source: HoREA)

Mechanism for land use fees in need of change, according to HoREA, as it burdens both enterprises and purchasers.

by Ngoc Lan

The Ho Chi Minh City Real Estate Association (HoREA) has released a document on amending and supplementing a number of issues in the Land Law 2013, including a proposal to change the mechanism for land use fees.

The law took effect on July 1, 2015 and has had a positive influence on the economy and the real estate market, contributing to protecting the legitimate rights of land users.

But after three years of implementation there remain many deficiencies that need to be amended or supplemented, especially regarding land use fees.

According to HoREA, the land use fee problem is a “bottleneck” for the property market and a burden that real estate businesses and owners both shoulder.

There is also a lack of transparency, with investors being unable to predict the fees prior to making investment decisions. The “ask-give” mindset also prevails.

HoREA therefore proposed changes to the mechanism for land use fee calculations to cut housing costs, increase transparency, and eliminate the “ask-give” mindset in the property market.

In order for the market to fully function in Vietnam’s market economy, HoREA also proposed two modifications. First, viewpoints on land use fees must change and such fee should be considered as a tax, as suggested by the Ho Chi Minh City People’s Committee. Land use fees should be removed in the long term and replaced with a land use tax at certain rates, suggested at about 10 or 15 per cent of the listed land price. The application of a land use tax would help businesses and purchasers, according to HoREA. Businesses would also be able to predict the land cost when investing in projects and the State, meanwhile, would have a stable, long-term source of tax income.

Second, enterprises should be allowed to participate in the process for determining land use fees and the process for preparing and evaluating land prices should be shortened from three years to one year.

HoREA also proposed the removal of the annual land price list, replaced by a land price list valid for five years.

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