Currently, many projects are in a situation where all procedures have been completed, the project has started construction, but the sale plan has to be postponed because the final step of paying land use fees has to be delayed because the land use fees have not been finalized.
For example, Phu Dong Real Estate Joint Stock Company said that in 2022, the company was approved for investment policy, planning, and construction permit for an apartment project in Di An City (Binh Duong Province). Immediately after receiving the construction permit, the investor received capital support from the bank for construction. To date, this project has been built up to the 10th floor, but the land use fee has not been paid yet, because the Department of Natural Resources and Environment has not yet appraised the land use fee. Until the financial obligations are fulfilled, Phu Dong cannot open for sale the project that will be formed in the future.
The leader of a real estate group in Ho Chi Minh City also shared his difficult situation with the story of land use fees. Almost all of this group's projects have not been developed for less than 7 years, some projects have lasted 10 years, 15 years. The most tiring thing is waiting to determine the exact amount of land use fees to be paid. There is a project of this group implemented since 2018 with the land use fee calculated to be more than 1,600 billion VND, up to now it has increased to 3,800 billion VND. However, that is still only a provisional estimate. With the new land price list still not written, will it increase further? The longer the legal process takes, the higher the interest costs will be, the costs will increase accordingly but it is still difficult to finalize the most effective business plan.
According to businesses, the reason for the slow land valuation and high land use fees is due to many inadequacies in the calculation method. The problem here is that state agencies always want the highest revenue and lowest cost to get the highest land use fees, while businesses want reasonable costs and appropriate revenue. This conflict causes difficulties for both businesses and management agencies.
According to Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association, among the 6 groups of reasons why projects are stuck in legal issues and cannot be implemented, and projects that have been implemented but cannot be granted pink books, the leading reason is due to problems in calculating land prices.
Mr. Chau said that Decree No. 44/2014/ND-CP of the Government on land prices has stipulated methods for land valuation. However, in reality, the criteria for implementing land valuation are stuck, mainly the surplus method. Although the Government has recently issued Decree No. 12/2024 amending and supplementing Decree No. 44/2014, key issues related to land valuation have not been included.
“Land pricing must be correct, sufficient, fair and not exploitative. The State should collect 10 dong, but should only collect 9 dong, the remaining 1 dong is considered as investment stimulus, people participating in consumption also contributes to economic development, nurturing revenue sources. In other words, regulations should be fair for the State, people and businesses,” Mr. Chau stated his opinion.
