Proposal received mixed reviews
In a report sent to the Office of the Government on the reasons for the increase in real estate prices, the Ministry of Construction said it would study and propose a tax policy for cases of owning and using many houses and lands to limit speculation and buying and selling in a short period of time to make a profit.
Previously, the proposal to tax real estate was proposed by the Ministry of Finance in the draft Law on Housing and Land Tax 2009, at a rate of 0.03% for houses over VND500 million. Then, in 2018, the Ministry of Finance sought opinions on the Draft Law on Property Tax with two options for the non-taxable threshold for houses of VND700 million or VND1 billion, corresponding to a tax rate of 0.3% or 0.4%. However, these proposals were shelved due to strong public reactions.
At present, the above proposal of the Ministry of Construction continues to receive mixed opinions from the people.
Ms. Nguyen Thi Mai (Thanh Xuan, Hanoi) expressed her concerns about the house tax. "It takes a lifetime to save up to buy a small house, and taxing a second property will only add to the economic burden on people because the already high house prices may increase further."
According to Savills Vietnam's Q3/2024 real estate market data, the average primary apartment price reached VND69 million/m2, up 6% quarter-on-quarter and 28% year-on-year. The average secondary price reached VND51 million/m2, up 10% quarter-on-quarter and 41% year-on-year.
Ms. Do Thu Hang, Senior Director of Research and Consulting at Savills Hanoi, said that new supply mainly comes from the high-end segment and above, while affordable apartments have not appeared.
In the first 9 months of 2024, apartments over 4 billion VND accounted for 70% of the number of units sold, a sharp increase from 2% in 2020.Apartments from 2 to 4 billion VND accounted for 29% of the market share and only 1% of apartments were priced under 2 billion VND, showing a serious imbalance in the product structure of the apartment segment.
Dr. Nguyen Van Dinh said that the main reason for the increase in housing prices is the imbalance between supply and demand. The supply is too weak, lacking diversity and suitability for the majority of people. Meanwhile, the demand is very large. What needs to be done is to re-adjust the balance between supply and demand, so that supply has the opportunity to gradually move closer to demand. Only then will the selling price have the opportunity to be adjusted. And if we do not understand correctly and apply the tax calculation for second real estate in a rigid manner, it will certainly lead to unpredictable consequences.
Real estate tax should not be imposed yet.
Mr. Nguyen Quoc Anh - Deputy General Director of Batdongsan.com - commented that if real estate tax is imposed at this time, in the short term, people may stop trading to monitor market developments.That could create a lull that makes the real estate market stagnant.
"Imposing real estate tax is an important policy, but the timing of its application needs to ensure sustainable market development for the economy to stabilize," Mr. Quoc Anh commented.
Dr. Tran Xuan Luong - Deputy Director of the Vietnam Institute for Real Estate Market Research and Evaluation - said that real estate tax should not be imposed at this time because the current tax database is not complete. Because tax policies will be difficult to promote efficiency, and may even cause social instability and market imbalance.
According to Mr. Pham Duc Toan - General Director of EZ Vietnam Real Estate Investment and Development Joint Stock Company, the problem of real estate inventory is a burning issue for real estate businesses today. This leads to financial pressure and many huge consequences for businesses. "If taxation is not carefully calculated, it will become a "double-edged sword" that negatively affects the real estate market," said Mr. Toan.
Prof. Dr. Dang Hung Vo - former Deputy Minister of Natural Resources and Environment - commented that tax is a tool to regulate the market. However, tax policy needs a specific roadmap that is carefully calculated. It is necessary to build a land management infrastructure, connecting provincial administrative units to clearly track the amount of real estate owned by an individual, avoiding under-declaration or incorrect declaration to avoid paying taxes. Researching how to tax real estate so that it does not overlap with other taxes is also a point to pay attention to.
