new land price HN ThachThao.jpg
Hanoi City (photo: Thach Thao)

A critical change in the 2024 Land Law is the elimination of a land price framework and changes in land price lists. Land prices will be updated annually, which more truly reflects market prices.

Land price lists are used to calculate land use fees, land rental, income tax from land transfers, and fines and compensation in land-related legal violations. They also determine starting prices for land use rights auctions.

Hanoi's People's Committee has issued a new land price list that is 2 to 6 times higher than the previous one, effective immediately until the end of 2025.

Hanoi's People's Committee has issued a new land price list that is 2 to 6 times higher than the previous one, effective immediately until the end of 2025.

Vu Cuong Quyet, CEO of Dat Xanh Mien Bac, told VietNamNet that the updated land price list defines land prices more accurately, closer to market prices. It will also be the basis for enterprises to define land taxes.

However, if land taxes are defined in accordance with market prices, land use conversion taxes will be higher, leading to higher prices of real estate products in the market.

Quyet commented that the new land price list would do more good than harm, because the list will speed up the calculation of land use fees for ongoing projects, thus helping increase the housing supply. Once the supply is plentiful, realtors won’t dare push housing prices up too much, but set prices at reasonable levels to balance market supply and demand.

He went on to say that the adjusted land price list will also help restrict the ‘dual pricing’ which has existed for a long time, thus helping collect more tax.

As the land prices set by local authorities are closer to real market prices, the starting prices set for land auctions will be higher. So, attendees at land auctions will have to pay more for deposits, which will make the land auctions more transparent. 

The current problem is that the starting prices set for land auctions are too low (starting prices are defined based on land price lists promulgated by local authorities, not market prices). As a result, at land auctions, the winning prices are many times higher than starting prices.

“The new land price list, with higher price levels, will help ‘filter’ land auctions attendees. They will have to be more cautious when deciding whether to attend auctions, because the deposits they have to pay to attend will be higher,” he explained.

Vu Kim Giang, Chair of SGO Group, also believes that Hanoi's new land price list will make the land pricing more transparent, thus boosting land evaluation which has faced hurdles for years, and helping unlock stalled projects.

However, he warned that the cost prices of real estate projects will increase in accordance with the new land price list. So, only real estate firms with powerful financial capability and many years’ experience can develop their land banks.

"When input prices align with market prices, coupled with developers' profit expectations, the prices of real estate products will increase, depending on the area," Giang commented.

Meanwhile, the owners of office buildings and commercial retail premises for lease will have to adjust rentals because they have to pay more to lease land from the state.

According to the Hanoi Department of Natural Resources and the Environment, the new land price levels were set based on market price surveys conducted in the last two years.

However, Nguyen Van Dinh, deputy chair of the Vietnam Real Estate Association, said the land prices in Hanoi are too high, which affects consumption in the market, because people who want to buy houses for accommodations cannot afford real estate. Therefore, most of the transactions in the market are conducted by investors and speculators. In many cases, they cannot sell products after buying them at very high prices.

“It is unreasonable to set official land price levels based on the prices in transactions, because the prices in transactions are ‘artificially pushed up’ by speculators,” he explained, warning that the high prices of real estate products will keep real buyers away.

Hong Khanh