Nguyen Toan Thang, director of the department, stressed that the adjustment of the 2020 land price framework aims at setting official land price levels that truly reflect the real situation. This is not the land price framework for application from January 1, 2026 in accordance to Clause 3 Article 159 of the 2024 Land Law.

Thang said the land price levels need adjustment because the current 2020 land price framework contains some problems. First, the 2020 frame has not been updated with the new land prices used to calculate compensation for people for site clearance. 

Second, the 2024 Land Law doesn’t stipulate the method of using coefficient to define land prices for land plots worth below VND30 billion.

Regarding the difference between the two land price frameworks, Thang said the 2020 frame is applied to six subjects, while the adjusted frame is applied to 12 subjects. Of these, four subjects will continue under the regulations similar to that in the 2013 Land Law, one subject will continue under nearly the same regulations and other subjects will be under completely new regulations.

The other subjects applying new regulations include: calculating land leasing fees annually; calculating land use fee when recognizing land use rights; calculating income tax from land use right transfer; calculating starting prices at land auctions; calculating land use fees in case auctions are not organized; and calculating land use fees in resettlement areas.

The HCM City Department of Natural Resources and the Environment said the adjusted prices have been fixed based on data from two major sources, including the land prices approved by appropriate agencies and land prices in successful transactions in the market, provided by tax agencies and land registration offices.

Asked about the possible impact of the land price adjustments, Thang said there would be two ‘unwanted effects’.

First, the households which want to change land use purposes will have to pay more for their financial duties than previously. However, it is fair if noting that the people who have to leave to make room for development projects will receive higher compensation for site clearance, and the compensation may be even higher than the prices in the official price framework.

Second, the adjusted price levels are 3-7 times higher than the currently applied levels. However, the adjusted prices are still lower than real market prices.

Meanwhile, the land price adjustment will bring positive effects. It benefits those whose land is taken back by the state because they can expect higher compensation for site clearance. The state will have higher collections from land. Dual-price scheme will no longer exist (the prices declared by buyers/sellers for tax calculation, and the real price applied at transactions). It helps accelerate public-investment projects. It helps reduce the time needed to define land prices and mitigates violations in land thanks to heavier punishments.

What will be land prices like?

Mentioning the specific impacts of the adjusted land price framework, Thang said those with rearranged resettlement properties would be able to immediately define the land prices of the resettlement land in accordance with the price framework. This will make land recovery and resettlement arrangement more transparent and fair.

The subjects to bear biggest impacts when the adjusted land price framework is applied are households and individuals who have land use right recognized and want to change land use purposes.

In the former case, the land use fees to be collected would depend on the time periods of using; the land. 

Some people think that the new land price levels would have a big impact on real estate traders and developers, because once the input costs increase, the product selling prices would also increase proportionally.

However, Thang affirmed that the land price adjustments won’t affect real estate firms, because the land use fees of real estate projects are determined by surplus method. The land prices to be determined would be different from the price levels in the price framework, as project costs are included in land prices

The other reason is that real estate prices will be determined based on supply and demand, so real estate developers cannot raise prices artificially.

Thang also disagreed with the opinion that the adjusted land prices in suburban districts would increase more sharply than inner districts by up to 50 times.

Anh Phuong