The HCM City People’s Committee has sent a document to the Prime Minister on the land price adjustment coefficient method (K coefficient) used to determine land prices.

The agency said it had faced problems making these assessments. The method has been used to calculate receipts for financial obligations and for state compensation when taking back land from people, and under certain regulations of the 2013 Land Law and related decrees and circulars.

The first step taken is planning the land price to submit to provincial people’s committees for approval. After that, auctions are organized to choose consultants.

According to the HCM City People’s Committee, it is difficult to implement the planning because they are only predictions. 

Meanwhile, the organizing of auctions to choose consultants is also difficult work because of overlapping laws.

Under current regulations, when determining land prices, consultants have to collect information about three land plots at minimum that have similar characteristics with the land plot that needs valuation. 

The three land plots must have been successfully transferred to the market.

However, information collection faces difficulties because transactions are not transparent and the real transaction prices are not accurately shown in contracts.

In many cases, the use of two different land price assessment methods for the same land plot leads to two different results.

Regarding the time needed to consider dossiers, according to the HCM City People’s Committee, it needs 3-6 months to consider the land plots with value of VND30 billion or higher (calculated under land price framework set by local authorities). 

However, in some cases, it takes one or several years because of regular changes of the laws.

Citing problems, HCM City wants the Prime Minister to allow it to determine a K coefficient that fits the local conditions. The K coefficients will be submitted to the city people’s council for approval.

If so, the municipal authorities would set a K coefficient to calculate land use fees and land rents for all land plots, regardless of the value of the plots (above or less than VND30 billion), instead of hiring consultants to determine land prices as currently applied.

Real estate firms’ complaints

Among hundreds of housing projects in HCM City, many are facing problems in determining land use fees. Investors want to fulfill financial obligations as soon as possible so that home buyers can get a ‘pink book’ (certificate of house ownership and residential land use rights).

At Moonlight Residences apartment project in Thu Duc City, developed by Ngoi Sao Gia Dinh, buyers received apartments in 2019 but still have no pink book because agencies are still determining the additional financial obligations for the technical infrastructure land.

The same situation is occurring with the Richmond City project in Binh Thanh district developed by Binh Trieu Engineering JSC.

The apartments were put into use in 2021, but the developer still has not fulfilled financial duties. A representative of Binh Trieu said this is because agencies have not defined the amount of money the company has to pay. 

To date, the company has paid VND168 billion in advance.

A 4.5-hectare residential quarter project in Phu Thuan ward in district 7 by Anh Tuan Investment JSC is facing the same problem.

Nguyen Toan Thang, director of the HCM City Department of Natural Resources and the Environment, said the regulations related to the appraisal of land prices change regularly. 

Despite great efforts by officers to accelerate procedures, the process still lasts a long time. 

The tardiness in land price determination leads to delays in mobilizing resources for the state budget, loss of investors’ opportunities, and delayed socio-economic development.

The department has suggested that the HCM City People’s Committee write an amendment to replace Resolution 54/QH14 on the pilot special mechanism for HCM City.

Anh Phuong