Even areas with poor infrastructure apply high official land prices, with some places showing signs of speculation and artificially high prices used as the official pricing basis, Nguyen Van Dinh, vice chair of the Vietnam Real Estate Association, pointed out during a recent seminar. 

He cited problems in the land pricing method based on market principles, including the lack of clear distinction between primary and secondary pricing systems.

In speculative markets, inflated prices are sometimes adopted into official price tables, inadvertently legitimizing “artificial prices”.

“This situation increases enterprises’ financial obligations, driving up real estate costs. Consequently, homeownership becomes increasingly out of reach for people,” Dinh explained.

Nguyen Quoc Hiep, Chair of the Vietnam Association of Construction Contractors (VACC) and Chair of GP.Invest, shared an example from a Hanoi project. 

In the first land allocation decision for over 7 hectares, an enterprise had to pay land-use fees within 30 days. In the second allocation decision (8.4 hectares), the land price rose 20 percent from the first, and by the third allocation (6.7 hectares), it had increased another 20 percent.

“Prices increase for each allocation, unreasonably inflating enterprise costs. This is a major limitation,” Hiep said.

He acknowledged that abolishing “specific land prices” and adopting annual price tables adjusted by coefficients is a significant step forward, but clear criteria for setting these coefficients are needed.

“One of our projects faced a land price coefficient 2.8 times the published table. This is unreasonable, and without clear standards, arbitrary applications create significant risks for businesses,” Hiep noted.

What will the amended Land Law address?

Associate Prof Nguyen Dinh Tho highlighted the vast gap between government land price frameworks and market prices, affecting both citizens and businesses.

In Hanoi and HCM City, many households face difficulties when changing land-use purposes due to high financial obligations based on price tables. This affects livelihoods and harms the investment 

He said land finance policies should ensure that citizens’ financial obligations remain reasonable, and that supportive mechanisms exist for businesses.

He stressed the importance of building a modern land database. “When cadastral records, planning information, and land-use plans are fully digitized and integrated, management efficiency will improve, administrative procedures will be simplified, and transparency will increase, which will help limit negative practices.”

Vo Anh Tuan, Deputy Director of the Land Management Department (of the Ministry of Agriculture and Environment - MAE), said at a recent seminar that the amended Land Law will address several key issues. 

A major focus is land-use planning. For land acquisition, compensation and resettlement, additional cases beyond current regulations will be proposed to resolve difficulties for citizens and businesses.

Land allocation and leasing rules will also be revised to address issues arising from shifting to a two-tier local government model, with clearer decentralization and delegation.

Also according to Tuan, implementing the 2024 Land Law has revealed persistent land pricing issues. A fair and reasonable compensation method is needed to protect citizens’ rights, reduce disputes, and foster social consensus.

MAE, which is drafting amendments of the Land Law, has proposed to amend Article 158 on land pricing principles, bases, and methods. Notably, it removes the principle of market-based pricing.

Instead, the state, as the representative owner of land, will control and decide land prices. 

For the primary market (land allocation, leasing, land-use conversion, or land-use right recognition), prices will be set by the state, independent of consultancy results.

Pham Viet Thuan, Director of the HCM City Institute of Resource and Environmental Economics, told VietNamNet that state-determined primary market prices align with Vietnam’s socialist-oriented market economy. Transparent primary pricing will stabilize the market and curb abnormal price fluctuations.

Thuan added that with clear primary prices, applying adjustment coefficients can determine secondary prices, enabling a more stable real estate market, avoiding sudden spikes, and eliminating mechanisms that destabilize prices.

Hong Khanh