A hot debate has occurred about a story on a shift in land use purposes. Tran Duy Dong, born 1965, and Nguyen Thi Hong, born 1970, in Hung Loc, Vinh City in Nghe An province wanted to convert their land plot, covering an area of 300 sqm, from garden to residential land. They planned to split the land plot into smaller pieces to give to their children.

At first, they estimated that they would have to pay VND1.9 million for every sq m of converted land. Unexpectedly, they were told to pay the conversion fee of VND4.5 billion, or VND15 million per sq m, which they could not afford.

The Ministry of Finance has proposed amending Article 8 of Decree 103/2024/ND-CP to specify land-use fees for converting agricultural land to residential land in the following specific cases:

When changing the purpose from agricultural land (garden land, pond land) on the same plot of land with a house but not yet recognized as residential land, to residential land;

When converting land that originated as garden land or pond land attached to a house, but the land user separated it to transfer land-use rights, or the surveying unit when measuring and drawing cadastral maps before July 1, 2004 measured and separated it into separate plots into residential land;

When converting agricultural land recognized within the same plot as a residence under the 2024 Land Law to residential land, with fees calculated at 30 percent of the difference between residential land use fees and agricultural land use or lease fees for land within the residential allocation limit.

For land exceeding the residential allocation limit, the fee is 50 percent of the difference between residential and agricultural land use or lease fees.

Tran Xuan Luong, Deputy Director of the Vietnam Institute for Real Estate Market Research, supports the Ministry’s amendment to Decree 103.

However, Luong noted that the cases mentioned by the Ministry of Finance (MOF) do not fully address practical societal issues.

“The Ministry’s proposal only tackles immediate problems, while it doesn’t cover all real-world scenarios. Policies that don’t encompass reality create inconsistencies, leading to social unfairness,” he said.

“Land-use fees must be flexible, not rigidly fixed, as numerous variables require assessment. A single ‘pair of shoes’ cannot fit everyone; fees should be tailored to specific circumstances,” Luong added.

The land in rural areas must be priced differently in comparison with the land near large cities.

He explained that officially set residential land prices are nearing market values, while agricultural land prices remain nearly stagnant, thus creating a significant gap (between officially set and market prices). Applying this “scale” uniformly to all cases is unfair.

“It is necessary to consider subjects, purposes of conversion, duration of use, and land history to devise optimal solutions,” Luong said.

He noted that this issue involves multiple ministries and branches, while Decree 103 only addresses financial and pricing aspects under the control of the Ministry of Finance. Inter-ministerial coordination is needed to develop suitable, comprehensive evaluation criteria for land pricing.

Land pricing has long been complex, requiring complete and transparent data.

International practice shows that determining land prices relies on historical price data over years. However, Vietnam, through multiple policy changes, has not yet established a comprehensive land price database. Current management is heavily administrative, lacking a robust data foundation.

Luong suggested digitizing and categorizing data by subject. The information about land-use rights for individuals and organizations should be clearly identified and digitized. This would enable price data retrieval, showing how many square meters of residential land someone owns, when it was purchased, and at what price. Such data would ensure accurate assessments and realistic pricing.

In many countries, land prices are updated annually, forming a critical basis for tax, conversion, and compensation policies. Vietnam needs to urgently complete its land and price database to implement related policies effectively and transparently.

“Policies without data lead to misapplications. For instance, a household in Nghe An had to pay VND4.5 billion to convert 300 sqm of garden land to residential land,” Luong said.

Hong Khanh