In an interview with VietNamNet, Dinh stressed that if people buy second and subsequent homes and use them for appropriate purposes, thus creating added value to society, their move should be seen as positive behavior that needs to be encouraged.

The proposal on taxing second and subsequent homes has sparked a strong debate in the society. What is your view about this?

The information has really worried many people. Many may ask why they are taxed if they just buy houses for their children or for them to do business. My view is that taxation is a tool to regulate people’s behaviors and must not be used to harm the market. I don’t think that all second home buyers need to be strictly controlled by the tool.

So what principle should be applied to ensure fairness, while helping to avoid discouraged behaviors?

If someone has two or three real estate properties, or even more, and all the properties are used for the right functions and purposes suited to the types of real estate, this must be seen as their legitimate right.

For example, I buy properties for my son when I have money and properties have reasonable prices. Though I still don’t use the properties because I don’t have business plans, for example, I can use the properties for lease. In this case, my properties can contribute to the national housing and land fund, and the properties can help satisfy people’s demand for accommodation.

If I have 2-3 homes, I can lease the properties which can be used as medical facilities in localities where such facilities are lacking. The properties can also be used for kindergartens and supermarkets in places which still don’t have these facilities. 

These are all legitimate behaviors which need encouragement, because they help create essential services in the areas where infrastructure conditions remain poor. The move also helps create jobs, brings benefits to society and increases the state budget collection.

All kinds of tax must target the optimal goal, which is creating assets and adding value to the society. The taxation on real estate should be considered carefully based on that principle.

However, those who propose taxation argue that if second homes are taxed, this will help reduce housing prices, thereby creating conditions for the majority of people to buy homes. What would you say then?

I think this view is not multi-sided. The major reason behind the escalation of housing prices is supply-demand imbalance. The supply is too weak and the housing products now available are not diverse and they are not suitable for the majority of people. Meanwhile, demand is too high.

The thing that needs to be done immediately in order to force prices down to more reasonable price levels is balancing supply and demand. Only when demand increases and comes closer to demand will prices be adjusted.

And in order to reach that end, supply sources need to be ‘liberalized’. There are a lot of real estate projects, which have been stuck because of many reasons, including legal procedures. These pending projects need to be cleared, and new projects need to kick off. 

I have to stress that owning and trading real estate is a legitimate right of people.

How do you think the tax, if approved, would impact the real estate market?

If we don’t understand the market well and we mechanically tax all second homes, this will lead to serious consequences. The tentative policy, if it is applied, will cause real estate purchasing power to decrease. And if so, the market, which has just begun recovering, will immediately become gloomy, or even fall into a deadlock.

If the real estate market has problems, this will surely affect other business fields and harm the national economy in general.

The government of China has announced a credit package that will help people buy second and subsequent homes more easily, after a period of tightening regulations which froze the real estate market. What do you think about this?

This is a lesson for Vietnam to learn from. I think that macro policies need to be suitable and facilitate development.

Hanh Nguyen