Proposed land price adjustments in Ho Chi Minh City under discussion

During a conference discussing the draft from the Ho Chi Minh City People’s Committee replacing Decision No. 02/2020/QD-UBND regarding land price adjustments, experts and lawyers recommended that the southern city carefully evaluate and establish a phased approach before implementing new land prices.

Ms. Nguyen Thi Kim Thuy, Deputy Chairwoman of the Vietnam Fatherland Front Committee of Ho Chi Minh City, said Decision No. 02, which sets a land price table for local areas, has exhibited numerous issues and limitations and is no longer aligned with legal requirements and practical reality. A new resolution is therefore necessary.

Balancing interests

Issues include the land price table not reflecting current market rates, its limited scope, in only being applicable to eight administrative procedures, and the long interval for updating land prices, at five years, which makes it difficult to adapt to market changes. Furthermore, there are other problems such as the lack of resettlement land prices, which hinders the timely allocation of public investment for key local projects.

Lawyer Nguyen Van Hau, Deputy Chairman of the Ho Chi Minh City Bar Association, said the draft proposal does not fully align with actual conditions and imposes a substantial financial burden on the public. In various districts in the city there is significant demand for changing the land use purpose from agricultural to residential.

He gave an example from Hoc Mon district, where families and individuals have registered this year for a change in land use purpose from agricultural to residential for hundreds of hectares. Many cases, spanning generations, still lack sufficient funds to make these changes, build homes, or subdivide their land for their children.

Another example from District 4 shows that the land price on Ben Van Don Street is currently priced at VND24 million ($955) per sq m and is projected to rise to VND271.2 million ($10,765) per sq m, or ten-times compared to current price. As a result, financial obligations relating to land use rights will also increase sharply, exceeding many residents’ capacity to pay.

In districts such as Nha Be, Binh Chanh, Can Gio, and Cu Chi, land price adjustments are projected to be quite high, with some areas seeing increases of 20 to 30-times compared to the 2020-2024 land price table. Hoc Mon district is expected to experience the highest increases compared to current prices, with some streets seeing price hikes of 30 to 50-times. The immediate implementation of the new land price table would significantly impact individuals and families who are now completing or preparing land registration procedures.

“Substantial land price increases in a short period of time could lead to a negative reaction from the community, especially among families and individuals in suburban or peri-urban areas [immediately surrounding the city] and areas with ongoing planning or real estate projects,” Mr. Hau explained. “Rising land prices will also affect market sentiment, leading to a mentality of waiting for further increases.”

While rising land prices could have certain positive effects, such as better site compensation, support, and resettlement for affected individuals and higher State revenue from land fees, they could also lead to higher compensation and investment costs, increasing housing prices, rental prices, and land costs in industrial parks. This may drive up commodity prices and negatively impact social housing projects that depend on land use rights transfers.

Moreover, higher land rentals at industrial parks could reduce economic competitiveness in attracting foreign investment, especially given the intense global competition for foreign capital.

In light of such issues, a representative from the District 10 People’s Committee at the conference recommended that the Department of Natural Resources and Environment work with city and district authorities to advise the Ho Chi Minh City People’s Committee on adjusting the land price table to reflect the actual situation in each locality, ensuring the best protection of citizens’ rights and interests.

A representative from Binh Chanh district suggested a comprehensive impact assessment, as the new land price table affects various groups and especially the economic and social conditions of residents. Delegates also recommended that the city gather additional input from citizens and political - social - professional organizations to determine the optimal price, ensuring the principle of “balancing interests between the State, land users, and investors.”

Additionally, many expressed a hope that the new land price table would help accelerate compensation and site clearance for major projects in the city, such as Ring Road No. 3, Xuyen Tam Canal, and Doi Canal. A new price table closer to market rates would likely gain public support due to increased compensation and assistance. The timely completion of key projects funded by the State budget would be also ensured, contributing to economic and social stability and development in the city and enhancing market transparency while addressing shortcomings in the current land price table and ensuring fairness in residents’ financial obligations.

New land prices

According to the city’s Department of Natural Resources and Environment, projected land prices in the draft table are approximately seven-times higher than those under the original Decision No. 02 from the Ho Chi Minh City People’s Committee. However, the effective land prices from the decision are adjusted by a coefficient of 3.5-times. Therefore, the revised land price table increases by about 2.5-times, reflecting roughly 70 per cent of current market rates.

For instance, the land price in Dong Khoi and Nguyen Hue Streets in District 1 is set at VND162 million ($6,433) per sq m under Decision No. 02, which is the maximum within the Land Law 2013 framework. In 2021, the Ho Chi Minh City People’s Committee approved a specific market price of VND680 million ($26,980) per sq m for a ground floor property, translating to around VND970 million ($38,445) per sq m overall. The draft land price table sets this area at VND810 million ($32,105) per sq m, which aligns with the area’s general pricing.

The Department of Natural Resources and Environment’s preliminary assessment indicates that the main impact will be on those changing land use purpose or obtaining land use rights. Under both the Land Law 2013 and the new amended Land Law 2024, land users with stable use before October 15, 1993, are exempt from land use fees, while those with land exceeding limits will be charged according to the 2005 land price table.

For other cases, fees are determined based on the land’s origin and timing. The draft decree on land use fees and land rent proposed by the government suggests adjusting fees from 10-50 per cent of the projected land price table. Additionally, exemptions or reductions will be applied for special categories such as policy families, veterans, and the poor.

The Department of Natural Resources and Environment views the adjusted land price table as a step towards aligning land prices with market rates, enhancing fairness and transparency, and preventing revenue loss. This adjustment is expected to make land use more cost-effective. The government will also adjust fee levels to align with practical conditions and avoid sudden increases.

According to the draft land price table, urban land prices in central Ho Chi Minh City are expected to rise by VND300-800 million ($11,910-$31,730) per sq m, with prices for Nguyen Hue, Le Loi, and Dong Khoi Streets projected at VND810 million ($32,105) per sq m.

Compared to the current table, projected land prices in other areas have also risen significantly. For example, Thu Duc City is seeing increases of 10 to 15-times and Nha Be, Binh Chanh, Can Gio, and Cu Chi districts 10 to 20-times, while Hoc Mon district has many roads where prices are expected to increase by 15 to 30-times.

Mr. Nguyen Toan Thang, Director of the Ho Chi Minh City Department of Natural Resources and Environment, said the adjusted land price table aims to balance the interests of the State, citizens, and businesses. He provided an example: if compensation is set at VND5 million ($200) per sq m but the adjusted land price table shows VND2 million ($80) per sq m, citizens may question the fairness of the State’s practices.

A major concern is the impact of the adjusted land price table on fees for changing land use purpose. Under Decree No. 103 on land use fees, actual fees will be based on factors such as land use timing and exemptions, ranging from 10 to 40 per cent of the land price table.

Notably, land users with stable use before October 15, 1993, are exempt from land use fees, and those facing difficulties or in special categories will receive reductions or exemptions.

Mr. Thang also mentioned that the Department of Natural Resources and Environment will compile all feedback and collaborate with relevant agencies to provide timely and consensus-driven responses. The Department will also consider measures to support cases affected by suspended planning and those struggling with land use conversions.