The State's investment in infrastructure works or urban project development enterprises has the impact of increasing land prices by up to 45-50%.
According to the report of the Ho Chi Minh City Development Research Institute, there are many factors that increase land prices, in which infrastructure impacts the most strongly besides the factors of planning, inflation, speculation ... Specifically, the State of land planning often affects an increase in land prices by 8-10% in the planned area and the surrounding area, the situation of this land price increase is regulated on the land price list.
When the State pours capital into infrastructure works or other investors develop urban projects, the impact of land price increases by up to 45-50%. With the infrastructure push, land prices around bridges or around urban projects will fluctuate very sharply. Meanwhile, land users investing in infrastructure can increase land prices by 20-25%. Particularly inflationary factors, speculation affects 15% of land prices with a wide range of price increases.
VnExpress's survey showed that in fact, two factors of planning and infrastructure pushed land prices up many times, i.e. a sharper increase than the report of the Ho Chi Minh City Development Research Institute. Over the past decade, the works of bridges, boulevards, metro, highways, belts have massively sprung up in the East of Ho Chi Minh City, causing land prices in districts 2, 9, thu Duc old now in Thu Duc city to experience many fluctuations.
Like Thu Thiem urban area, which is both affected by planning and infrastructure factors, land prices on saigon's most prime peninsula have continuously set up new premises. In 1996-2003, thu Thiem people received compensation of VND 150,000-200,000 per m2 of agricultural land, this is the decade of compensation for land clearance for new urban planning. At this time, depending on the location and route, residential land in Thu Thiem recorded a market price of about VND25 million per m2.
Thu Thiem 2 bridge in April 2022 connecting Thu Thiem and The East of Ho Chi Minh City with the center of District 1.
In the years when Thu Thiem entered the stage of infrastructure work, attracting calls for investment, land prices on this peninsula soared more sharply. In September 2015, in a report on Thu Thiem published by CBRE Vietnam, the average land price in Thu Thiem recorded more than 3,000 USD per m2 (equivalent to 68 million VND per m2).
By the end of 2017, according to the land price development report in Thu Thiem published by Gachvang Co., Ltd., the peak land price of this urban area reached nearly VND 170 million per m2. Not stopping, in the second quarter of 2018, thu Thiem's land price peak approached the threshold of VND 210 million per m2.
If the latest infrastructure milestone is Thu Thiem 2 bridge in the second quarter of 2022, the market land price offered by enterprises on this peninsula and neighboring wards has exceeded 350 million VND per m2.
Thu Thiem is not the only case of land price fluctuations in The East of Ho Chi Minh City due to planning and infrastructure investment factors, this phenomenon occurs almost throughout the districts and districts in the city in the south and west of the city.
Dr. Yu Phuoc Tan - Ho Chi Minh City Development Research Institute - said that with the fact that there are many factors affecting the increase in land prices, the State should take the price of land compensation according to the market to ensure the rights of the people. With the group of factors affecting the increase in land prices due to the State's infrastructure investment, Mr. Tan proposed to allow the construction of an expanded land recovery plan adjacent to the project with traffic works passing through with the consensus of the majority of the community who have their land expropriated.
In case the land price increases due to the land user's infrastructure investment, the solution to regulate the land price is to advance the land use levy first and divide the time of submission into several times instead of only collecting once. With the impact group from inflation, speculation, it is advisable to tax real estate to partially regulate these impacts.
According to Tan, currently, land revenues across the country are unsustainable and uneven. Revenues from land allocation and leasing accounted for 83% including land use levy, ground and water lease. Meanwhile, revenue sources in the process of land use right transfer accounted for 16% including: land registration fee and other fees, corporate income tax from land use right transfer, personal income tax from right transfer. Particularly, revenues in the process of land use account for only about 1% including agricultural land use tax and non-agricultural land.
Tan said that the State needs to review the current way of calculating land use levy because investment enterprises are under great financial pressure in the first time, not to mention this revenue will decrease over time. If the roadmap for land leasing is mainly in the form of annual payment in accordance with the purpose of land use, it is possible to ensure a stable revenue source, avoiding losses to the State budget.
In order to adjust the non-agricultural land tax and land use right transfer tax, it is necessary to reconsider the tax rate of non-agricultural land paid annually remains low (0.03%) while other countries collect 1-1.5% a year. The land use right transfer tax of 2% calculated on the real estate value according to the State land price list is still low, should be considered additionally in terms of declaring the transaction value, including considering the increase in tax rate. In addition, Tan commented that in the long run, the State should consider issuing a property tax to contribute to regulating the rapidly rising land price.
Mr. Le Hoang Chau, Chairman of Ho Chi Minh City Real Estate Association (HoREA) also acknowledged that the current land price fluctuations are affected by many reasons: infrastructure explosion, announcement of planning, formation of new projects, urban refurbishment, speculation of land hoarding ...
In particular, the factors of infrastructure, planning and urban refurbishment often create a huge geographical difference (land price increase). He recommended that the State should have a policy of compensation for fair ground clearance at market prices for people with land expropriation.
Currently, home owners in Vietnam do not have to pay housing property tax, only have to pay non-agricultural land use tax, of which the tax rate for residential land is within the limit of 0.03% of the land price list. This tax rate is very low, not enough to regulate the market, so it is necessary to adjust the taxes more appropriately.
However, the land use levy collected once in the past time is quite high, accounting for about 10% of the value of the apartment, accounting for over 30% of the value of townhouses (houses attached to the land) and accounting for 50% of the value of villas. Therefore, Mr. Chau said that if he wants to tax real estate to regulate the real estate market, it requires adjusting the reduction of land use levy to a lower level to avoid tax overlapping taxes.
By Vnexpress