Real estate: Official dispatch requesting to rectify land auction work, 3 factors affecting real estate prices, income confirmation procedures when buying social housing

Real estate: Auctioned land in Long Khuc, Tien Yen commune, Hoai Duc district, Hanoi, located next to the Ring Road 4 project. (Source: Vietnamnet)

Prime Minister directs strict punishment for paying unusually high land auction prices

Prime Minister Pham Minh Chinh has just signed and issued Official Dispatch 134/CD-TTg dated December 14, 2024 requesting relevant ministries and localities to promptly rectify the work of auctioning land use rights .

The dispatch stated that on August 21, 2024, the Prime Minister issued dispatch No. 82/CD-TTg directing localities to promptly rectify the land use rights auction work and achieved certain results.

However, the organization of land use rights auctions in some localities still has shortcomings and limitations such as the phenomenon of auction participants paying unusually high prices, signs of price inflation, or collusion and conspiring to manipulate prices for profit, causing market disruption.

To improve the effectiveness and efficiency of land use rights auctions, contributing to a healthy real estate market, the Prime Minister requested:

Chairmen of People's Committees of provinces and centrally-run cities shall direct relevant agencies and units to review the organization of land use rights auctions in their localities to ensure compliance with the law, publicity and transparency. Promptly detect and strictly handle violations in land use rights auctions, and prevent acts of taking advantage of land use rights auctions for personal gain and disrupting the market.

In particular, focusing on implementing solutions such as organizing public planning, land use plans, construction planning, urban planning of the area where land use rights auctions are held and neighboring areas. Having measures to ensure the supply of residential real estate and residential land is suitable for the accessibility and payment capacity of the majority of people in need, overcoming the imbalance of supply and demand in the real estate market.

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Before determining the starting price according to the land price list for the auction of land use rights, it is necessary to review, adjust and supplement the corresponding land price in the land price list in the area and location of the auction according to the provisions of the law on land, ensuring that the starting price offered for auction must be consistent with the conditions of the invested infrastructure and the actual land price level in the auction area.

Directing the development of land use rights auction plans must be strict, scientific, and controlled by competent authorities, avoiding the situation of taking advantage of the auction to gain profit and disrupting the market. In particular, pay attention to the regulation on shortening the deadline for paying the winning bid, determining the appropriate amount of money to be paid the first time to limit the situation of abandoning the deposit; directing the unit assigned to organize the land use rights auction, the organization practicing the property auction to choose the appropriate form and method of auction to limit the behavior of collusion, price suppression or price inflation.

At the same time, promote the application of information technology and digital transformation in the organization of land use rights auctions. Based on current legal regulations, take appropriate measures to strictly manage information on auction participation history and cash flow in the payment account of the auction winner; especially in cases where there are unusual signs in the auction such as: one person or a group of people registering to bid for multiple plots of land in the same auction area, auction participants bidding unusually high or winning high bids but abandoning deposits...

The Chairman of the People's Committee of provinces and cities is responsible before the law and the Prime Minister for organizing and implementing land use rights auctions to ensure publicity, transparency, objectivity, and protection of the interests of the State and the rights and interests of related parties.

Hanoi to auction 52 more land plots

On the morning of December 30, National Joint Stock Auction Company No. 5 in coordination with the Land Fund Development Center of Quoc Oai district will organize an auction of assets of the People's Committee of Quoc Oai district.

Specifically, auctioning the right to use 26 land plots (LK2, LK6 areas) in the project to build technical infrastructure for the land auctioned for land use rights in DG 31, Yen Quan village, Tan Phu commune, Quoc Oai district.

These are rural residential plots with long-term use. The plots have an area of 73.2-101.5m2.

The starting price is 4.7 million VND/m2; equivalent to 344 million to 477 million VND/plot. This is the starting price of round 1; from round 2 onwards, the starting price will be the highest valid bid in the previous auction round. In case the highest valid bid in the previous auction round is equal to the starting price of the auction round, the starting price of the next auction round will be equal to the price of the previous auction round plus one price step.

The general price step applied to land plots and in auction rounds is 3 million VND/m2. Time for selling and receiving auction documents until 5:00 p.m. on December 27.

Auction method by direct voting in multiple rounds at the auction and at least 6 mandatory rounds. Direct voting in multiple rounds at the auction ends when no one else bids. Ascending bidding method.

The auction was held at the Center for Culture, Information and Sports of Quoc Oai district.

Also at the above location, on the morning of January 18, 2025, Joint Stock Auction Company No. 5 - National in coordination with the Land Fund Development Center of Quoc Oai district will continue to organize the auction of the right to use 26 land plots (LK1, LK2 areas) which are assets of the People's Committee of Quoc Oai district.

26 auctioned land plots belong to the project of constructing technical infrastructure for the land auction area of land use rights in DG 31, Yen Quan village, Tan Phu commune, Quoc Oai district.

The land plots range in size from 85-122m2. The starting price is 4.7 million VND/m2; equivalent to 399.5 million to over 573 million VND/plot.

Time for selling and receiving auction documents until 5:00 p.m. on January 15, 2025.

Previously, in November, Quoc Oai district successfully auctioned dozens of land plots in Yen Quan village, Tan Phu commune. The plot with the highest winning price was 94.7 million VND/m2.

Young people are finding it increasingly difficult to buy a house.

According to Deputy General Director of Batdongsan.com.vn Nguyen Quoc Anh, young Vietnamese people in any era have difficulty buying a house when real estate prices are constantly increasing. Comparing average salaries and house prices in the past and present, it can be seen that not only Gen Z today but also young Vietnamese people, regardless of era, have many difficulties in buying a house on their own.

In 2004, it took an individual of the 7x generation about 31.3 years of income to buy an apartment (60m2) worth 0.6 billion VND, under the condition of a mobilized interest rate of 7.4%. After 10 years, the number of years of income for an individual of the 8x generation to buy the above apartment is 22.7 years. The apartment price has increased to 1.5 billion VND while the mobilized interest rate has decreased to 6%.

By 2024, a 9x individual will need 25.8 years of income to buy the above apartment (priced at 3 billion VND) under the condition of a mobilized interest rate of 4.5%. Although the number of years of income and interest rates have decreased over time, in general, young people of all generations still need to make efforts for a long time to be able to own a house.

The continuous increase in real estate prices has led to a high level of interest in issues related to selling prices and difficulties in owning real estate in 2024. Mr. Quoc Anh stated that economics, management and society are the three main factors affecting real estate prices.

Economically, Vietnam is a country with strong per capita economic growth and inflation. At the same time, the interest rate environment and investment efficiency of domestic channels both strengthen consumers' demand for real estate.

Specifically, Vietnam's GDP per capita growth is currently at 34.8%, higher than the world average (20.8%) and developing countries (22%). On the other hand, inflation in Vietnam is also higher than the average of other countries. Currently, the interest rate environment in Vietnam is gradually returning to a more favorable level and the proportion of accumulated assets in Vietnam's GDP is quite high (32.8%), ranking 27th in the world (average 27.1%).

The second factor is management with tax as both a source of revenue and a tool for market management. Data from the Organization for Economic Cooperation and Development (OECD) shows that the proportion of real estate tax in GDP by country in Vietnam is at (0.03%), much lower than other countries such as China, Singapore (1.5%), Japan (2.6%), and South Korea (4%).

Finally, there are social factors. Vietnam’s population and urbanization rate show many opportunities for real estate demand growth. The trend of smaller families also drives demand for real estate for the next generation to inherit and the journey of home ownership for young people. In addition, culturally, Vietnamese people have a strong desire to own real estate in their lifetime.

According to Mr. Quoc Anh, in the face of rising real estate prices, referring to some prominent countries in the world, it can be seen that Real Estate Tax is used as a policy to manage the market and optimize revenue. However, before applying, many theoretical and operational challenges need to be considered appropriately. The perspective for Vietnam lies in the existence of many challenges from theory to appropriate application of real estate tax.

Confirm income when buying social housing

Many freelancers are having difficulty confirming their income to buy social housing. Without a labor contract, when they go to the commune to request income confirmation, they are rejected because there is no basis for proof. So what are the legal regulations and what should people do?

Social housing project in Hanoi. (Photo: Ke Toai)

In response to people's concerns, the Department of Housing and Real Estate Market Management (Ministry of Construction) said that on November 27, 2023, at the 6th Session, the 15th National Assembly passed the Housing Law No. 27/2023/QH15 (effective from August 1, 2024). On July 26, 2024, the Government issued Decree No. 100/2024/ND-CP detailing a number of articles of the Housing Law on the development and management of social housing (effective from August 1, 2024). On July 31, 2024, the Minister of Construction issued Circular No. 05/2024/TT-BXD detailing a number of articles of the Housing Law.

Accordingly, at Point b, Clause 1, Article 78 of the 2023 Housing Law stipulates: "Subjects specified in Clauses 5, 6, 7 and 8, Article 76 of this Law, in order to be eligible to purchase or hire-purchase social housing, must meet the income conditions prescribed by the Government."

Clause 2, Article 30 of Decree No. 100/2024/ND-CP stipulates: “In case the subject specified in Clause 5, Article 76 of the Housing Law does not have a labor contract, if he/she is single, the actual monthly income received shall not exceed 15 million VND, if he/she is married according to the provisions of law, the applicant and his/her spouse shall have a total actual monthly income received not exceeding 30 million VND. Within 7 days from the date of receipt of the request for confirmation, the People's Committee at the commune level shall confirm the income condition in 1 consecutive year from the time the subject specified in this clause submits a valid application to the investor to register to buy or rent-purchase social housing”.

Clause 1, Article 8 of Circular No. 05/2024/TT-BXD stipulates: “The form of documents proving income conditions for purchasing or leasing social housing shall be implemented according to Form No. 04 (for subjects specified in Clauses 5, 6, 7 and 8, Article 76 of the Housing Law) or Form No. 05 (for subjects specified in Clause 5, Article 76 of the Housing Law but without a labor contract) in Appendix I issued with this Circular. In case the applicant for purchasing or leasing social housing is married, his or her spouse must also declare the form of documents proving income conditions according to Form No. 04 or Form No. 05 in the Appendix/issued with this Circular”.

Therefore, according to Decree No. 100/2024/ND-CP, within 7 days from the date of receipt of the request for confirmation, the People's Committee at the commune level shall confirm the income conditions for 1 consecutive year from the time the subject specified in this clause submits a valid application to the investor to register to buy or lease-purchase social housing. In Clause 1, Article 8 of Circular No. 05/2024/TT-BXD, to have income confirmed, subjects without a labor contract must prepare Form No. 05 in Appendix I of this Circular.