Amidst the nascent recovery of the real estate market, the Ho Chi Minh City Real Estate Association (HoREA) has submitted comments on the draft Decree amending and supplementing Decree 103/2024/ND-CP.
Proposal to reduce land use fees for converting land to residential use is "shocking" but has a basis.
The document was presented at the Ministry of Justice 's appraisal council meeting on July 24th, with the most notable content being a proposal to drastically reduce land use fees and land lease fees, a move that many consider "shocking" but has a basis in practice.
According to Mr. Le Hoang Chau, Chairman of HoREA, the current land use fee for converting agricultural and non-agricultural land to residential land is creating a significant financial burden for households and individuals. Specifically, he proposed adjusting the reduction rate from 30% to 20% for land within the allocated residential land limit, and from 50% to 30% for land exceeding the limit.
Mr. Chau substantiated his argument with a specific example: a 300m² plot of land (of which 50m² exceeds the permitted limit), with residential land priced at 11 million VND/m² and agricultural land at 600,000 VND/m², would require residents to pay over 3.1 billion VND in land use fees if calculated at 100% of the added value.
Although the current proposal from the Ministry of Finance reduces the contribution amount to just over 1 billion VND, Mr. Chau still believes this is an excessively large sum.
According to him, the reduced payment of approximately 676 million VND, equivalent to 21.6% of the current amount, is considered more reasonable and helps reduce the financial burden on the people.
The tax on converting agricultural land to residential land in the Ho Chi Minh City area is very high.
No additional land use fees will be collected.
Another equally important issue is the transitional provision regarding land use fees. HoREA expressed its support for the option of not collecting additional land use fees for projects where land was allocated 20-30 years ago.
According to HoREA, the 2024 Land Law does not stipulate retroactive collection, so applying a rate of 5.4% or even 3.6% per year as proposed would be unreasonable, creating additional costs and driving up selling prices, affecting consumers.
Instead, HoREA proposed option 3, which only collects an additional fee of 0.5% per year, which is both legally compliant and helps ease the burden on businesses and individuals. In the event that point d, clause 2, Article 257 of Decree 103/2024 is repealed, HoREA also stated that a mechanism for refunding the collected fees is necessary.
Adjusting regulations on land lease fees.
Beyond land use fees, the Association also proposed adjustments to regulations on land lease fees. Specifically, HoREA suggested that no additional land lease fees should be collected during the recalculation process, similar to land use fees. At the same time, the additional fee should be reduced to 0.5% per year to mitigate the impact on real estate rental prices, a particularly important factor in the context of numerous businesses striving to cut operating costs.
Furthermore, HoREA also raised concerns about the method of calculating annual land lease rates. According to current regulations, the calculation rate ranges from 0.25% to 3%. However, in reality, some localities are hesitant to apply a rate lower than 1.5% for fear of scrutiny.
Meanwhile, the sharp increase in land prices in Ho Chi Minh City, effective from August 1, 2024, ranging from 2.36 to nearly 39 times higher than in 2020, could lead to a surge in land lease fees, creating a new burden for businesses leasing land.
Overall, HoREA's proposals aim to soften the financial costs associated with land, hoping to alleviate difficulties for businesses and households and contribute to stabilizing housing and rental prices. At the same time, these proposals are also placed within the framework of the 2024 Land Law, aiming to create consistency in policies and laws.
Source: https://nld.com.vn/tiep-tuc-de-xuat-giam-them-tien-su-dung-dat-khi-len-tho-cu-19625072416011717.htm
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