In the context of the real estate market just recovering, the Ho Chi Minh City Real Estate Association (HoREA) has sent a document commenting on the draft Decree amending and supplementing Decree 103/2024/ND-CP.
Proposal to reduce land use fees when converting to residential land, "shocking" but well-founded
The document was presented at the meeting of the Appraisal Council of the Ministry of Justice on July 24, with the most notable content being the proposal to drastically reduce land use fees and land rents, a move that many people consider "shocking" but has a basis in practice.
According to Mr. Le Hoang Chau, Chairman of HoREA, the current land use fee when converting agricultural land and non -agricultural land to residential land is creating a significant financial burden for households and individuals. Specifically, he proposed to adjust the reduction from 30% to 20% for the land within the residential land allocation limit, and from 50% to 30% for the land exceeding the limit.
The argument for this proposal was demonstrated by Mr. Chau with a specific example: a 300m² plot of land (of which 50m² exceeds the limit), with a residential land price of 11 million VND/m² and an agricultural land price of 600,000 VND/m², if calculating 100% of the added value, people have to pay more than 3.1 billion VND in land use fees.
Although according to the current proposal of the Ministry of Finance, the contribution level is reduced to more than 1 billion VND, Mr. Chau still thinks this is too large a number.
According to him, the payment is only about 676 million VND, equivalent to 21.6% of the current level, which is considered more reasonable and helps reduce financial pressure on people.
Tax for converting agricultural land to residential land in Ho Chi Minh City is very high.
No additional land use fees
Another equally important issue is the transitional provisions on land use fees. HoREA expressed its support for the option of not collecting additional land use fees for projects that have been allocated land for 20-30 years.
According to HoREA, the 2024 Land Law does not stipulate additional collection, so applying the proposed collection rate of 5.4% or even 3.6%/year would be unreasonable, causing additional costs and increasing selling prices, affecting consumers.
Instead, HoREA recommends option 3, which is to collect additional fees at a rate of only 0.5% per year, which is both legally compliant and "comfortable" for businesses and people. In case point d, clause 2, Article 257 of Decree 103/2024 is abolished, HoREA also stated that there should be a mechanism to refund collected fees.
Adjustment of regulations on land rent
Not stopping at land use fees, the Association also proposed to adjust regulations on land rent. Specifically, HoREA proposed not to collect additional land rent when recalculating, similar to land use fees. At the same time, the additional collection rate should also be reduced to 0.5%/year to reduce the impact on real estate rental prices, a particularly important factor in the context of many businesses trying to cut operating costs.
In addition, HoREA also raised the issue of how to calculate the annual land rental price. According to current regulations, the calculation rate ranges from 0.25% to 3%. However, in reality, some localities are afraid to apply a rate lower than 1.5% for fear of being "scrutinized".
Meanwhile, the sharp increase in land prices from August 1, 2024 in Ho Chi Minh City, increasing from 2.36 to nearly 39 times compared to 2020, could cause land rents to skyrocket, creating a new burden for businesses renting land.
Overall, HoREA’s proposals aim to reduce financial costs related to land, with the hope of removing difficulties for businesses and households and contributing to stabilizing housing and rental prices. At the same time, these proposals are also placed within the framework of the 2024 Land Law, in order 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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