The paradoxical 'trend' of hunting for properties with planning restrictions to invest money

According to regulations, land under planning with a decision to recover cannot be transferred for land use rights (land sale). However, with land under planning but without a decision to recover, depending on each specific case, the landowner may have some land use rights restricted but can still sell the land. In the market, land under planning is often sold at a cheaper price.

'Surfing' houses affected by planning to make a profit

Ms. Nguyen Ngoc Anh ( Nam Dinh ) shared that after many searches, she chose to buy a 40m2 plot of land on Dong Thien Street (Vinh Hung Ward, Hoang Mai District, Hanoi). The plot of land has a frontage of 5m2, the car alley in front of the house is more than 4m wide, and the owner is selling it for 3 billion VND, equivalent to nearly 75 million VND/m2. Compared to other plots of land in the same location with a price of about 100 million VND/m2, this plot of land is 1 billion VND cheaper. But it is worth mentioning that it is 100% in the road expansion planning.

“ People are often afraid of land being involved in planning, but I think differently. Land plots located on main roads are at high risk of being involved in clearance. But with land plots located deep in alleys and the planning has been drawn up for nearly ten years but not implemented, it has become a suspended planning and may have to be abolished. At that time, my land plot will make a lot of profit. Currently, with the 1/2000 planning, people can still build normal houses ,” Ms. Ngoc Anh explained.

Ms. Ngoc Anh further cited that her parents have been living in a house without a red book on Bach Dang Street (Hai Ba Trung District, Hanoi ) for 30 years now. The house is also involved in a road construction project, but the project has not been implemented for decades, so it has not affected their place of residence.

" Whether or not to buy a house that is subject to planning depends on each person's perspective. Real estate prices are too high now, only plots of land subject to planning are cheap and suitable for my family's income," Ms. Ngoc Anh shared.

Many people are looking to buy properties affected by planning. (Illustration: Ngoc Vy).

Informing reporters, many real estate brokers said that recently, not only people with real housing needs but also investors tend to buy land with planning issues to wait for compensation and buy land waiting for the planning to be removed.

Mr. Pham Van Ho, an investor who specializes in hunting for land with planning problems, said that not all land with planning problems will be difficult to sell and will have no buyers. If 100% of the land is affected by planning problems, land located on a main road or in a residential area with long-term residents can still be bought to live in or to build houses for sale. If the land is affected by the 1/2000 planning problem, it is still possible to build houses, so there is no problem. As for land in the 1/500 planning problem, absolutely stay away from it.

He said that in 2022, he will still earn billions thanks to real estate trading in areas affected by planning. Specifically, he bought 3 apartments in Dinh Cong (Hoang Mai district, Hanoi), each apartment has an area of 35m2, built 5 floors brand new but priced at only 4.6 billion VND/apartment due to 100% planning. Meanwhile, plots of land in the same location cost about 150 million VND/m2, equivalent to about 5.3 billion VND/apartment.

After that, Mr. Ho sold it again for 5 billion VND/house, calculating that he made a profit of more than 1 billion VND from the 3 houses.

Mr. Ho also added that he had just bought a 500m2 garden plot in Long Bien district, according to the planning, this land would become a green park. He said that this area was approved for planning nearly 15 years ago, currently many houses are built here so the possibility of adjusting this land into residential land is very high.

" If the planning is removed and converted into residential land, I can get a big profit ," Mr. Ho shared.

Be careful of risks, risk of buried capital

Mr. Nguyen Anh Tuan - Director of Tuan Anh Real Estate said that the trend of hunting for houses and land with planning issues has long been "suitable" for many investors, but recently, especially since the beginning of 2021, there has been a clear "feverish" trend.

“ There are many suspended planning projects in Hanoi, so customers with little money are willing to look for this segment to buy cheap real estate. In fact, there are 50-year planning projects that have not been implemented yet, while in the same location, planned land can be half the price of a plot of land not included in the planning. If the planning is lucky enough to be removed, customers will win big ,” said Mr. Tuan.

Many properties and lands affected by planning have quite cheap prices, suitable for many people's budgets. (Illustration photo).

In addition, according to Mr. Tuan, recently, houses and plots of land that are partially covered by planning have been sought after by many investors because their prices are much cheaper than plots of land in similar locations. They have the mentality of both living and waiting for planning to increase land prices.

However, Mr. Tuan warned that although buying planned land is profitable, the risks are also very high.

Mr. Tuan analyzed that, basically, “suspended” planning is a term used to refer to the situation of not being implemented or being behind schedule of plans with land use content. Accordingly, all real estate in the area that the State agency has announced to reclaim for a certain purpose but not implemented according to the plan, is the real estate product stuck with “suspended” planning.

The time limit for determining whether a project is "suspended" or not is clearly stipulated in Clause 8, Article 49 of the 2013 Land Law, amended and supplemented in 2019. Specifically, after the announcement of revocation is made, a maximum of three years, if there is no official decision to clear or change the purpose of use, the competent approving authority will have to adjust or cancel the planning.

However, in reality, this process does not happen in just a few days or weeks. Buyers may have to wait for years to know the fate of the project. If they choose to invest in land with suspended planning, this means burying capital.

In addition, if you buy a house or land with a "suspended" planning that has an annual land use plan from the district level, the buyer will be restricted in exploiting, using, constructing, renovating and repairing the house.

In addition, in the case of having invested in real estate products that are under “suspended” planning and wanting to divest, buyers will encounter many difficulties in finding transfer and transaction partners. Because, in general psychology, most customers are still afraid of real estate being planned.

Ngoc Vy

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