Why are market principles ignored in land valuation?

(NLDO) - The draft revised land law has made major adjustments related to the content of land prices.

The draft revised Land Law is attracting special attention as it introduces many significant changes related to regulations on land valuation - one of the core contents in Articles 158 to 162 of the 2024 Land Law.

Two highlights include the adjustment of land pricing principles to reduce the role of market factors and the proposal to abolish specific land pricing mechanisms. These adjustments are raising many concerns about the direction of land management and administration in the coming time.

Why abolish the regulation on land valuation according to market principles?

Specifically, the Draft Amended Land Law abolishes regulations on land valuation based on market principles; requirements on publicity, transparency, objectivity, honesty and independence are no longer recognized; the harmony of interests between the State, investors and land users is replaced by the conformity between State management requirements and local realities.

With the 4 principles in the Draft showing the coverage of administrative factors in land valuation; so, are we equating the principle of land valuation with the principle of the State deciding on land prices?

The State's decision on land prices in the primary market and the decision on land prices for calculating compensation when the State reclaims land have been established since the regulations on land prices during the 1993 Land Law.

We need to note that these principles apply generally in land valuation activities, not only when the State decides on land prices; at the same time, the development of land valuation principles is to ensure that the true value of the land plot/land area, the inherent characteristics of land prices are reflected, and to control the imposition of subjective will in land valuation.

Therefore, the principles in the draft need to be carefully considered, ensuring the objectives of the principles and contributing to improving professionalism in land valuation.

Imposing subjective will and ignoring market factors will not reflect the nature and objectivity of land valuation. The core issue is that we must improve the mechanism for effective market management and regulation, not avoid or eliminate the impact of the market on the land valuation process.

The draft revised Land Law is attracting special attention as it introduces many significant changes related to regulations on land valuation. Photo: Son Nhung

Replacing specific land price mechanism

The next major change is that the Draft proposes to replace the specific land price mechanism with the use of a land price table combined with an adjustment coefficient. Accordingly, when the State reclaims land, the land price to calculate compensation will be based on the adjusted land price table, not determined separately for each case as before.

Using a price list with adjustment coefficients will create convenience and speed when applying land prices in the current context, reduce the risk of errors, and extend the time for specific land valuation. However, the use of specific land prices from the 2013 Land Law to the present has outstanding advantages such as: high individuality for applicable cases, valuation based on market data at each determined time, regulating the interests of related parties specifically in each case...

The difficulties and shortcomings in land valuation in recent times are that the valuation subject has not demonstrated professionalism, and land valuation consultancy organizations have not operated effectively. Therefore, it is necessary to study and establish a model of an independent land valuation system as directed in Resolution No. 19-NQ/TW dated October 31, 2012.

We believe that it is necessary to correctly identify the core of the problem, not just for convenience and difficulties but ignore the science and professionalism in land valuation. The widespread application of the Land Price List with adjustment coefficients is similar to the period of the Land Law 2003 and when the specific land price solution was born in the Land Law 2013, it is necessary to specifically assess whether or not the old problems will reappear, which is a step backward when abolishing specific land prices.

Source: https://nld.com.vn/than-trong-khi-bo-quy-dinh-ve-dinh-gia-dat-theo-nguyen-tac-thi-truong-196250806112343466.htm