Disillusioned with getting rich quick after buying up land to split and sell

Struggling for the dream of land division

In recent years, the practice of collecting large plots of land to split and sell them has become common in many localities. In particular, when the "land fever" broke out, many people spent money to buy large plots of land ranging from thousands to tens of thousands of square meters at a price of only a few million VND/square meter, with the intention of completing procedures to split them into smaller plots for sale.

Many landowners have won big with the above trick of "dividing land to sell land". However, the sluggish market and the regulations on land division being tightened by the authorities have put many investors in a difficult situation.

Ms. Nguyen Thi Trang - an investor in Hanoi - said that in 2021, she and the investment group pooled more than 20 billion VND to buy a plot of land of more than 10,000 square meters in Tien Xuan commune (Thach That, Hanoi) for the purpose of dividing the plot. However, because this plot of land only had 120 square meters of residential land, the rest was garden and pond land, it was later forced to convert it to residential land.

"With this plot of land, according to estimates, in addition to the land area for infrastructure, we can divide it into more than 50 plots of land with an area of 60-100m2 for sale. And the market price of residential land with car roads running through the area also fluctuates from 10-13 million VND/m2", Ms. Trang shared.

However, up to now, all the calculations of her and this investment group have failed when the application for land conversion and land division is still not completed. More worryingly, the land is being abandoned, and the loans of the members of the investment group are due for payment.

"The group's investment in this land plot was mostly borrowed from banks and relatives. Not being able to achieve the goal is causing the group to struggle, sometimes there are disagreements on whether to sell or keep it," said Ms. Trang.

Vỡ mộng giàu nhanh sau khi mạnh tay gom đất nền để tách thửa, bán nền - 1 — A plot of land in Co Dong commune (Son Tay town, Hanoi) was divided into 120 plots of land and advertised for sale (Illustration: Ha Phong).

Similarly, Mr. Nguyen Duc Tai in Hanoi is also struggling because he decided to buy a plot of land of more than 5,000m2 in Ba Vi to split the plot but failed. Up to now, the money invested in this plot of land has been lying idle, while the debt to pay has also given him a headache all day long.

"In 2021, I decided to buy a 5,000m2 plot of land in Minh Quang commune, Ba Vi district for more than 1 million VND/m2 with the intention of dividing the plot to sell. Simply calculated, if the conversion and division of the plot is successful, my plot of land will be divided into 15 small plots, each plot is about 100-200m2," said Mr. Tai, adding that if sold at the market price of the area at that time, about 4-5 million VND/m2, he could earn about 20 billion VND. After deducting the principal, interest, land use conversion costs and infrastructure costs, he still made a profit of more than 5-7 billion VND.

Conversion limit reduced

According to the provisions of the 2013 Land Law, the land allocation limit and recognition as residential land for households and individuals will be determined by the Provincial People's Committee.

For example, in 2017, the Hanoi People's Committee regulated the land allocation limit in the city. Accordingly, for wards, the maximum is 90m2; for communes bordering districts and towns, it is 120m2; for communes in the plains, it is 180m2; for communes in the midlands, it is 240m2; and for communes in the mountainous areas, it is 300m2.

Implementing this policy, many localities have corrected the land use limit according to the new regulations. However, not all people who are granted land use rights exceeding the limit proactively bring their books to correct them. However, in cases of registration of changes (purchase, sale, donation, inheritance...), it is mandatory to correct the above-mentioned limit.

According to legal experts, if the land plots exceed the above limit, buyers need to be very careful. It is best for buyers to go to the People's Committee of the district, commune, ward, land registration office, or lawyer for advice and guidance, to avoid seeing cheap land and "holding on" it and then getting into debt.

Vỡ mộng giàu nhanh sau khi mạnh tay gom đất nền để tách thửa, bán nền - 2 — According to experts, the widespread division of land plots for sale causes many consequences for the market and planning (Photo: Ha Phong).

From a market perspective, Chairman of the Vietnam Real Estate Brokers Association Nguyen Van Dinh said that these land division products are the source of price increases, creating "land fever". They bring many consequences in management and especially in the management of market stability and sustainability. The market is only sustainable when the project development is in accordance with the planning, economic development strategy, creating stable jobs for local people and the locality appraises and approves.

In addition, the widespread subdivision and sale of land also greatly affects planning work, and will cause many problems when implementing new planning, especially in localities that do not have planning. Many people change the purpose of residential land, and the sudden increase in population when implementing planning is very difficult.

"Authorities need to have mechanisms and policies to "tighten" this activity, ensuring social security and that the State's laws are not abused," Mr. Dinh emphasized.

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