Ho Chi Minh City: Is It Necessary to Issue a High Land Price Table Early?

According to Clause 1, Article 257 of the 2024 Land Law, the land price table issued by the provincial People's Committee under the provisions of the 2013 Land Law will continue to be applied until December 31, 2025. If necessary, the provincial People's Committee can decide to adjust the land price table according to the actual situation. With about 17 months left for the current land price table to be applied, should Ho Chi Minh City issue the new adjusted land price table? The adjustment of the land price table to a higher rate will significantly impact social life, especially the real estate market.

The new land price table may increase real estate prices. Ho Chi Minh City needs to prepare thoroughly for the new land price table to be implemented from January 1, 2026, and consider using the current land price table until the end of 2025. Currently, only 27 out of 63 provincial People's Committees have published land price table information. For example, Binh Duong province has seen an average increase of 18% in land prices from 2020 to 2024.

After the Ho Chi Minh City Department of Natural Resources and Environment announced the draft adjusted land price table, many citizens and real estate businesses expressed concerns. According to experts, the real estate market will be affected, possibly causing a light or severe "shock."

On August 1, 2024, the Ho Chi Minh City People's Committee Party Committee held a meeting to hear reports on the progress of building the adjusted land price table. City People's Committee Chairman Phan Van Mai stated that the 2024 Land Law took effect on August 1, 2024, but no locality has issued a new land price table. Ho Chi Minh City will seek the opinion of the City Party Standing Committee, gather feedback from citizens and People's Council representatives, and then issue the adjusted land price table in August 2024.

If the new land price table is implemented, the compensation costs for projects such as dredging, environmental improvement, and infrastructure construction will increase significantly. The City People's Committee Chairman acknowledged that land prices affect various stakeholders, and a balance must be struck between the interests of the state, businesses, and citizens, with a particular emphasis on the interests of the people.

Clause 1, Article 257 of the 2024 Land Law stipulates that the land price table issued by the provincial People's Committee under the 2013 Land Law will continue to be applied until December 31, 2025. The provincial People's Committee may decide to adjust the land price table as needed.

According to Clause 3, Article 159 of the 2024 Land Law, the provincial People's Committee must develop and submit the initial land price table to the same-level People's Council for decision and announcement from January 1, 2026. The provincial People's Committee is responsible for submitting annual adjustments, amendments, and supplements to the land price table to the same-level People's Council for decision and announcement from January 1 of the following year.

Citizens who wish to change the purpose of land use are worried about the high land use fees. Many people who submitted applications before August 1, 2024, will have their taxes calculated according to the old land price table. However, the tax authorities have stopped calculating taxes and are awaiting new guidelines.

If the new land price table is implemented, Ho Chi Minh City's public investment projects will be significantly affected. For example, the compensation costs for projects such as the North bank canal and the Xuyen Tam drainage channel will increase substantially. City leaders have indicated that the investment capital for these projects will significantly increase, with compensation costs estimated to rise by about VND 10 trillion (equivalent to an increase of nearly 46%).

The immediate implementation of the new land price table will increase project investment costs, affecting foreign investors interested in developing projects in Ho Chi Minh City. Higher land and site rental costs will affect business profits, potentially leading to increased prices for goods and services and exacerbating inflationary pressures. The sudden rise in land prices may cause instability in the real estate market and even create a "real estate bubble," leading to many risks.

During the 17-month "buffer" period between the two laws, Ho Chi Minh City leaders need to carefully consider whether it is necessary to issue an excessively high adjusted land price table early. The government also needs to research a gradual increase in land prices in stages to reduce the "shock" for businesses and citizens.

Currently, all applications to change land use purposes submitted from August 1, 2024, are being processed by district, county, and Thu Duc City tax departments, awaiting guidance from the Ho Chi Minh City Tax Department. Citizens are concerned about whether the tax authorities' suspension of calculating financial obligations is legal. In the absence of a new land price table in Ho Chi Minh City, the current land price table and adjustment coefficients remain legally effective. Other provinces and cities that have not issued new land price tables still apply the old ones.

The tax authorities' suspension of calculating financial obligations has caused confusion and concern among citizens submitting applications to change land use purposes. To protect citizens' legal rights, the Ho Chi Minh City Tax Department should promptly provide answers and specific guidance.