 Land use fee weighs on property firms
Saigon Times - 3/10/2016 8:54:20 AM
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The HCMC Real Estate Association (HoREA) has said property firms are complaining about the current land use fee calculation method which makes life hard for them.
In a document recently sent to the HCMC delegation of National Assembly (NA) deputies, the association proposed the Ministry of Natural Resources and Environment make the land use fee calculation method more transparent.
HoREA proposed replacing the current land use fee with a land use tax making up a fixed percentage of land value. This will make the tax transparent and easy to calculate, and help eliminate the ask-and-give mechanism in the property sector.
Explaining why the current land use fee is a burden for property investors, HoREA chairman Le Hoang Chau said they have to pay a huge amount of money for land compensation in line with the market price but they do not have this money deducted correspondingly when they pay the land use fee for local government.
Chau took a big project under construction in District 7 as an example. The average land compensation is VND6 million per square meter but the investor got a deduction of only VND1.2 million per square meter when it made the land use fee payment for the city.
In addition, according to Chau, investors do not know exactly how much they would have to pay land use fee for the city government as it depends on each lot of land.
“The investor will only know the exact payable amount when a leader of the city signs a decision approving the project,” he said.
The association proposed permitting owners of resettlement housing to sell and transfer their units and those eligible for buying resettlement homes to transfer their home buy rights.
Nevertheless, as argued by the association based on the civil code and in line with the 2014 housing law, owners of resettlement homes have the right to make decisions relating to their properties and the right to buy resettlement homes is also their property ownership right.
According to Chau, the property market has recovered since late 2013. In 2015 alone, VND140 trillion in credit flowed into HCMC’s property market, making up 12.3% of total outstanding loans in the city. Additionally, around US$1.3 billion of US$5.5 billion in overseas remittances sent to HCMC last year found its way to the property sector.
However, the market has seen signs of the upscale housing segment being overheated with prices of high-end homes surging 5-15%.
Of around 1,400 property projects approved in HCMC, 190 projects have been recalled or had their licenses invalidated. Of some 1,220 valid projects, 405 projects have not got off the ground and 97 projects have been put on hold after a period of construction.
The association forecast the city’s property market will grow further this year and that there will be more budget apartments, commercial houses with reasonable prices, industrial properties, offices for lease and serviced apartments.
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