At a recent workshop on implementing Vietnam’s 2024 Land Law and its impact on real estate development, business leaders raised concerns over unequal treatment between residential land and commercial-service land. They called for reforms to address inconsistencies and high costs in land pricing policies for commercial-service use.

Rising land prices challenge businesses

Speaking at the workshop held on January 10, Le Van Binh, Deputy Director of the Land Department under the Ministry of Natural Resources and Environment, reported that 25 out of 63 provinces have revised their land price tables, with more expected to follow.

Adjusted land prices in major cities have seen significant increases. For example, Ho Chi Minh City's revised table, effective October 31, 2024, shows price hikes ranging from 4 to 38 times, with the highest rate reaching 687.2 million VND/m² (approximately $28,000). In Hanoi, prices have risen by 2 to 6 times, with the highest rate reaching 695.3 million VND/m² (about $28,300).

These adjustments have led to bottlenecks, particularly in Ho Chi Minh City, where 58,000 real estate projects face challenges related to land pricing.

Unequal treatment in land pricing

Vu Lan Anh, Deputy CEO of CEO Group, pointed out significant disparities in how land is categorized and priced.

“There is still a considerable divide between residential land and commercial-service land. Current regulations for pricing commercial-service land remain inadequate and need refinement,” Lan Anh said.

Under the 2024 Land Law, land prices for calculating land use taxes are based on provincial land price tables. However, in practice, local authorities often charge upfront payments for commercial-service land leases that are approximately 70% of residential land prices.

“This percentage lacks scientific basis and is disproportionately high, making commercial-service land expensive and discouraging investments in tourism and hospitality projects,” she added.

Lan Anh suggested that commercial-service land prices be set at 20–40% of residential land prices to better align with market principles and balance interests among stakeholders.

Call for detailed land classification

Economic expert Dr. Dinh Trong Thinh emphasized that local governments often set land prices based on location and street frontage rather than land use or profitability.

Grouping various types of non-agricultural production and business land into a single category with uniform pricing fails to reflect market principles.

“For lands that do not generate high profits but serve community purposes, governments should consider reducing or exempting land use and lease fees for businesses,” Thinh proposed.

Balancing interests and revisiting regulations

Le Van Binh clarified that the revised land price tables primarily apply to individual households and annual lease payments for businesses. For real estate projects, specific valuation methods or auctions are used instead.

He noted that while businesses with annual leases may face increased costs due to rising land prices, the 2024 Land Law provides safeguards, including capped adjustments within government-defined limits.

Nguyen Manh Khoi, Director of the Legal Department at the Ministry of Construction, acknowledged that six months after the 2024 Land Law took effect, some implementation issues have emerged.

“We anticipate further research and adjustments to decrees guiding the law to address new challenges as they arise in different localities,” Khoi stated.

Hong Khanh