The costly land-use fee in Ho Chi Minh City is worrying property developers as it may further trigger a collapse in Vietnam’s stagnant property market.
Viet Nam News reported that property developers have recently voiced their mounting concerns over land fees as not only does it delay the projects but also add to the financial burden that they have to deal with. With this in mind, they urge local authorities to consider reducing the payment or revise the method of calculating land-use fees.
Under Decree No 69 enacted in 2009, fees are based on the market value of land rather than the amount that investors have actually paid for. However, Nguyen Dinh Tan, director of the Municipal Taxation Department, disagrees with how the fees are assessed and explained that it should be based on how firms sell their property products.
On the other hand, the director of Le Thanh Property Company, Le Huu Nghia, noted that the land-use fee also causes delay as it usually takes longer for authorised agencies to calculate the payment. As such is the case, property firms would have to wait up to three years to get a permit for real estate projects.
“According to current regulations, real estate developers must pay the land-use fee before they are granted construction permits. But it always takes a lot of time for authorised agencies to calculate the land-use fees while the real estate developers cannot develop their projects without construction permits,”
he said to Viet Nam News.
Tran Trong Tuan, director of the city’s Department of Construction, noted that it usually takes 21 months to complete the procedures for granting a construction permit while the maximum wait lasts for 27 months.
Besides these, Nam Long Investment Joint Stock Company Chairman Nguyen Xuan Quang also put forward other issues, including the foreign company’s complaint on land-use fee’s lack of transparency. Accordingly, this has caused the company to drop the housing projects.
“Property investors need to be informed about land-use fees when they prepare projects. The land-use fees should be paid according to the progress of projects to ease the project owners’ financial burden,”
Viet Nam News quoted Quang as saying.
In response to the issues, Nguyen Huu Tin, vice chairman of the municipal People’s Committee, assures that the city administration would look into the regulations and consider making adjustments that would work well for the property sector.