Key Highlights of Decree No. 71/2024/ND-CP on Land Pricing
On June 25, 2024, the Government issued Decree No. 71/2024/ND-CP, which takes effect on August 1, 2024 (“Decree 71”), regulating land pricing to ensure transparency and reflect market-based land values. This Decree replaces previous regulations and introduces several significant updates, improving land management efficiency and protecting the legitimate interests of stakeholders. In this article, TNTP’s lawyers will analyze the key highlights of Decree No. 71.
1. Diverse and Detailed Land Valuation Methods
Decree 71/2024/ND-CP introduces four fundamental land valuation methods, including:
- Comparative Method:
– Conduct surveys and collect information on land use purposes and factors affecting the value of the land parcel to be appraised.
– Collect data on comparable land parcels, including market transaction prices and auction-winning prices after financial obligations are fulfilled.
– The selection of comparable land information follows these priority criteria:
(i) The most recent data close to the land valuation date;(ii) Similar factors affecting land prices;(iii) The shortest distance to the land parcel being appraised, without administrative boundary limitations.
The land value under this method is calculated by subtracting the value of attached assets from the land use right value of the comparable land parcel and dividing it by the area of the comparable parcel.
- Income Method:
This method is specified in Article 5 of Decree 71/2024/ND-CP as follows:
For non-agricultural land: Collect income information from leased land or rented spaces within:
– Three consecutive years (from January 1 to December 31) before the valuation date.
– The one year immediately preceding the valuation date for three land parcels closest to the land to be appraised.
– If no specific data is available, financial reports from the past three years or the preceding year of three nearby land parcels should be used.
For agricultural land: Collect data from statistical, tax, and agricultural agencies as follows:
– For annual crops, aquaculture, salt production, and other agricultural land, actual income data should be gathered for three consecutive years before the valuation date.
– For perennial crops, data should be collected from at least three continuous harvests before valuation.
– For production forest land, information should be collected from a full harvesting cycle before valuation.
– If no data is available from official agencies, actual income information from three nearby land parcels must be used.
Determine the annual average net income, calculated as the average revenue minus average costs.
Determine the land use right value based on net income and the average savings deposit interest rate.
The land value is obtained by dividing the annual average net income per unit area by the average 12-month deposit interest rate for VND at state-owned commercial banks.
- Surplus Method:
According to Article 6 of Decree 71/2024/ND-CP, this method calculates land value by subtracting estimated total development costs from total estimated revenue based on the highest and best use of the land, as approved in planning.
- Coefficient Adjustment Method:
This method applies when land already has a market price but requires adjustment based on fluctuations. The determination is as follows:
– Conduct surveys and collect data on the land to be appraised, including land prices by position and area.
– Determine market land prices for each location and area.
– The coefficient adjustment is determined by dividing the market land price by the official land price in the government land price table.
The final land value is obtained by multiplying the official land price table value by the coefficient adjustment factor.
These methods are now more detailed and flexible, allowing accurate land valuation in various scenarios. The new framework ensures that state-issued land prices align with actual market values, reducing disparities and improving the efficiency of land pricing adjustments.
2. Positive Impacts of Decree 71
One of the most notable highlights of Decree 71 is the establishment of a national land price database, a system managing nationwide land price data to enhance transparency and accuracy in land valuation. Public access to land pricing information allows stakeholders to reference and use this data for transactions, compensation, and land transfers. Additionally, this system enables regulatory bodies to monitor market land values and adjust policies accordingly.
Decree 71 enforces a market-based land valuation principle. Authorities must consider market fluctuations, economic conditions, and social factors when setting land prices. The objective is to bridge the gap between state-issued and market land prices, preventing land prices from being excessively low or high, which could lead to social dissatisfaction, especially in land clearance and compensation cases.
The implementation of Decree 71/2024/ND-CP not only enhances land valuation processes but also positively influences the real estate market. When land prices reflect actual market values, land transactions become more transparent and efficient, minimizing land speculation and compensation disputes. Additionally, the national land price database promotes fair competition, fostering sustainable growth in the real estate sector.
Decree No. 71/2024/ND-CP marks a significant reform in Vietnam’s land valuation system. The improved valuation methods, adoption of a national land price database, and enhanced dispute resolution mechanisms ensure transparency and fairness, benefiting all market participants. Strict adherence to these new regulations is expected to improve land management efficiency and support a sustainable real estate market in the future.
This article by TNTP’s lawyers provides insights into “Key Highlights of Decree No. 71/2024/ND-CP on Land Pricing” We hope this article proves valuable to readers in both business and daily life.
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