What are the land pricing methods in Vietnam? What is the order of land pricing according to the coefficient-based method?
What are the land pricing methods in Vietnam?
Pursuant to Article 4 of Decree No. 44/2014/ND-CP, depending on the specific case, there are different methods of land pricing, specifically:
- Direct comparison method:
+ This is a land pricing method meant to compare and determine the price for a particular plot of land by analyzing prices for unoccupied plots of land with similar purposes, locations, profitability, infrastructure, area, shape, legitimacy that have been sold on the market or at auction (hereinafter referred to as comparable plots of land).
+ The unoccupied land plot with some similar characteristics as above is called the comparative land plot.
- The subtraction method is a land pricing method applied to the land with property attached to land by subtracting value of the property attached to land from total value of real estate (including land value and value of the property attached to land)
- The income-based method:
This is a land valuation method that calculates the quotient (the number produced when dividing by two) between the net income (income determined by total income minus total costs) earned average annual average per unit area of land compared to the average annual savings deposit interest rate up to the time of land valuation of a 12-month term VND deposit at a state-owned commercial bank with an interest rate of savings deposits are the highest in the provinces and centrally run cities.
Value of the target land plot is determined using the formula below:
Value of the target land plot = Average net income in a year/Average saving deposit interest rate in a year
- The surplus-based method:
This is a method used to determine the price of the land with development potential as a result of changes of zoning or purposes by subtracting estimated total cost from estimated total revenue of the real estate.
- The method using land price coefficient:
+ This is the method used to determine land price by multiplying the land price coefficient by the land price in the land price lists promulgated by the People's Committees of provinces and centrally run cities.
However, when applying the land valuation method, attention should be paid to:
- Based on the conditions of application of land valuation methods and collected information to select an appropriate land valuation method.
- In case of necessity, a combination of methods (direct comparison method, deduction method, income method, surplus method) can be applied to check, compare, compare and decide on land prices.
What are the land pricing methods in Vietnam? What is the order of land pricing according to the coefficient-based method?
What are the conditions of application of land pricing methods in Vietnam?
Conditions for applying the land valuation method are specified in Clause 2, Article 5 of Decree No. 44/2014/ND-CP as follows:
- The direct comparison method is applied to determine the land price when comparable plots of land are sold on the market or at auction.
- The subtraction method is applied to determine the land price of the plot of land with property thereon when there is sufficient data on the real estate price (including land and assets) which is similar to the land sold or sold at auction;
- The income-based method is applied to determine the plot of land of which income and land use cost are already determined;
- The surplus-based method is applied to determine the plots of land with development potential as a result of changes of zoning or purposes of land when the total estimated revenue and expenses can be determined;
- The co-efficient method is applied in some cases prescribed in Clause 2 Article 18 of Decree No. 44/2014/ND-CP.
What is the order of land pricing according to the coefficient-based method?
Pursuant to Article 7 of Circular No. 36/2014/TT-BTNMT (amended in Article 10 of Circular No. 33/2017/TT-BTNMT) stipulating the order of land pricing according to the coefficient-based method as follows:
Coefficient-based method
The order and contents of land pricing by the land price adjustment coefficient method shall comply with the following regulations:
1. Survey, collect information
a) Survey and collect information on land prices of at least 03 land plots that have been transferred on the market and won at auction of land use rights within a period not exceeding 02 years up to the time of valuation at each land location (according to the land price list) in the land valuation area.
In case there is not enough information on land price in the area of land valuation, information on the surrounding area with similar conditions on natural conditions, socio-economic conditions, technical infrastructure and social infrastructure with the land valuation area.
In the course of surveying and collecting market land prices, investigators shall comply with the provisions of Point d, Clause 1, Article 3 of this Circular.
b) For the case where the income and expenses from the land use can be determined, the income and expenses from the land use shall be collected from at least 03 land plots to determine the land price according to the income method at each land location (according to the land price list) in the land valuation area.
2. Determine the common land price in the market for each land location
a) To make statistics of the market land prices according to each land location for the information collected according to the provisions of Points a and b, Clause 1 of this Article.
b) The determination of the common land price on the market for each land location shall comply with the provisions of Clause 3, Article 3 of the Government's Decree No. 44/2014/ND-CP dated May 15, 2014 on regulations on land prices (hereinafter referred to as Decree No. 44/2014/ND-CP). For the case where the market price of land is concentrated on one price range, the common market price of each land location is determined by taking the arithmetic average of the land prices at that land location.
3. Determination of land price adjustment coefficient
The land price adjustment coefficient is determined based on the common land price in the market, the specific socio-economic conditions in the locality and the land price in the land price list. For cases where there is not enough information on market land prices to determine the common land prices on the market specified at Point b, Clause 2 of this Article, the price based on specific socio-economic conditions in the locality For specific land that has been decided by a competent authority, the land price in the land price list is used to build the land price adjustment coefficient.
The land price adjustment coefficient specified at Point b, Clause 2, Article 18 of Decree No. 44/2014/ND-CP is established for each type of land and land location according to the project; in case the area has many land acquisition projects at the same time and has similar characteristics in terms of natural, socio-economic conditions, technical and social infrastructure, land price adjustment coefficient is built for each type of land, land location by region.
4. Value of the target land plot is determined using the formula below:
Value of the target land plot = Average net income in a year/Average saving deposit interest rate in a year.
Thus, the order of land pricing according to the method of price adjustment coefficient is carried out in 04 steps as follows:
- Step 1: Survey, collect information
- Step 2: Determine the common land price in the market for each land location
- Step 3: Determine the land price adjustment coefficient
- Step 4: Value of the target land plot is determined using the formula below:
Value of the target land plot = Average net income in a year/Average saving deposit interest rate in a year
LawNet
