Conditions of application of land pricing methods in Vietnam

Land pricing methods in Vietnam

Pursuant to Article 4 of Decree 44/2014/ND-CP, there are 5 land pricing methods as follows:

(1) Direct comparison method 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).

(2) 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)

(3) The income-based  method is a method used to determine land price by dividing the average annual net income from a land unit by average annual interest rate of 12-month term deposit on the pricing date at a state-owned commercial bank of which the deposit interest rate is highest in that province.

(4) The surplus-based method 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.

(5) The method using land price coefficient (hereinafter referred to as the coefficient method) 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 (hereinafter referred to as provinces)

Conditions of application of land pricing methods in Vietnam (Internet image)

Conditions of application of land pricing methods in Vietnam

The application of the land valuation method must satisfy the conditions specified in Clause 2, Article 5 of Decree 44/2014/ND-CP, including:

- 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 in Decree 44/2014/ND-CP.

Information on application of land pricing methods in Vietnam

- Information on the prices of land sold on the market or sold at auction, the land price on the land database, the price on the real estate exchange, the land price determined by the cost and income of the land plot (hereinafter referred to as the market price) must be objective and accurate.

In case there is not sufficient information about the pricing area, it is allowed to collect information from the nearby area.

- Information preferably used for applying land pricing methods to the land pricing area at the time closest to the time of land pricing is prescribed in point a this Article 

Mai Thanh Loi

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