New laws have tightened speculation in real estate?

The Land, Housing, and Real Estate Business Law, which has just been passed, contains many stringent provisions that will gradually address negative issues related to speculation and wastage of land resources, according to experts.

The amended Real Estate Business Law includes additional provisions that prohibit the transfer of land use rights for individuals to self-build residential houses in special urban areas, as well as urban areas of types I, II, and III. This provision is expected to prevent the phenomenon of land parceling and lot selling (one of the causes of virtual land fever and real estate speculation) in most urban areas.

Article 48 of this Law also requires that all real estate transactions be conducted through banks. This action is expected to eliminate the practice of "dual pricing" transactions, serving as the basis for building a data system, promoting a more transparent real estate market, reducing speculation, and preventing price surges.

Furthermore, Article 153 of the Land Law 2024 stipulates an increase in revenue collection from land, including land use fees and land taxes, for real estate projects that are slow to progress or have not been put into use. The new law is expected to have a significant impact on project implementation and to restrict the massive acquisition of land by organizations and individuals, hindering the access to land by other investors with similar or better capacities to carry out projects.

The new law has also tightened the conditions for enterprises to acquire land use rights for commercial residential projects. Specifically, it only allows enterprises to negotiate for land use rights when they already have land reserves and must have at least 1 square meter of new residential land for each project (the current law allows enterprises to negotiate for land use rights, transfer, lease, or contribute capital to land use rights, regardless of land type, as long as it complies with planning and land use plans). This provision helps prevent the situation where enterprises hoard agricultural land and leave it unused or fail to implement projects, or change land use purposes indiscriminately.

In addition, in the explanatory report on the Land Law 2024, the National Assembly's Standing Committee also proposed that the Government promptly propose regulations on higher taxes for individuals using large land areas, owning multiple houses, and engaging in land speculation. This regulation is believed to prevent the accumulation of land by organizations and individuals, preventing the wastage of land resources.

Real estate, apartments, skyscrapers along Hanoi Boulevard and Metro line 1, February 2023. Photo: Quynh Tran

According to experts, the new regulations are gradually addressing negative issues related to speculation and the wastage of land resources that have persisted in recent times.

Mr. Nguyen Manh Ha, Vice Chairman of the Vietnam Real Estate Association, analyzed that the provision prohibiting projects from parceling land and lot selling, and instead requiring developers to construct rough buildings for customers, will focus enterprises on investing in building residential houses and structures on land rather than merely investing in infrastructure and "selling unripe rice".

"In this way, the value of land lots will increase because of the need to pay for construction. This helps save land, limit land speculation and underutilization, and reduce land speculation and price surges," he said.

Meanwhile, Master Nguyen Van Dinh believes that the new law has stipulated that enterprises engaging in commercial and service land use must pay annual rent for land use rights without the right to transfer land use rights, but only the right to sell or lease assets attached to land. This forces users to implement projects and make land profitable. This regulation limits the situation where enterprises hoard land for speculation without implementing projects. According to him, the Land Law 2024 requires land for commercial residential projects, which will limit the phenomenon of enterprises seizing land without any actual project development. Only enterprises with genuine capacities will have access to land reserves, creating a systematic, professional, and transparent real estate supply and addressing the issue of land resource wastage.

In the same vein, Ms. Tran Thi Cam Tu, CEO of EximRS Real Estate Company, believes that the provision requiring a minimum of 1 square meter of land for residential projects will screen investors, preventing land hoarding and land speculation without project implementation. This also helps the state budget exploit the price difference resulting from the change of land use purposes or land auctions.

However, Ms. Tu also believes that this will pose challenges for enterprises without existing land reserves. Therefore, it is essential for the authorities to create conditions for providing clean land reserves for auctioning and project implementation. Having clean land reserves will shorten the investment period for enterprises. The state also needs to support reducing administrative procedures and processes to develop suitable land reserves and technical infrastructure to attract and encourage enterprises to develop projects.

Furthermore, according to a real estate company leader in Ho Chi Minh City, in addition to the current regulations, it is necessary to expedite property taxation for individuals owning multiple properties to limit land speculation. According to him, this tax should not target low-income individuals but only apply to those who engage in land speculation and accumulate multiple properties. Therefore, this property tax imposition is justified.

He believes that the tax rate must be carefully studied to ensure that the taxation achieves the goal of limiting land speculation. To achieve this, it is necessary to build comprehensive land data among localities to manage individuals owning multiple land plots in different locations nationwide.