According to the provisions of the 2024 Land Law and Decree 71/2024/ND-CP ("Decree 71"), when determining land prices using the surplus method, the competent authority will estimate the total revenue and total costs for each year of the project. From this, the land use right value of the plot to be priced will be determined. Accordingly, the total development revenue of the plot will be estimated based on certain indicators such as sales period, the start time of product and service business, sales rate, occupancy rate, and total development costs. The total development costs of the plot will be estimated based on indicators like construction investment costs, business costs, loan interest, investor's profit considering owner's equity, and business risks.
On September 16, 2024, the Hanoi City People's Committee issued Decision No. 55/2024/QD-UBND, which stipulates several contents under the authority of the City People's Committee regarding the specific determination of land prices in Hanoi City (“Decision 55”). It details the percentage ratios used to estimate revenue and costs of the plot when determining land prices using the surplus method, as follows:
1. Occupancy rate and sales rate used to estimate the total development revenue of the plot:
1.1. Occupancy rate:
a) The occupancy rate for land leases, commercial services, offices, rental apartments, daycare centers, and other service types (including basement parking lots according to the approved plan) is divided by areas, with the highest rates in Hoan Kiem, Hai Ba Trung, Ba Dinh, and Dong Da districts at 90%; other districts range from 83% to 85%; urban areas of Son Tay town and rural districts at 75%; and other communes at 70%.
b) The occupancy rate for industrial and industrial cluster projects: 100%.
1.2. Sales rate:
a) Sales rate for high-rise projects (apartments, offices, commerce):
|
Content |
Floor area below 50,000 m² |
Floor area from 50,000 m² to under 200,000 m² |
Floor area above 200,000 m² |
||||||
|
First year |
Second year |
First year |
Second year |
Third year |
First year |
Second year |
Third year |
Forth year |
|
|
Construction progress |
50% |
50% |
35% |
35% |
30% |
25% |
25% |
25% |
25% |
|
Apartment sales progress |
100% |
0% |
50% |
50% |
0% |
35% |
35% |
30% |
|
|
Office and commercial leasing progress |
Revenue from the 3rd year |
Revenue from the 4th year |
Revenue from the 5th year |
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b) Sales rate for mixed-use and low-rise housing projects:
|
Content |
Land area below 5 ha |
Land area from 5 ha to under 20 ha |
Land area above 20 ha |
||||||
|
First year |
Second year |
First year |
Second year |
Third year |
First year |
Second year |
Third year |
Forth year |
|
|
Construction progress |
50% |
50% |
35% |
35% |
30% |
25% |
25% |
25% |
25% |
|
Progress of selling low-rise houses and apartments |
100% |
50% |
50% |
0% |
35% |
35% |
30% |
||
|
Office and commercial leasing progress |
Revenue from the 3rd year |
Revenue from the 4th year |
Revenue from the 5th year |
||||||
c) Sales rate for industrial and industrial cluster projects:
|
Content |
Land area below 100 ha |
Land area from 100 ha to 300 ha |
Land area above 300 ha |
|||
|
First year |
First year |
Second year |
First year |
Second year |
Third year |
|
|
Construction progress |
100% (construction in the first 6 months) |
50% |
50% |
35% |
35% |
30% |
|
Sales progress |
100% (sales in the last 6 months) |
100% |
50% |
50% |
||
|
Rental progress |
Revenue from the 2nd year |
Revenue from the 3rd year |
Revenue from the 4th year |
|||
2. Percentage rates for determining business costs, loan interest, and investor profit:
a. The percentage to determine business costs is calculated based on the project's pre-tax revenue, including:
- Marketing, advertising, and sales costs: 5%;
- Operation and management costs:
-
- Leasing service-commercial floors, offices, rental apartments, daycare centers, and other commercial service types: 10%;
- Parking service: 5%;
- Hotel business: 45% for 4-star and above hotels, and 35% for 1-3 star hotels;
- Factory leasing: 0%.
b. The percentage to determine loan interest, investor's profit considering owner's equity, and business risks: 14%.
3. Adjustment ratios for land prices based on influencing factors (Article 8 of Decree 71):
- Non-agricultural land adjustment: not more than 15%.
- Agricultural land adjustment: not more than 20%.
Decision 55 takes effect from September 16, 2024.
Comment: