On February 5, 2024, the Government issued Decree 12/2024/ND-CP (“Decree 12”) amending and supplementing a number of articles of Decree 44/2014/ND-CP dated May 15 /2024 on land prices (“Decree 44”). In ATA's opinion, Decree 12 has basically resolved the problems in determining current land prices. In addition, although Decree 12 is a document guiding the implementation of the 2013 Land Law, it is completely consistent with the 2024 Land Law. Accordingly, when the 2024 Land Law takes effect, there will be no difficulties caused by changing the Land Law. change applicable law. The notable contents of Decree 12 are summarized and analyzed by ATA as follows:
I. Supplementing and adjusting some basic issues on land valuation
1. Allow land valuation for the entire land area
Decree 12 adjusts to allow valuation of all land plots belonging to the same land plot in the same project using land instead of only allowing valuation of each individual plot of land in the land plot of a project as stipulated in Decree 44. With this adjustment, real estate project investors will benefit by saving time and effort in carrying out land valuation according to regulations.
2. Addition of the concept of transfer in the market
Decree 44 does not specifically stipulate the connotation of the concept of "market transfer", while this is a basic concept in land valuation, which has led to some fraudulent acts. In order to overcome the above problem, Decree 12 specifically stipulates the definition of when a land use rights transaction is considered to be transferred on the market, as a basis to ensure the determination of land use rights. Land prices are objective and most consistent with market prices.
More specifically, Decree 12 stipulates that transfer on the market is the transfer of land use rights or the transfer of land use rights and housing and other assets attached to land when procedures for taxes, fees, and taxes have been carried out. fees at the tax office or registered at the land registration office or signed a transfer contract between the investor of a real estate or commercial housing project and the customer.
3. Supplement regulations on information sources to apply land valuation methods
Decree 12 specifies and supplements regulations on information used to apply the land price orientation method in the direction that it must be information within a period of no more than 24 months from the time of land valuation. First, priority should be given to using information closest to the time of valuation and collected from reliable sources such as: national land database, price database; Land registration office, unit organizing auction of land use rights, unit/organization of asset auction; tax authorities, agriculture and rural development agencies, etc.
4. Combine the extraction method with the comparison method
The deduction method is applied to value land plots with assets attached to the land. Accordingly, to ensure that land valuation is not affected by factors on land assets (through which land prices are determined most accurately), Decree 12 combines the deduction method with the deduction method. comparison (the content of the comparison method stipulates that the value of assets on land is excluded).
5. Regulate the order and content of land price determination according to land valuation methods right in the Decree
The order and content of determining land prices according to the land valuation methods of Decree 44 are guided in Circular 36/2014/TT-BTNMT dated June 30, 2014 of the Ministry of Natural Resources and Environment (“Circular 36”). Meanwhile, Decree 12 specifically regulates the order and content of determining land prices according to land valuation methods (without having to adjust the regulations of Circular 36). Accordingly, Decree 12 enhances the legal value of the regulations on the order and content of land price determination and ensures the consistency and comprehensiveness of the regulations (instead of detailing the implementation at the moment). Documents under the decree, detailed content of implementation are issued simultaneously and synchronously right in the Decree).
II. Specify the conditions and procedures for applying and implementing land valuation methods
Previously, Decree 44 and Circular 36 only regulated the conditions and order of application and implementation of methods without specifying which cases would be applied which land valuation method. Because calculating using different methods will lead to different results, land valuation according to Decree 44 and Circular 36 creates many practical problems. To overcome the above situation, Decree 12 specifically regulates which specific land valuation methods will be applied.
II. Specify the conditions and procedures for applying and implementing land valuation methods
Previously, Decree 44 and Circular 36 only regulated the conditions and order of application and implementation of methods without specifying which cases would be applied which land valuation method. Because calculating using different methods will lead to different results, land valuation according to Decree 44 and Circular 36 creates many practical problems. To overcome the above situation, Decree 12 specifically regulates which specific land valuation methods will be applied.
1. Comparison method
Decree 12 specifically stipulates that the minimum number of comparable land plots required on the market is 03 land plots (these land plots must have the same land use purpose and certain similarities in factors affecting the price). land transferred on the market, winning an auction of land use rights where the auction winner has fulfilled the financial obligations according to the auction winning decision). Meanwhile, Decree 44 does not specifically stipulate the minimum number of comparable land plots. At the same time, the basis for the winning land price at the auction of land use rights is also more strictly regulated in the direction that it must be the winning land price in which the auction winner has fulfilled their financial obligations; This regulation aims to overcome practical problems when many people win auctions of land use rights but do not fulfill their financial obligations according to regulations.
2. Income method
Decree 12 stipulates that the interest rate on savings deposits as the basis for calculation according to this method must be the average interest rate of commercial banks in which the State holds more than 50% of charter capital or total shares. have voting rights in the provincial area for 03 consecutive years up to the end of the most recent quarter with data before the time of valuation; Instead of just basing it on the annual average of a state-owned commercial bank with the highest savings deposit interest rate in the province. This adjustment ensures stability and fairness in determining land prices, avoiding the effects of economic instability and immediate purchasing power.
Decree 12 clearly stipulates the income method to be applied in cases where the land plot, agricultural land, or non-agricultural land is not residential land but the land plot or land area to be valued does not meet the conditions to apply the method. Comparative method that determines income and expenses from land use according to the legal land use purpose at the time of valuation (Decree 44 stipulates that the only condition to apply this method is that the plot is land, income and expenses from land use can be determined).
3. Surplus method
Basically, this method is regulated by Decree 12 similar to Decree 44. However, Decree 12 determines that the basis for land valuation according to this method is the most effective use of land to ensure land prices are determined at the best level. In that spirit, determining land prices based on the most effective use of land will help the state maximize and optimize revenue sources for the state budget; On the contrary, determining land prices in this direction will contribute to increasing the responsibility of land users (because they have to spend the highest cost to have legal land use rights, they will have to make efforts to in the most efficient use of land). In essence, this regulation contributes to balancing and harmonizing the interests of the state and businesses.
In addition, Decree 12 also clearly defines that this method is applied when the conditions for applying the comparison method or income method are not met but the total development revenue and total development costs of the project can be estimated.
4. Land price adjustment coefficient method
To ensure the objectivity of the land price adjustment coefficient, Decree 12 clearly stipulates that the land price adjustment coefficient is issued on the basis of comparing land prices in the land price list with popular land prices on the market.
In addition to the cases where the land price adjustment coefficient method has been applied as prescribed in Decree 44, such as calculating land use fees when the State recognizes the land use rights of households and individuals for the land area. Living in excess of the limit, using land in case the property buyer continues to lease land from the State for the remaining land use term according to the specific land price, using the land for the right purpose as determined in the project. ; Decree 12 specifically supplements the following cases where the adjustment coefficient method is applied, including:
- Calculate annual land rental payments when the State leases land without auctioning land use rights;
- Calculate the starting price for auctioning land use rights when the State allocates or leases land in cases where the land plot or land area has been invested in technical infrastructure according to detailed construction planning;
- Calculate compensation when the State recovers land for cases of recovery of many adjacent land plots with the same use purpose that do not qualify to apply the comparison method.
Applying the land price adjustment coefficient is an optimal method in cases where the above methods cannot be applied. This is also a quick method, helping to save time in carrying out administrative procedures for businesses. , individual. At the same time, with stricter regulations, the land price adjustment coefficient method can promote many of the conveniences and advantages of this method while still ensuring objectivity and accuracy.
III. Some other related issues
1. Recognize the mechanism of decentralization and decentralization in land valuation
On May 6, 2023, the Government issued Resolution 73/NQ-CP allowing the Provincial People's Committee to authorize the Committee based on legal regulations and actual local situation. District-level people decide specific land prices in some specific cases.
Up to now, in order to ensure the decentralization mechanism, contributing to reducing the workload for higher management agencies and also ensuring the reduction of administrative procedures, shortening implementation time and contributing to supporting businesses. , individually, Decree 12 officially institutionalizes Resolution 73/NQ-CP mentioned above in the direction of stipulating that the Provincial People's Committee is allowed to authorize the District People's Committee to decide specific land prices.
2. Increase responsibility in land valuation
Decree 12 specifically regulates the responsibilities of individuals when participating in land valuation, specifically:
- Decree 44 does not specifically and bindingly stipulate the establishment of a land price appraisal council to determine specific land prices (Decree 44 only stipulates in general that specific land prices are based on aggregate results). , analyzing information about land plots and market land prices without specifying the implementing entity) and in practice, the establishment of land price appraisal councils is carried out by localities on the basis of actual conditions of the land. each locality. The lack of specific regulations has led to many difficulties in implementation. To overcome the above situation, Decree 12 stipulates that to decide the specific land price, it must be based on the results of appraisal of the land price plan of the Specific Land Price Appraisal Council. At the same time, Decree 12 also clearly stipulates the organizational structure, and specific tasks, powers, and responsibilities of the Land Price Appraisal Council and each member of the Land Price Appraisal Council.
- The land price determination unit (including the public service organization/unit with the function of consulting on land price determination or the interdisciplinary working group assigned the task of determining specific land prices) is responsible for the accuracy. , completeness of information to apply land valuation method; on independence, objectivity, and honesty in land price determination consulting activities; Be responsible before the law for the results of consulting on land price determination.
Decree 12 takes effect from February 5, 2024./.
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