1. Determining the Legal Value of Vietnamese Valuation Standards for Real Estate Valuation
Circular 42 clearly defines that the Vietnamese Valuation Standards for real estate valuation must comply with the legal regulations on valuation. It does not apply to cases of land valuation under land law (such as instances where land value determination serves state land price management).
2. Only Applying the Surplus Method in Determining the Value of Real Estate
Circular 145 permitted the use of various land valuation methods (deduction, surplus, comparison, direct capitalization, and discounted cash flow) based on the valuer's choice, with different methods applied to different types of real estate. However, Circular 42 stipulates that all real estate must be valued using a single method – the surplus method.
3. Adjusting Valuation Procedures to Ensure the Most Suitable and Accurate Valuation Results
While Circular 42 does not alter the valuation process outlined in Circular 145, it adjusts and adds requirements to ensure the suitability and authenticity of the valuation process and to achieve more accurate valuation results, such as:
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Collecting information from at least three similar real estate properties;
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Analyzing and assessing the feasibility, completion, and operation of the project according to the committed investment schedule and current real estate regulations;
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Determining the volatility of transfer prices, rental prices, and other factors forming revenue based on market survey results or published data from statistical agencies or real estate market management agencies, ensuring it aligns with real estate market volatility over the years;
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The discount rate is determined based on the average medium-term lending interest rate of VND deposits at commercial banks where the state holds over 50% of charter capital or voting shares, with headquarters or branches in the province where the valuation is conducted, for implementing real estate investment and business projects.
Circular 42 takes effect from August 5, 2024.
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