Methods to determine land prices, the formulation and amendment of land price frameworks and land price lists, determining prices for specific types of land, and consultancy on determining land prices are regulated in Government Decree No.44/2014/ND-CP (May 15, 2014).

Methods to determine prices

1. The direct comparison method is applied to determine land prices in cases where comparison is possible with land prices of areas that have been traded in the market or cases where land use rights have been successfully auctioned;

2. The subtraction method is applied to determine land prices of areas with attached assets when there is sufficient data on similar areas, when land has been traded in the market or land use rights have been successfully auctioned;

3. The income method is applied for areas wherein income derived from the land and land use expenses can be determined;

4. The surplus method is applied for areas with development potential as a result of changes in zoning or conversion of purpose, and when total revenue and expenses can be estimated;

5. The land price correction co-efficient method is applied in some specific cases required under the Decree.

Formulation and amendment of land price frameworks

1. The formulation of land price frameworks must be based on principles for fixing land prices, price determination methods, analysis of information on market prices, natural and socio-economic factors and management and use of land.

Land price frameworks are used as the basis for provincial People's Committees (PPC) to compile land price lists. The Ministry of Natural Resources and Environment is responsible for formulating land price frameworks once every five years and submitting them to the Government for promulgation. The Ministry of Finance (MOF) is responsible for evaluating land price frameworks.

2. Amendment of land price frameworks is required if the common market price increases by 20 per cent or more compared with the maximum stipulated price or decreases by 20 per cent or more compared with the minimum stipulated price in the land price framework within a period of 180 days or more.

Formulation and amendment of land price lists

1. Formulation of land price lists must be based on the principles for fixing land prices, price determination methods, land price frameworks, and results of analysing information on market prices, natural and socio-economic factors and management and use of land affecting land prices.

The Provincial Department of Natural Resources and Environment is responsible for formulating land price lists once every five years and submitting them to Provincial People's Committee for promulgation and announcement on January 1 of the first year in a five year cycle.

2. Amendment of land price lists is required when (a) the Government amends the land price frameworks resulting in an increase of land prices by 20 per cent or more compared with the maximum price or a decrease in land prices by 20 per cent or more compared with the minimum price in the land price list of the same land type; or (b) the common market price increases by 20 per cent or more compared with the maximum price or decreases by 20 per cent or more compared with the minimum price in the land price list within a period of 180 days or more.

Specific land prices

PPC decides specific land prices based on the principles for fixing land prices, price determination methods, and results of analyzing information on land areas and market prices. Specific land prices are used in certain circumstances required by the Land Law, and for calculation of the starting price in an auction of land use rights when the State allocates land with collection of land use fees or leases land with a one-off rent payment for entire lease term.

Consultancy on land price determination

Land price consultancy organisations must comply with the land price principles and methods, procedures and content when formulating land price frameworks and land price lists or determining prices for specific types of land; be independent, objective and honest; and perform obligations required by Land Law.

Land price consultancy organizations must have at least three price consultants each with work experience of 36 months or more; a price evaluation card, a certificate for real estate evaluation or certificate for land price evaluation.

This Decree takes effect on July 1 2014, replacing Government Decrees No.188/2004/ND-CP (November 16 2004) and 123/2007/ND-CP ( July 27, 2007). It also repeals Article 1.6 of Decree No. 189/2013/ND-CP (November 20, 2013).

MAI COUNSEL