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Trang 1Vietnam Government
Portal
Email: thongtinchinhphu@chinhphu.vn Agency: The Office of the Government Time of signing: 23/05/2014 11:22:45 +07:00
On land pricing method; formulation and adjustment of land price lists; Specific land
pricing and land pricing consultancy
-Pursuant to the Land Law dated November 29, 2013;
Pursuant to the Government's Decree No 44/2014/ND-CP dated May 15, 2014 on land pricing;
Pursuant to the Government's Decree No 21/2013/ND-CP dated March 04, 2013 defining the functions, tasks, powers and organizational structure of Ministry of Natural Resources and Environment;
At the proposal of General Director of Vietnam General Department of Land Administration and Director of Legal Department;
Minister of Natural Resources and Environment promulgates a Circular on detailing land pricing method; formulation and adjustment of land price lists; Specific land pricing and land pricing consultancy.
Chapter I GENERAL PROVISIONS Article 1 Scope of regulation
This Circular provides detailed regulations on land pricing methods; formulation andadjustment to land price lists, specific land pricing+ and land pricing consultancy
Article 2 Subject of application
1 Competent authorities functioning in State management on land; agencies involved
in formulation, adjustment, verification of land price frame, land price list and pricing ofspecific land
2 Organizations and individuals engaged in providing land pricing consultancyservices
3 Other relevant organizations and individuals
Trang 2Chapter II LAND PRICING METHODS Article 3 Direct comparison method
Land prices shall be determined by the direct comparison method with procedures andcontents as follows:
1 Surveying and collecting information
a) Carrying out a field survey to collect information about the to-be evaluated landlots
b) Surveying and collect information about at least 03 land lots with similarcharacteristics with the to-be evaluated land plot in terms of use purposes, location,profitability, technical and social infrastructure, area, dimensions, shape, and legality of landuse right (hereinafter referred to as comparable land plots) that have been transferred in themarket and won at land auction up to the time of land pricing Collected information shallinclude:
- Land prices;
- Use purposes, its locations, areas, dimensions, shapes, technical and socialinfrastructure, legality of land use right, transfer time, winning auction for land use right, andother information that affect the land price
c) Information about prices of comparable land plots are collected from:
- Prices of land won at land use right auction;
- Market land prices in the database on land;
- Successful land transaction prices on real estate transactions;
-Successful land transaction prices in the market provided by the transferors ortransferees through direct interviews
A successful transaction is a transaction in which the transferee made payment to thetransferor as agreement and received the right to use land
d) During the information collection and survey of land prices, information aboutwinning prices at land use right auction, land prices of successful transactions on real estatetransaction, market land prices in the land database, and information closest to the time ofpricing and areas of land pricing shall be given priority to choose If information in the area isnot sufficient, information shall be obtained from adjacent areas with similar naturalconditions, socio-economic conditions, technical and social infrastructure with the to-beevaluated land plot
During the survey and information collection, the land lots of which the use purposeswill be changed according to annual land use plan of the district approved by a competentauthority, and the land lots that are not eligible for transferring according to regulations ofLand Law shall not be investigated
2 Analysis, comparison, and adjustment of prices due to differences betweencomparable land plots and to-be evaluated land plot
a) Carrying out analysis and comparison to determine the similarities and differencesbetween comparable land plots and to-be evaluated land plot
Trang 3b) Adjusting the price according to the differences between comparable land plots andthe target land plot.
The price of the comparable land plot shall be adjusted to absolute value or apercentage (%) according to the differences between the comparable land plots and the to-beevaluated land plot
The adjustment of prices of the comparable land plot shall be implemented basing onthe to-be evaluated land plot; the price shall be adjusted to absolute value first, then adjusted
to percentage (%); if the factor’s comparable land plot is inferior to the to-be evaluated landplot, the price of the comparable land plot shall be increased (plus); if the factors ofcomparable land plot is superior to the to-be evaluated land plot, the price of the comparableland plot shall be decreased (minus)
3 Estimated price of the to-be evaluated land plot
The estimated price of the to-be evaluated land plot shall be determined by adjustingthe price of each comparable land plot according to differences between the comparable landplots and to-be evaluated land plot using the formula below:
Estimated price of to-be
evaluated land plot
according to each
comparable land plot
=
Price of eachcomparableland plot
Price adjustment due todifferences between thecomparative land plot andthe to-be evaluated landplot
If market land prices fluctuate during the period from the transfer time, winningauction for land use right of comparable land plot to the land pricing date, prices ofcomparable land plots must be adjusted to volatility index of market land announced byDepartment of Natural Resources and Environment If Department of Natural Resources andEnvironment has not announced the volatility index of market land price for each land typecalculated based on common price in the market collected over time or statistics given by astatistics office (if any)
4 Determination of price of the to-be evaluated land plot
The price of the to-be evaluated land plot is determined by arithmetic mean ofestimated prices of the to-be evaluated land plot calculated in Clause 3 of this Article; theprice of the to-be evaluated land plot must not differs by more than 10% from the estimatedprices
Examples of the application of direct comparison method to determine land price areprovided in Appendix 01 enclosed herewith
Article 4 Substraction method
Land prices shall be determined using the extraction method as follows:
1 Surveying and collecting information
a) Carrying out a field survey to collect information about the to-be evaluated landplot with land-attached assets (hereinafter referred to as real estate)
b) Surveying and collecting information about at least 03 pieces of real estate withsimilar characteristics as the to-be evaluated land plot in terms of use puposes, location,profitability, technical and social infrastructure, area, dimensions, shape, and legality of landuse right (hereinafter refered to as comparable real estate) that have been transferred in themarket or won at auction for land use right within 02 years from pricing time Collected
Trang 4information shall include:
- Land prices;
- Land use purposes, locations, areas, dimensions shapes, technical and socialinfrastructure, legality of land use right, transfer time, and other information that affect theland price;
- Information about land-attached assets
c) Information sources are provided in Point c Clause 1 Article 3 of this Circular.d) During the survey, the surveyors shall follow the instructions in Point d Clause 1Article 3 of this Circular
2 Determination of current value of land –attracted assets of comparable real estateCurrent value of land –attracted assets of comparable real estate is determined asfollows:
Current value of land –
attracted assets of
comparable real estate
= New construction valueat the land pricing time - DepreciationWhere:
- New construction value at the land pricing time is replacement cost for investingconstruction of new property with equivalent specifications or the costs of renovation of theland-attracted assets New construction value includes direct costs, indirect costs, reasonableprofit for the investor, taxes and fees payable as prescribed by law
- Depreciation of land-attracted assets include tangible depreciation and intangibledepreciation (including physical depreciation over the operation process; depreciation due tofunctionally obsolete, changes to the planning, economic recession, or external impacts)
New construction value and depreciation of land-attracted assets shall be calculated inaccordance with law If no regulations or instructions on calculation of new constructionvalue and depreciation are available, the calculation shall rely on information collected fromthe market
3 Estimated land price of comparable real estate
Land value of comparable real estate is calculated as follows:
- Current value of land-attractedassets of comparable real estate Land price of comparable real estate is estimated as follows:
4 Determination of land price of the to-be evaluated real estate
Land prices of the to-be evaluated real estate is calculated in accordance with Clauses
2, 3, and 4 of Article 3 of this Circular
Examples of the application of extraction method to land pricing are provided inAppendix 02 enclosed herewith
Trang 5Article 5 Income-based method
Procedure and content of land pricing with income based method will be carried out
as follows:
1 Surveying and collecting information about the to-be evaluated land plot
a) For non-agricultural land, average annual income of the to-be evaluated land plot isthe average amount earned from manufacturing, business, or lease over 05 consecutive years
up to the pricing time
b) For agricultural land, average annual income of a the to-be evaluated plot isdetermined as follows:
- Average annual income of land for annual trees, aquaculture, or salt production isthe average amount earned from such activities over 03 consecutive years up to the pricingtime;
- Average annual income of land for long-term trees or production forests is based onannual revenue, periodic revenue, or lump sum revenue
c) If it is impossible to determine income of the to-be evaluated land plot, informationabout average income of at least 03 similar land lots in terms of intended use, locations,profitability, technical and social infrastructure, areas, dimensions, shapes, and legitimacy ofland use right shall be collected, or information collected from the market shall be used
2 Investigating and collecting information about the operating cost of the target land plot to
be priced
a) Annual average cost is calculated taking into account tax in connection with land use;investment in land improvement; cost for maintenance of construction works attached to theland and production expenses
b) Costs mentioned in Point a, this Clause shall be calculated according to the limits and unitprices imposed by competent authorities If no limit or unit prices imposed by competentauthorities are available, information about average income of at least 03 similar land lots interms of intended use, locations, profitability, technical and social infrastructure, areas,dimensions, shapes, and legitimacy of land use right shall be collected, or informationcollected from the market shall be used
3 Average net income on yearly basis shall be calculated using the formula below:
Average net income
Average income
4 Value of the target land plot is determined using the formula below:
Value of the target
Average net income in a yearAverage saving deposit interest rate in a yearAnnual average saving deposit interest rate (r) in 03 consecutive years up to the pricing date
is the highest 12-month interest rate on VND deposit announce by a state-owned commercialbank in the province on the pricing date
With regard to non-agricultural land with limited land use terms, annual average savingdeposit interest rate is calculated as follows:
Interest rate adjusted on term basis = r x (1 + r)
n
(1+r) n - 1
Trang 6Where n is the remaining land use term of the target land plot (expressed in years).
In case the land lot to be priced is invested, constructing assets attached to the land forproduction and business, after determining value of the land lot and attached assets, currentvalue of asset attached to the land lot will be deducted to defined value of the land lot to beevaluated
Current value of property on land shall be determined in accordance with Clause 2 Article 4
of this Circular
5 Land price of the target land plot shall be calculated using the formula below:
Land price of the
Value of the target land plot Area of the target land plotExamples of application of income-based method for land pricing are provided in Appendix
03 enclosed herewith
Article 6 Surplus method
Procedure and content of land pricing with surplus method will be carried out asfollows:
1 Investigating and collecting information about the target land plot; information about landplanning, construction planning, permission to change land use purposes, and regulations onconstruction approved by competent authorities to make the optimal use of land
2 Estimating assumed total development revenue from real estate
Assumed development revenue from real estate is estimated on the basis of collectedinformation about transfer prices, rental, and other factors of income generation of otherprojects with similar characteristics as the planned project in the target area or adjacent area,similar technical and social infrastructure; taking into consideration the tendency andintensity of fluctuation of transfer prices, rental, and other factors
3 Estimating total assumed development cost of real estate
a) Development costs include:
- Construction cost of technical and social infrastructure, housing and other civil worksaccording to the planning approved by State competent authorities; temporary and auxiliaryworks in favor of construction;
- Equipment costs include cost of equipment procurement, cost of technology transfers; costs
of installation, testing, calibration; costs of transport and insurance; taxes and relevant fees;
- Cost for construction investment consultancy including: cost for survey consultancy,preparation of project, design, construction supervision and other consultant costs inconnection therewith;
- Project management costs;
- Operating costs include: costs of advertising, sale, management; profit received by theinvestor with account taken of business risks and capital;
- Contingencies for additional volume of work and price slippage during the projectexecution;
- Other costs defined by law
Total assumed development cost excludes cost of compensation, and resettlement support
Trang 7according to a plan approved by a competent authority.
b) Estimation of total development cost is performed as below:
Total development cost is determined taking into account costs mentioned in Point a, thisClause, the limits and unit prices imposed by competent authorities If no limit or unit priceimposed by competent authorities are available, information of common actual costs ofsimilar projects in the target area or adjacent areas with similar profitability and infrastructureshall be collected
4 Should investment project for real estate development prolongs in many years, manystages, estimation of revenues and costs will be performed on yearly basis and such amountsshould be deducted to the current value at the point of time of land pricing Estimation oftotal development revenue and development cost of the real estate will follow this formula:
Total development revenue =
n
i r
- TRi is the revenue in the ith year of the project
- Ci is the cost in the ith of the project
- r is the discount rate (according to average rate of midterm loan interest rates on the pricingdate of state-owned commercial banks in the same province intended for real estatedevelopment projects)
- n is the number of years of project execution
5 Pricing of target land plot
Value of the target land plot is determined using the formula below:
Value of the target
Totaldevelopmentrevenue
Land price of the target land plot is determined using the formula below:
Land price of the
Value of the target land plot Area of the target land plotExamples of application of surplus methods for land pricing are provided in Appendix 04enclosed herewith
Article 7 Coefficient-based method
Procedure and content of land pricing with coefficient based method will be carriedout as follows:
Trang 8adjacent areas with similar natural conditions, socio-economic conditions, technical andsocial infrastructure as the target area.
During the survey, the surveyors shall follow the instructions in Point d Clause 1 Article 3 ofthis Circular
b) land lotsFor land lot that it is possible to determine incomes, costs from land use,information about income and cost of land use will be collected for at least 03 land plots forland pricing with income based method for each location of land (according to land price list)for the area of land pricing
c) Collecting information about local socio-economic conditions
2 Determination of common land prices at each location
a) Making statistic of market land prices at each location according to the informationcollected as prescribed in Point a and Point b Clause 1 of this Article
b) Common land prices of each location shall be determined in accordance with Clause 3Article 3 of the Government's Decree No 44/2014/NĐ-CP dated May 15, 2014 on regulation
on land pricing (hereinafter referred to as Decree No 44/2014/NĐ-CP) If market land pricesfall within a price range, the common land price shall be the arithmetic mean of the prices atthat location
3 Determination of land price coefficient
The land price coefficient is determined based on common land prices, local socio-economicconditions, and land prices on the land price list
4 Determination of price of target land plot
Value of the target
Land price on the
Land pricecoefficient
Article 8 Selection of land pricing method
Based on information collected and condition of applying land pricing method stated inClause 2, Article 5 under Decree No.44/2014/ND-CP, suitable method for land pricing may
be chosen If necessary, it is possible to apply in combination land pricing methods specified
in Clause 1, 2, 3 and 4, Article 4, Decree No.44/2014/ND-CP for verification, comparisonand determination on land price
Chapter III FORMULATION AND ADJUSTMENT TO LAND PRICE LIST
Section 1: FORMULATION OF LAND PRICE LIST
Article 9 Contents of the land price list
1 Pursuant to the land pricing principles in Article 112 of the Land Law, land pricingmethods in Clauses 1, 2, 3, and 4 Article 4 of Decree No 44/2014/NĐ-CP, the ProvincialPeople’s Committees shall request the People’s Councils of the same level to grant approvalbefore issuing land price lists with regard to the types of land mentioned in Clause 1 Article
11 of Decree No 44/2014/NĐ-CP
Apart from the land price lists mentioned in this Clause, for locality having hi-tech zone, theProvincial People’s Committees shall grant detailed price list for types of land in the hi-techzones
Trang 92 In consideration of the local development, the Provincial People’s Committees shall decideincrease or decrease in prices of the land lots that are superior or inferiors to other land lots inthe same location in terms of dimensions, shapes, profitability, and other factors that affectland prices.
3 In cases where the land planning is adjusted, or land intended uses are changes and newstreets are added to the current land price list that are not mentioned in Clause 1 Article 14 ofDecree No 44/2014/NĐ-CP, the Provincial People’s Committee shall adjust the land prices
on the list and request the Provincial People’s Council to grant approval before issuing it.Services of Natural Resources and Environment shall assist the Provincial People’sCommittees in adjusting land price lists and submitting reports to Ministry of NaturalResources and Environment within 15 days from the adjustment date
4 After a land price list is issued, the land prices on which depend on locations of land, theProvincial People’s Committee shall, if capable, request Department of Natural Resourcesand Environment to determine the a price of every plot of land in the area that has a cadastralmap, and develop a land price database
Article 10 Land price list formulation project preparation
1 A land price list formulation project shall specify: type of land to be surveyed/investigated;number of investigation sheets; number of surveyed communes, wards and towns (hereinafterreferred to as investigation points); human resources, equipment, time, plan, and costestimation for preparing a land price list
2 Procedures for a project of land price list formulation:
a) Collecting information and documents attending to the project preparation including:geographical location, topography, geomorphology, socio-economic situation, managementand use of land that affect the current land price and land price list;
b) Determining the number of surveyed points or point of investigation: the points ofinvestigation must be subject to land price fluctuation; the number of points of investigationmust account for at least 50% of the total number of communes, wards, towns (herein calledcommunal level) of one district, rural district, township, city under provincial control(referred to as district level); the point of investigation must represent the surveyed type ofland, which is evenly distributed over the district;
c) Determining the number of land plots in need of surveying
Number of land lots to be investigated for each kind of land in each point of investigationshall reach at least 50% in total number of land lots of the same kind being transferred on themarket, winning the auction of land use right in a period no more than 02 years from the time
of investigation but no less than 03 land lots
For land lots that it is possible to identify income and costs from land use, number of landlots to be investigated and surveyed for information in favor of land pricing with incomebased method must be at least 03 land lots for each point of investigation
3 Responsibility to plan and approve the project
a) Department of Natural Resources and Environment shall plan the land price listformulation project and submit it to the provincial People’s Committee for approval beforeApril 01 of the year in which the land price list is compiled
Project documents for land price formulation include: the land price list formulation project;submittal for approval for the project; a draft decision to approve the project made by the
Trang 10Provincial People’s Committee.
b) The Provincial People’s Committee shall approve the land price list formulation project byApril 15 of the year in which the land price list is compiled
Article 11 Preparation for land price list formulation
1 Establishing a Steering Committee
The Provincial People’s Committee shall establish a Steering Committee to direct theexecution of the approved land price list formulation project Composition of a SteeringCommittee:
a) Head is a representative of the Provincial People’s Committee leadership;
b) Deputy Head is the Director of Department of Natural Resources and Environment;
c) Members of the Steering Committee are representatives of Department of Finance,Department of Justice, Department of Planning and Investment, Department of Agricultureand Rural development, and Department of Construction; representatives of the People’sCommittees of districts; and representatives of management boards of hi-tech zones andeconomic zones (if any);
The Steering Committee shall assist the Provincial People’s Committee to instruct relevantunits to execute the land price list formulation project
2 The Head shall establish project teams to assist the Steering Committee
3 Department of Natural Resources and Environment shall assist the Steering Committee toexecute the land price list formulation project:
a) Choosing a consultant to conduct market land price investigation;
b) Assisting the Steering Committee in providing training for project teams; guiding projectteams to examine and accept market survey results, the draft land price list, and performingother tasks assigned by the Head
Article 12 Determination of type of communes in price list formulation
1 Determination of type of commune for formulating land price list for agricultural land;rural residential land; rural land for commerce and service; non-agricultural land forproduction and business other than rural land for commerce and service will be performedbased on 3 types of communes: lowland, midland and mountainous; each kind of commune istypically characterized as below:
a) Lowland commune is subject to low land form, relatively flat form and altitude equal tothe sea level; being highly populated; having infrastructure and conditions of goodsproduction and circulation better than midland and mountainous areas
b) Midland commune refers to those having moderate level of topography (lower than themountainous but higher than delta), including mostly hilly areas; with population densitylower than that of the plain, higher than mountainous areas, holding infrastructure and goodsproduction and circulation conditions worse than plain but better than mountainous areas c) Mountainous commune refers to those with land form higher than midland ones, includingmostly areas of high mountains, complex topography; low population density; infrastructureand condition of goods production and circulation poorer than midland areas
Mountainous commune is defined with features stated in this point and guidelines by theCommittee for Ethnic Minority Affairs
Trang 112 Every Provincial People’s Committee shall make a list of lowland, midland andmountainous communes in the province as prescribed in Clause 1 of this Article.
Article 13 Classification of urban areas serving price list formulation
When making the list of prices of commercial and services land in urban areas, agricultural land for production and business other than urban land for commerce and service,land for construction of office buildings, administrative construction, land for public services,and other non-agricultural land in urban areas, urban areas shall be classified as follows:
non-1 Urban areas are classified into cities, towns, and townships that are established andclassified by competent authorities;
2 By law, urban areas are classified into 06 classes including special class, class I, class II,class III, class IV, and class V Unclassified townships shall be classified into class V;
3 The Provincial People’s Committee shall apply suitable land price frame to urban areas inthe province according to the decisions on establishment and classification of urban areasapproved by competent authorities
Article 14 Classification of areas serving price list formulation
When making the list of prices of rural residential land, rural land for commerce and service,non-agricultural land for production and business other than rural land for commerce andservice , land for construction of office buildings, administrative constructions, land forpublic services, and other rural non-agricultural land, the areas shall be classified as follows:
1 Zone 1: the area with highest profitability and most convenient infrastructure;
2 Zone 2 onwards: the areas with lower profitability and less convenient infrastructure thanthe superior zone
Article 15 Classification of land location serving price list formulation
1 With regard to land for paddy fields or other annual crops; land for perennial plants, landfor production forests, land for aquaculture; land for salt production, the determination ofland location in the commune or district depends on the productivity, infrastructure,advantages (applied to annual crops and perennial plants); on infrastructure, advantages,distance from the residential area to the manufacturing area, and distance from themanufacturing area to the concentrated consumption area (applied to land for aquaculture andland for salt production) The locations are classified into:
a) Location 1: the location where the conditions are most convenient;
b) Location 2 onwards: the locations where the conditions are less convenient compared tothe superior location;
2 With regard to rural land for commerce and service, non-agricultural land for productionand business other than rural land for commerce and service, the location of land shall bedetermined by street or street segment, or depend on the technical and social infrastructure,advantages, distance to the downtown The locations are classified as follows:
- Location 1: the location where the conditions are most convenient;
- Location 2 onwards: the locations where the conditions are less convenient compared to thesuperior location
3 With regard to residential land in urban areas, urban land for commerce and service, agricultural land for production and business other than urban land for commerce and service,the location of land shall be determined by street or street segment, or depend on the