Housing

Hai Duong will abolish Instruction 3224 on land price calculation by surplus method.

PV • March 22, 2024 10:44

Considering the abolition of Instruction 3224 on land price calculation by the surplus method to implement the new decree of the Government is one of the notable contents at the regular meeting of Hai Duong Provincial People's Committee in March (4th time) on the morning of March 22.

3(1).jpg — *Comrade Tran Van Quan, Vice Chairman of the Provincial People's Committee chaired the meeting.*

On the morning of March 22, the People's Committee of Hai Duong province held its regular meeting for March (4th time) to review the reports of the Departments of Natural Resources and Environment, Transport, Construction, Industry and Trade and the Provincial Cooperative Union. Comrade Tran Van Quan, Vice Chairman of the Provincial People's Committee chaired the meeting.

At the meeting, the People's Committee of Hai Duong province considered the proposal of the Department of Natural Resources and Environment on abolishing Instruction 3224/HD-UBND dated November 7, 2022 of the People's Committee of the province on a number of criteria when determining specific land prices by the surplus method in Hai Duong province.

Concluding this content, Comrade Tran Van Quan, Vice Chairman of the Provincial People's Committee basically agreed with the content of the submission of the Department of Natural Resources and Environment. The abolition of Instruction 3224 aims to implement Decree No. 12/2024/ND-CP dated February 5, 2024 of the Government amending and supplementing a number of articles of Decree No. 44/2014/ND-CP dated May 15, 2014 of the Government regulating land prices and Decree No. 10/2023/ND-CP dated April 3, 2023 of the Government amending and supplementing a number of articles of the Decrees guiding the implementation of the Land Law.

1(1).jpg — *Representative of the Department of Natural Resources and Environment presented a proposal to abolish Instruction 3224 of the Provincial People's Committee.*

The Provincial People's Committee assigned the Department of Natural Resources and Environment to preside over and coordinate with relevant departments and branches to advise and submit to the Provincial People's Committee new instructions (specific regulations on construction time, construction progress; advertising and sales costs; management and operation costs; investor profits) based on the provisions of Decree No. 12/2024/ND-CP dated February 5, 2024 of the Government.

While waiting for new instructions, the land valuation consultancy hired by the Department of Natural Resources and Environment is responsible for proposing a land pricing plan. The Department of Natural Resources and Environment will submit the land valuation plan to the Land Valuation Council for consideration and finalization of the land pricing plan to be submitted to the People's Committee of the competent authority for decision. The old land pricing plans decided by the Provincial People's Committee before February 5, 2024 will be applied according to the old calculation plan.

Decree 12 has some new regulations on the investor's profit target (including the cost of equity and the cost of borrowed capital) calculated as a percentage of the construction investment cost (previously calculated as a percentage of the total construction investment cost and the land value).

4(1).jpg — *Comrade Nguyen Van Doan, Director of the Department of Construction, gave his opinion.*

Regarding construction costs, priority is given to the following: Construction estimates have been appraised by specialized construction agencies in accordance with the provisions of the law on construction; construction estimates are based on norms and unit prices issued and announced by competent state agencies and have been appraised by independent consulting agencies; construction investment capital rates are announced by the Ministry of Construction.

Meanwhile, in Instruction 3224/HD-UBND, only the construction investment capital rate announced by the Ministry of Construction is applied and takes into account the costs within or outside the investment capital rate established by the investor and sent to the Department of Construction to preside over and coordinate with departments and branches to advise the Provincial People's Committee to determine specifically.

The regulations on cash flow discount rates are also different. According to Decree 12/2024/ND-CP, the cash flow discount rate is calculated based on the average medium-term lending interest rate (1-3 years) of VND loans at commercial banks in which the State holds more than 50% of the charter capital or total voting shares in the province of the year preceding the end of the most recent quarter with data before the valuation time to implement real estate investment and business projects.

According to Instruction 3224/HD-UBND, the cash flow discount rate is calculated based on the average medium-term lending interest rate at the time of land valuation of the VND loan currency of 4 state-owned commercial banks in Hai Duong province, including: Agribank, Vietcombank, Vietinbank, BIDV...