The end of "two-price" real estate?

Root

Nearly 5 months ago, Mr. Le Van Tuan's family in Gia Loc town was looking to buy a house to move to Hai Duong city to live. Through many relationships, he learned that a 2-storey house on Quyet Thang street (Hai Duong city) was being sold for 2.1 billion VND. Because the house was old, this price was mainly the selling price of a plot of land with a total area of ​​68 m2. If this price was agreed upon by Mr. Tuan and the homeowner to be recorded in the notarized sale and purchase contract, according to current regulations, the homeowner must pay personal income tax of 42 million VND, and Mr. Tuan will have to pay a registration fee of 10.5 million VND.

However, based on the land price list for the period 2020-2024 and the land price adjustment coefficient in 2024 in Hai Duong province, the above land plot is only worth more than 1.3 billion VND. “If the landowner and my family agree to use this price to make notarized documents, the personal income tax that the landowner has to pay is only about 26 million VND, I only have to pay 6.5 million VND in registration fees. Both the landowner and I will save nearly half. However, for some personal reasons, I did not buy that land plot,” said Mr. Tuan.

This is the root cause of the “two-price real estate” disease that has been occurring for many years, not only in Hai Duong but also in many other localities across the country. Hai Duong Newspaper reported on this issue more than 2 years ago. It pointed out the huge difference between the market price and the price regulated by the land price list. Many people, in order to minimize costs in real estate transactions, bought and sold at one price and notarized contracts at another price.

The 2024 Land Law has completely eliminated the land price framework. Simply put, it means that there will no longer be a minimum and maximum land price for each type of land in each region. Instead, provinces and cities will base on principles and valuation methods to build land price lists. One of them is the market principle. When the land price list is built close to the market price, the difference between these two types of prices will be significantly narrowed. This means that the situation of declaring two prices will gradually be limited.

According to the 2024 Land Law, the land price list will be submitted by the provincial People's Committee to the People's Council at the same level for decision to announce and apply from January 1, 2026. However, recently, the People's Committee of Hai Duong province has proactively met many times to discuss the development of a land price list based on market principles, as a basis for early submission to the Provincial People's Council for approval at the nearest session.

In the draft new land price list, all adjustment coefficients will no longer be effective. Instead, real estate in each area, route, location, etc. will be determined with specific prices. For example (expected) with urban land, real estate in the residential area of ​​Nhi Chau ward (Hai Duong city) if located on a road with a width (including road surface, sidewalk, median strip if any) of 27 m or more at location 1 will cost 26.4 million VND/m2, location 2 is 12 million VND/m2, location 3 is 3.8 million VND/m2. Or in Pham Ngu Lao ward, real estate on Nguyen Luong Bang street from May Su intersection to Ngo Quyen street at location 1 is priced at 74.4 million VND/m2, the section from Ngo Quyen intersection to Vu Huu street at location 1 is 59.4 million VND/m2...

Close to market price

Clause 2, Article 47 of the 2023 Law on Real Estate Business, which also takes effect from August 1, stipulates that "real estate business organizations and individuals must record the correct actual transaction price in the contract; they are responsible for recording a transaction price in the contract that is not correct with the actual transaction price".

In addition, according to Clause 2, Article 48 of this Law, “project investors, real estate businesses, and real estate service businesses receive payments under real estate business contracts and real estate service business contracts from customers through accounts opened at domestic credit institutions or foreign bank branches legally operating in Vietnam”. Payment data via accounts will help increase publicity and transparency in real estate transactions between businesses and individuals.

Removing the land price framework, applying a land price list built according to market principles, and making payments in real estate transactions through banks are regulations that are expected to help tighten the situation of dual-priced real estate. However, there are still some concerns.

Ms. Pham Anh Nguyet in Hai Duong City, a real estate broker with a practice certificate, said that the annual land price list is a great effort by relevant agencies in the province to significantly reduce land prices "on paper" and in reality. "However, the land price list is built this year to be applied next year. That is, it is built from the present to be applied in the future. Therefore, it is inevitable that the land price list will have a certain delay compared to the market. If the difference is not too high, that is, close to the market price, then the situation of real estate with two prices and vice versa can be basically controlled."

In fact, the situation of declaring two prices does not only appear in businesses and individuals, but also between individuals. At this time, there will be a notarized contract declaring a virtual price and a contract agreeing to declare a real price. In this case, if a legal dispute arises, only the notarized contract is valid, the agreement contract is invalid. At that time, it is very difficult for the seller to reclaim the difference. Moreover, if the declaration is incorrect and there are signs of tax evasion, it will be handled according to the law.

“With the house on Luong The Vinh Street that was sold more than 2 months ago, my family definitely requested the buyer to declare close to the market price. Although we know that doing so will result in higher tax payments, it will avoid the risk of the tax authority returning the documents if they suspect dishonest declaration. In addition, my family also does not have to worry about future legal disputes,” said Ms. Nguyen Thi Ha in Hai Tan Ward (Hai Duong City).

To block two prices, first of all, it must be from the perspective and consciousness of real estate buyers and sellers.