Legal document newsletter week 19/10/2023
OPINIONS OF SOME EXPERTS ON THE SURPLUS METHOD IN LAND VALUATION
Recently, the Ministry of Natural Resources and Environment has consulted relevant ministries, branches and agencies on amending and supplementing Circular No. 36/2014/TT-BTNMT dated June 30, 2014 on detailed regulations on land valuation methods, construction and adjustment of land price lists, specific land valuation and advice on land price determination to submit to the Government for consideration and promulgation of a Decree amending and supplementing the Decree No. 44/2014/ND-CP dated May 15, 2014 to promptly resolve problems in determining land prices. Among them, there are many different opinions surrounding the current land valuation methods that the drafting agency proposes to amend, especially the elimination of the “surplus” method that is causing the most debate .
Quoting the opinions of a number of experts commenting on no longer applying the surplus method in the revised Draft as follows:
- Economic expert, Dr. Vu Dinh Anh wondered:
“If we abolish the residual method, it will be inaccurate both scientifically and practically. To find the market price of a plot of land, one cannot apply the same methods but must base it on the specific conditions of each type of land, land information data, and purpose. use, about the market, about transactions, about the profitability of land…”, Mr. Nguyen Tien Thoa – Chairman of Vietnam Appraisal Association, shared the same opinion.
- Associate Professor, Dr. Dinh Trong Thinh, an economic expert, said:
“In order for land valuation to be market-economic, it is impossible to abandon the surplus method, because this is the method used to calculate the transformation process, taking income minus costs to calculate the benefits, from there , calculate land value. Thus, this is a method that fluctuates over time, according to planning, and according to real estate development. In many countries around the world, the residual method is also used and considered to be a relatively accurate method because it is related to future income and expenses, reflects the transformation process of real estate and is consistent with the current situation. market economy. Therefore, this method ensures that the land rent difference does not fall into one person’s pocket as it is now.”
- Ms. Do Thi Thu Giang, Director of Consulting Services, Savills Ho Chi Minh City analyzed:
“The residual method has outstanding advantages compared to other methods. Specifically: The comparison method is only suitable for real estate properties with small areas and common similar transactions. However, this method has limitations in terms of data, the transaction information collected has a difference in real transaction value and contract transaction value; Details of the transaction are not fully disclosed. In the case of large real estate, the number of comparable properties is not much, leading to having to make large adjustments, affecting the valuation results .
- Through many comments from experts, the draft has now been reported to Deputy Prime Minister Tran Hong Ha by the Ministry of Natural Resources and Environment. The surplus method has been retained , but there will be many important adjustments compared to the previous draft. current regulations. ” The cases where land valuation is applied using the residual method have been limited ” .