Vietnam is exploring new tax measures on real estate to combat rising property prices and curb speculative activity, following previous proposals that were delayed due to public opposition. The government’s move comes as concerns grow over the impact of speculation on the housing market, which has led to distorted price trends in certain regions.
Prime Minister Phạm Minh Chính has instructed the Ministry of Finance to draft policies aimed at limiting speculative practices in the real estate sector and enhancing oversight of construction projects. Reports suggest that property prices in some areas have soared beyond the financial reach of local residents, fueled by speculative behavior that manipulates market dynamics.
The Prime Minister has pointed out that developers are exploiting limited property availability, driving prices upward. To address these issues, he has tasked the Ministry of Finance with proposing tax solutions, including potential taxes targeting the difference between land use fees and sale prices.
Additionally, Phạm Minh Chính has urged the State Bank of Vietnam to tighten credit controls for speculators in an effort to prevent the formation of real estate price bubbles. Proposed measures include stricter quality controls on credit, requiring banks to submit detailed reports on real estate loans for improved risk assessment. The Prime Minister also suggested lowering lending caps, increasing equity payment ratios, and raising interest rates for individuals holding multiple properties to curb speculative borrowing.
To further combat price inflation, the Ministry of Public Security has been directed to enforce land auction regulations more rigorously, specifically targeting those responsible for spreading misinformation to artificially inflate prices and deceive the public. A report on these initiatives is expected by April 30.
The surge in land auction prices, particularly in suburban areas, has led to winning bids that far exceed starting prices, negatively affecting the overall health of the real estate market. Many areas are experiencing a mismatch in supply and demand, with an oversupply of high-end properties like shophouses and villas, while affordable housing remains scarce, particularly in major cities like Hà Nội and HCM City.
In late 2024, Vietnamese lawmakers proposed tax policies aimed at individuals who own multiple properties or leave them vacant, as part of an effort to address the persistent rise in housing prices across the country. The Ministry of Construction has recently put forward a proposal to tax individuals with multiple properties as a way to curb speculation. The Ministry of Finance supports this initiative but has called for further study before implementation.
Earlier proposals also included a 0.03% tax on homes valued over VNĐ500 million (US$19,607) in the 2009 draft Law on House and Land Tax. Most recently, public consultation took place on a new Property Tax Law that proposed two thresholds: VNĐ700 million or VNĐ1 billion, with tax rates of 0.3% or 0.4%. However, these proposals have faced mixed reactions, leading to their postponement.
The current tax reform is part of a broader strategy for reforming Vietnam’s tax system by 2030, as approved by the Prime Minister. While the government’s tax reform plan aims to address speculative activities, experts have cautioned against implementing high taxes, raising interest rates, or tightening credit policies without addressing the underlying issues of limited housing supply.
Dr. Lê Xuân Nghĩa, a leading economist, emphasized that without increasing housing supply, such measures could inadvertently drive prices even higher, as buyers are willing to pay inflated prices when supply is scarce. He called for a comprehensive, long-term housing finance strategy focused on social housing development.
Similarly, Dr. Cấn Văn Lực, chief economist at BIDV, urged for prompt action to implement laws that will increase housing supply and address key market issues, such as land valuation and bad debt, in order to ensure the sustainable development of the real estate sector.
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