Resolution No. 18-NQ/TW: New hopes for the market for land

DNHN - General Secretary Nguyen Phu Trong signed and released Resolution No. 18-NQ/TW of the 5th Conference of the Central Committee of the Party, term XIII (Resolution 18) on "Continuing renovation, perfecting institutions and policies, improving the effectiveness and efficiency of land management and use, and creating a driving force for our country to become a high-income developed country" on June 16, 2022.

With its many important new land management rules, Resolution 18 is expected to be a big step forward in making the real estate market a full, open, and efficient place to do business. 

In Decree 18, the government wrote down a lot of important new rules about how to make land more marketable, transparent, and efficient in the future. Here are some of the most important ones:

1. Get rid of the land price bracket and let the market determine the price of the land.

Article 113 of the 2013 Land Law and Decree 96/2019/ND-CP says that every five years, the government sets a price range for each type of land and each area. Based on this, the Provincial People's Committees will make a list of local land prices and send it to the People's Councils at the same level for approval before it is made public. When the price of common land on the market goes up by 20% or more compared to the maximum price or down by 20% or more compared to the minimum price in the land price bracket, the Government and then the Provincial People's Committee will change the price to be fair.

Resolution 18 asked to get rid of the land price bracket and come up with ways to set land prices based on market principles. To tell the agency in charge of setting land prices what it needs to do and how it needs to do it. The Central Government will come up with criteria and rules for inspecting and keeping an eye on localities as they make price lists for land. Land prices are decided, inspected, and kept track of by People's Councils at the provincial level. There is a good way to improve the quality of land valuations, make sure that the Land Price Appraisal Council is independent, that the Land Price Determination Consulting Organization can do its job, and that the valuations are done honestly.

The land price on the list is a very long way from the market price of land, especially in cities that are growing and changing quickly. This is the main reason why the state budget loses money from land use taxes, fees, fines for administrative violations in the land sector, and the value of land use rights when businesses are put on the state stock market business;

So, letting provinces and cities make local land price lists that aren't controlled by the government's price bracket not only brings land prices closer to the market price but also creates a basis for declaring and applying the actual transfer price of land use rights, increasing state budget revenue from land management activities, speeding up the process of legalizing real estate documents and the work of compensation and collection of land acquisition.

2. Land will be given out and leased out mostly through auctions of land use rights and bidding for projects that involve land use. People with a lot of houses, land, speculation, and fallow land will have to pay more taxes.

Resolution 18 also asserts: Continue to implement land allocation and land lease mostly through auctions of land use rights and bidding for projects that use the land; Set specific rules for auctions of land use rights and bidding for projects that use the land; Don't put land use rights up for auction or let people bid on projects that use land. Instead, limit and strictly regulate the cases of land allocation or land lease.

Implement the form of the land lease with annual payment and specify the cases of a one-time payment of land rent, suitable to the nature and purpose of land use, ensuring a stable source of income and preventing losses to the state budget.

Resolution 18 sets out the policy of expanding the subjects and limits for receiving agricultural land use right transfers based on the characteristics and conditions of each region and locality and the changing jobs and occupations in the countryside. Develop the right mechanisms and policies, and organize the return of leased land without investment from agricultural and forestry companies to the locality for management and implementation of land allocation and lease according to regulations and the needs of each locality and region.

Having the right policies to give land to ethnic minorities who don't have enough productive land, as well as effective ways to stop people from selling land after they've been given it; putting in place policies to encourage the growth of the land use right market, especially the market for renting agricultural land; making rules about banks leasing agricultural land.

Resolution 18 also says that the way land is given to religious organizations will be regulated as follows: "The State shall allocate land with a limit and without collecting land use levy for land used for worshipping and offices of religious organizations." By law, religious groups that use the land for other things must pay rent to the State for that land. The terms for giving land to religious groups, renting land, and putting limits on how it can be used are in line with the local land fund.

While reaffirming that there will still be tax breaks, land use fees, and land rents for poor households, ethnic minorities, and families of people who did good work for the revolution; Resolution 18 also makes it clear that people who use a lot of lands, build a lot of houses, speculate on land, use land slowly, use land that isn't being used at all, or use land that isn't being used at all must pay a higher tax rate in areas where production is planned to ensure national food security, protect forests, especially protection forests, special-use forests, etc.; There are specific and timed punishments for people who get land from the government, rent land but don't use it or use it slowly. Organizations, state agencies, and non-business units that use the land for the wrong reasons should be forced to give it back, especially if it is in a good location that makes a lot of money. This will prevent the loss of capital and government assets.

Logically, the removal of the land price bracket and the completion of methods of valuation and auction of land use rights adhere to market principles and are consistent with reality, as well as the principle of higher taxes for speculative activities, owning a lot of lands and abandoned land will cause the price of land use rights to lose the average, levelled rigidly, to become more diverse, flexible and closer to local realities; at the same time, to lose motivation and loopholes for inadequacies, mistakes and profiteering because of exploiting the current two-price land mechanism, to overcome the situation of bordering land price difference between localities in land allocation, land lease, compensation upon land recovery in the locality.

This would help meet legitimate needs, protect the rights, lives, and ways of life of people whose land is taken, speed up site clearance, deal with projects that are behind schedule or don't use land and real estate, and encourage land use that is economical, efficient, and sustainable.

Also, the combination of strictly implementing the policy of land allocation through auction, bidding for projects that use land in the spirit of Resolution 18, and the policy of organizing the recovery and public auction following the law of the area allowed to change the land use purpose other than the approved plan and for cases of violation of the land law in the spirit of Resolution No. 60/2018/QH14 dated June 15, 2018, will create resonances with the position.

So, when equitizing SOEs, it's important to think about two options: either correctly and fully calculate the value of land use rights and implement the equitization plan according to the set process, or don't include the land price in the enterprise value when equitizing, but the State recovers the land to use the land lease mechanism or auction the land use rights after the equitization is done.

By separating the land-related processing process from the equitization process of foreign enterprises, there will be a way to solve the hard problem of figuring out the value of land use rights and advantages that is both practical and highly effective. Foreign businesses that need to be equitized own land in beautiful places in cities and in remote areas where it is hard to figure out what the land is worth on the market. This is to avoid mistakes or self-interest when deciding whether the value of the foreign business is too high or too low. 

3. Increasing social cohesion and protecting people's interests

Resolution 18 reiterates that land acquisition must be carried out under the Constitution and the law, and only after the compensation, support, and resettlement plan has been authorized. In the event of land recovery and resettlement, resettlement plans must be finalized before the land is recovered, so that the people whose land is recovered have a place to live that is equal to or better than the former site.

One of the new points in Resolution 18-NQ/TW is a request to the authorities to quickly supplement and complete regulations on land management and use for national defence and security in conjunction with production and economic construction; on residential and agricultural land in conjunction with trade and services; on land for tourism projects with spiritual elements; on land use regime for construction of aerial works, underground works, and land formed from sea recladding.

In particular, Resolution 18 lets more people and more things get rights to use agricultural land; Making it easy for people who use agricultural land to change the purpose of crop and livestock production. This will improve the efficiency of how agricultural land is used, as planned. Improve how the quality of the soil is managed and stop its degradation and deterioration.

Also, one of the most important parts of Resolution 18 is to emphasize the need to make sure everyone benefits and agrees, and to encourage people to put their own money into land acquisition projects by giving them land use rights. The Resolution calls for: More specific rules about who can take back land, why, and how much they can take back, as well as specific conditions and criteria for the state to take back land for socioeconomic development in the national interest.

Continue to use the self-negotiation system between people and businesses to transfer land use rights for urban projects and commercial housing; To quickly come up with and perfect ways for organizations, households, and individuals with land use rights to work with investors on projects by transferring, leasing, or contributing land use rights.

To define the mechanism of land use right contribution and land adjustment for projects of urban development and improvement and rural residential areas; Details about how to use the land fund effectively next to infrastructure projects, based on master plans, plans for land use, and priority policies for people whose residential land has been recovered and who want to be given land or buy houses on the land. The area of recovered land has been made bigger in line with the law. Make rules about how banks can rent out agricultural land.

The growth of the market for agricultural land use rights, especially the expansion and variety of ways that people with land use rights can contribute capital to building and putting into action projects for acquiring and rehabilitating the land.

Restructuring and resettling the economy at the national and local levels is a huge legal and practical gap that needs to be filled as soon as possible. If this policy is carried out well, it will have a wide range of positive effects on both the macro and micro levels, both right away and in the long run. It will create new jobs and income sources and make sure that the local people keep their land use rights for the long term. It will also remove bottlenecks, increase the potential for exploitation, and turn land use rights into a great resource for economic growth and social investment.

4. Make land management and the real estate market more public, open, and efficient.

Resolution 18 stresses the need for the following: Consolidate the way the state manages land so that it is more streamlined, effective, efficient, synchronized, and unified. This means getting rid of middlemen, encouraging the right kind of decentralization and decentralization, and adding a way to check, monitor, and control power.

National master plans, land use master plans, and master plans for sectors and fields that use land must all be consistent, unified, synchronized, closely linked, and help each other develop. At the national, provincial, and district levels, plans and master plans for land use are made to meet the needs of implementing the strategy for fast and sustainable socio-economic development, ensuring national defence and security, protecting the environment, and adapting to climate change.

Land use planning must show information about each land parcel based on the types of land, how they are zoned, and how they fit into the natural ecosystem. Norms for land use must fit the needs of land use so that there is no waste in allocating, managing, and using the land. Setting clear and tight rules for the approval and distribution of annual land use plans. The government has to make sure that there are enough resources for making land use plans and master plans for sectors and fields that use land.

Land needs to be fully researched, evaluated, surveyed, inventoried, measured, and accounted for in the economy. It also needs to be planned for effective and rational use with a long-term view, balancing the needs of different generations, regions, and regions, as well as the needs of socio-economic development, national defence and security, education, culture, sports, protecting the environment and adapting to climate change, and ensuring food security for the whole country.

Add to and finish regulations to make sure that land management is open and public. For example, build a real estate market information system that includes land information. Build a centralized, unified, synchronous, multi-purpose, and interconnected digital database and national information system on land; Make sure there is publicity, transparency, and a specific way to deal with people who break the rules about land allocation and land lease, especially when it comes to auctioning land use rights and bidding on projects that use land. 

To speed up commercialization and develop the market for land use rights, especially the market for agricultural land lease; Make land prices public, require all transactions to take place on trading floors, and pay with banks instead of cash; Strictly control, stop land speculation, and make sure the real estate market grows in a healthy, safe, and sustainable way; Land that isn't being used well, land that isn't being used at all, pollution, land that is getting worse, and problems with land management and use that have been left over from the past... 

Resolution 18 is expected to have a lot of good effects, but the most important one is that it has set a firm foundation for narrowing the price gap, moving slowly toward a market price regime and a system for distributing land resources based on market principles, making the real estate market more marketable, transparent, and efficient, and protecting people's rights during and after land acquisition, as well as building more consensus and unity.

Resolution 18 also made it easier for land use rights to be gathered and concentrated in the hands of people who can use them more effectively based on more market-based principles.

Dr Nguyen Minh Phong