Prime Minister: High land prices cause huge consequences for economic development

On the afternoon of October 22, the National Assembly continued to discuss in groups the three draft Laws on Land, Housing and Real Estate Business (amended). After listening to the delegates’ comments, Prime Minister Le Minh Hung spent more than half an hour talking about the goals and orientation of amending three laws that will have a strong impact on the real estate market in the coming time.

The draft Land Law (amended) proposes to remove regulations on specific land prices and organize consulting organizations to determine land prices. Instead, land prices will be decided by the State. The valuation must ensure 4 principles, including honesty, objectivity, openness, transparency, and suitability for development goals in each period; correct order and procedures for land valuation. The valuation will be based on land data, relevant industries, and harmonize the interests of the State, land users, and investors.

Prime Minister Le Minh Hung said that the above proposal aims to institutionalize Resolution 21 of the Central Committee. According to him, previous Resolution 18 directed land prices to follow the market. However, this regulation forces localities to determine input land prices, based on very high land auction results.

The Prime Minister said that high land prices will also push up the costs of projects, causing house prices to rise, because businesses still have to borrow capital and face lengthy administrative procedures. Therefore, he said the State must regulate and manage land prices to serve development goals.

The head of the Government acknowledged that localities can collect good budget revenue at a certain time, when land prices are high. But this has huge consequences for economic development. “We will never be able to solve and handle the house price problem with priority subjects such as officials, civil servants, workers, pupils, students, and armed forces,” the Prime Minister shared.

He also emphasized the need to shift thinking from home ownership to the State being responsible for arranging accommodation according to the provisions of the Constitution. He further informed that the Land Law (amended) is expected to take effect from 2028 to match the process of completing the land database.

Regarding the Housing Law (amended) project, the Prime Minister said that people’s housing needs are great, but the housing supply suitable for affordability still has many shortcomings. He assessed that the current housing structure is “still biased towards ownership” and housing types are not clearly defined. Therefore, the “not successful, not right” support policy falls into the priority group, which is social housing and rental housing.

To solve this problem, according to the head of the Government, the draft clearly defines 4 housing groups. In particular, commercial housing will follow market regulations. “Those with high income conditions can access the high-end housing segment,” the Prime Minister said.

He affirmed that the State’s goal is to manage rental housing, public housing, and policy housing. “The state does not subsidize housing, but it also does not let the market completely self-regulate. The throughout spirit is, first of all, to let people have a place to live, associated with social security,” the Prime Minister said.

Therefore, the State will focus on prioritizing the development of rental housing. He said that this segment will be a strategic pillar to ensure social security and contribute to curbing the risk of real estate speculation.

The Prime Minister also stated that in recent times, commercial housing prices have increased, exceeding people’s ability to pay. It takes young workers a lot of time to save up to buy a house, so the need for long-term rentals at reasonable prices is huge. Therefore, he requested that there be a policy so that people can rent houses long-term, stably and at reasonable prices.

According to the draft, rental housing prices are not expected to exceed the framework issued by the Provincial People’s Committee. The Prime Minister said the above regulations aim to ensure that policy incentives from the State to support investment in rental housing are conveyed to people.

The draft also proposes that after 5 years social housing can only be resold to the right people who are eligible to enjoy preferential policies on this type of housing. The Prime Minister explained that this is to prevent profiteering, distorting the good goals of the policy, and turning welfare policies into profit-making opportunities. “Ensuring social housing is always within the welfare ecosystem and serving the right people,” he affirmed.