Localities clamp down on land hoarding and speculation
Localities clamp down on land hoarding and speculation
Authorities in Ha Noi halted processing on all land partition applications of agricultural land or made up of agricultural areas and non-residential land in a move joined by other localities across the country to combat real-estate speculation and hoarding.
The move was announced in a recent memo by the capital city's authority to the Department of Natural Resources and Environment.
Last week, the Vietnam News Agency reported a large number of land partition applications were received by southern Tay Ninh Province's Department of Natural Resources and Environment.
A majority of the applications were for Hoa Thanh and Trang Bang townships as well as border districts such as Ben Cau, Tan Chau and Duong Minh Chau. According to local sources, a hectare of land in the areas is typically purchased at VND2-4 billion (US$87,000-150,000), significantly higher than the market price, by traders and speculators. They later divide the land into smaller lots for resales for VND500-800 million. This practice often allows them to net a profit in the range of 50-70 per cent of original investments.
Rampant hoarding has left the province with a large area of uncultivated agricultural land as farmers no longer have access to them, according to Do Thanh Tam, a local official in Chau Thanh District.
Khanh Hoa's authority also said the central provincial authority was to conduct a large-scale inspection of all land partition applications. The province said it would no longer accept applications for land located outside of established residential areas.
In recent years, real-estate traders have been exploiting a loophole in the country's 2003 and 2013 land laws, which currently do not prohibit the partition of agricultural and non-residential land. It has allowed traders and speculators to buy large patches only to divide them into small lots for sales, which resulted in many unplanned residential areas without the infrastructure in place to meet residents' demands, according to chairman of the HCM City Real Estate Association Le Hoang Chau.
Nguyen Chi Thanh, deputy chairman of the Vietnam Association of Realtors, said in the last few years traders and speculators have been buying land in the outlying districts of large cities in anticipation of future expansion. Thanh said potential investors must keep a cool head and thoroughly study current city expansion plans to avoid scams.
Former minister of natural resources and environment Dang Hung Vo said that originally land partition was allowed to help local residents in rural areas acquire housing construction permits on agricultural land. It was never meant to be exploited by traders and speculators, who typically only care about reselling without any further development of infrastructure. Any economic benefits, therefore, will likely be short-term.
Industry experts have voiced concern over the recent land fever as a result of the pandemic, which has hurt most economic sectors leaving real estate as a perceived-to-be safe haven for wealth. A spike in demand coupled with low supply as most developers were unable to cope with the pandemic has made it a lucrative business for small traders to buy large patches of land and resell them for profit.
Prohibiting land partition, however, is only a short-term solution. For the long-term, localities must step up efforts in urban planning and land management while developers offer well-planned projects to balance supply and demand, according to the experts.
Local authorities, meanwhile, must be held responsible and accountable for the management of land-based resources under their jurisdiction, especially in regard to urban planning.
