Vietnamese Residents Forced to Sell Properties Due to High Urbanization Costs

HO CHI MINH CITY LAND PRICE ADJUSTMENTS TRIGGER FINANCIAL STRAIN FOR RESIDENTS SEEKING LAND USE CONVERSION

HOMEOWNER FORCED TO SELL DUE TO SOARING CONVERSION COSTS
In 2018, Ms. Hanh purchased a house in Binh Loi Commune (former Binh Chanh District) via a notarized private contract for approximately VND 850 million. She planned to convert the land to residential use once her finances allowed. However, in August 2024, upon hearing news of adjusted land price tables, she contacted the previous owner to formalize the ownership paperwork. Though the dossier was completed by October 2024, the required payment surged to nearly VND 2 billion—far beyond her financial capacity.

"I had no choice but to list the house for sale, but because it only has a private contract and the conversion costs are too high, buyers aren’t interested," she said.

Ms. Hanh is not alone. Many residents are now selling properties at low prices because they cannot afford the financial obligations tied to land use conversions.

RESIDENTS FACE EXORBITANT FEES AMID LAND PRICE HIKE
Mr. Le Van Quyet, a resident of Long Binh Ward, owns a 210 m² plot eligible for residential conversion but previously entangled in planning restrictions. Once the restrictions were lifted, he was shocked to learn that the land use fee exceeded VND 5.7 billion—a sum he cannot afford.

Under the current land price table, residential land in deep alleys along Nguyen Xien Street is valued at VND 28 million per m², while agricultural land sits at just VND 600,000 per m²—a difference of over VND 27 million per m². This disparity has driven conversion costs up more than tenfold compared to previous rates, when residential land in the area was priced at only VND 2.7 million per m².

Similarly, Mr. Nguyen Van Minh, an investor holding over 2,000 m² of land in Ba Diem Commune purchased in 2020 for VND 10 billion, intended to convert it to residential use for profitable resale. However, the estimated land use fee now exceeds VND 39 billion, forcing him to sell at the original price—accepting a loss to free up capital.

SHARP INCREASE IN LAND USE FEES FOLLOWING PRICE ADJUSTMENTS
Ho Chi Minh City’s land price adjustments under Decision 79 (effective August 1, 2024) have led to surges in land use and rental fees, with increases ranging from 2.36 to nearly 39 times the 2020 levels. Additionally, land use fees for conversion are no longer calculated via fixed norms but are now based on 100% of the price difference between residential and agricultural land, placing further financial strain on residents and businesses.

PROPOSED REVISIONS TO LAND USE FEE POLICIES
In a draft amendment to Decree 103 on land use and rental fees, the Ministry of Finance has proposed reinstating the previous calculation method—levying fees as a percentage rather than the full price difference. The proposed rates are:
30% for land within the allocation limit
50% for land exceeding the limit

This approach would apply only to conversions of "reserved residential land" (e.g., gardens, ponds within the same plot as a house or adjacent to it but technically separated before 2004) and not to pure agricultural to residential conversions.

EXPERTS WARN OF PERSISTING FINANCIAL BURDENS
Despite the proposed changes, experts argue that the current high land prices will still result in conversion costs multiplying several times over compared to previous periods.

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association , noted that the city still has over 13,000 plots without ownership certificates —about 0.7% of total land plots . Many households and individuals face difficulties due to planning entanglements, unresolved land use conversions, or the need to legalize agricultural land interspersed within stable residential areas. The sharp rise in land prices and volatile conversion costs have exacerbated these challenges.

Residents seeking both land division and conversion to residential use are similarly affected, as the adjusted land prices have surged compared to previous years.

CALLS FOR FAIRER POLICIES AND FINANCIAL RELIEF
According to Mr. Pham Viet Thuan, Director of the Ho Chi Minh City Institute of Resource and Environmental Economics , residents now pay 250–300% more in land use fees for conversions compared to pre adjustment rates. The vast disparity between residential and agricultural land prices has made conversions unaffordable for many, impacting both state budget revenues and the real estate market .

EXPERTS PROPOSE TIERED FEE STRUCTURES AND TRANSITIONAL MECHANISMS
Lawyer Truong Anh Tu, Chairman of TAT Law Firm , emphasized the need to distinguish between genuine residential needs and investment purposes . He argued that rigidly applying a single price standard to all cases would unfairly burden residents, particularly when no supportive guidelines exist for the new fee structure.

"There should be a transparent transitional mechanism in land pricing policies," he said. "Households converting land for stable housing should qualify for exemptions, reductions, or deferred payment schedules. Conversely, those converting land for subdivision or commercial purposes should pay market based fees."

Ms. Vo Nhat Lieu, Director of the Real Estate Project Development Training Institute (PROPIIN) , suggested categorizing land users to apply varying fee levels instead of a one size fits all formula. She proposed:
Exemptions or reductions for genuine residential use to ensure affordability.
Graduated fees (30–100%) for investors and commercial landowners, with transparent calculations to prevent disputes.

DEPUTY PRIME MINISTER URGES BALANCED APPROACH
Deputy Prime Minister Tran Hong Ha recently instructed that land use fees should be equitable and considerate of public financial capacity , avoiding undue hardship in the 2024 Land Law amendments . He stressed the need to differentiate between user groups , particularly first time homebuyers, ensuring fees align with their actual payment abilities and access to housing rights .

Experts also recommend installment plans or deferred payments for land use fees, giving residents time to manage their finances. Such measures would help stabilize the real estate market while ensuring fair state revenue collection .