Concerns over uniform application of K coefficient in land expropriation – VnExpress

At a land valuation seminar on the morning of June 12, experts observed that land pricing policies in Vietnam have undergone many changes in a short period.

According to the 2024 Land Law, the land price framework is developed annually, eliminating the adjustment coefficient (K coefficient), instead of once every five years as before. However, following the issuance of National Assembly Resolution 254, localities must develop a new land price adjustment coefficient and apply it no later than July 1.

Mr. Huynh Hong Duc, Chairman of the Board of Directors of Hong Duc Trading, Service and Consulting JSC, stated that the 2024 Land Law and Resolution 254 have clearly distinguished two land pricing mechanisms: the price framework – K coefficient and specific valuation.

Specifically, the K coefficient is used to calculate taxes, fees, administrative fines, or in certain cases of land allocation and recognition of land use rights for households and individuals. Meanwhile, specific land prices are applied when calculating land allocation fees for commercial projects, changing land use purposes, equitization, or compensation for land expropriation.

Mr. Duc argued that the practical application of the K coefficient has many shortcomings due to its average nature and lag compared to actual market developments. For example, land prices can change rapidly after the announcement of planning or infrastructure investment, but the K coefficient is usually issued periodically, making it difficult to promptly reflect actual fluctuations.

Additionally, applying a common K coefficient to an entire street leads to a uniform approach, ignoring the specific characteristics of real estate such as location, area, and commercial advantage. This results in compensation prices being significantly lower than market prices, giving rise to complaints and lawsuits, and prolonging the site clearance process, Mr. Duc said.

Mr. Huynh Hong Duc, Chairman of the Board of Directors of Hong Duc Trading, Service and Consulting JSC, speaking at the seminar on the morning of June 12. Photo: Markettimes

Mr. Duc added that for urban development, industrial park, or coastal projects, the K coefficient also has many limitations. This method cannot calculate the added value formed after planning is approved, or when infrastructure or land use functions change.

In particular, areas covering hundreds of hectares or agricultural land converted for other uses can be heavily affected. This is because a large-scale land plot with synchronized infrastructure investment will have exponentially superior value. Valuation based on the K coefficient could be much lower than reality as it does not include variables regarding infrastructure development and marketing costs, causing a loss of state budget revenue.

Not to mention, for specialized projects such as international financial centers, coastal cities, or areas with no similar transactions on the market, developing a K coefficient has almost no reliable database, according to Mr. Duc.

Real estate in western Hanoi. Photo: The Bang

At the seminar, Mr. Nguyen The Phuong, Vice Chairman of the Vietnam Valuation Association, stated that as of early June, about 11 localities (Hanoi, Bac Ninh, Hung Yen, Thai Nguyen, Lam Dong, Dong Nai, etc.) had issued land price coefficients applicable until December 31, 2026.

Except for Dong Nai, he noted that the remaining provinces and cities all set the land price adjustment coefficient at 1. This does not ensure market principles because the prices in the current land price framework are still far below actual transaction levels, especially for agricultural land along roads or in urbanized areas, he said.

Ms. Duong Thi My Lang, Chairwoman of the Board of Directors of Da Nang Valuation and Financial Services JSC, observed that localities only have about half a year to develop adjustment coefficients for all streets and land types in their areas. Meanwhile, the process of hiring consultants, preparing estimates, organizing bidding, and implementation usually takes a minimum of 45 days.

With such a tight timeframe, it is very difficult for the K coefficient, once issued, to meet requirements and align with reality, Ms. Lang said. She also proposed a solution to add cases where the market fluctuation adjustment coefficient cannot be determined to the list of exemptions from the land price framework and K coefficient. Instead, these cases must be subject to land valuation using the income or surplus methods under the 2024 Land Law.

Mr. Nguyen The Phuong also recommended applying a market fluctuation coefficient of less than or equal to 1 for land prices in industrial parks, export processing zones, high-tech zones, free trade zones, and land used for educational and medical purposes. This is because increasing land prices in these cases creates difficulties for local economic development, driving up investment, production, and business costs.

Another obstacle in land valuation, according to experts, is the lack of transparent data and unclear protection mechanisms. Mr. Nguyen Tien Thoa, Chairman of the Vietnam Valuation Association, recommended that authorities need to complete the digital cadastral map and build a centralized, unified land price database nationwide.

He also proposed studying the piloting of a sandbox mechanism in real estate valuation, allowing the application of big data and automated valuation tools in Hanoi, Ho Chi Minh City, Da Nang, Hai Phong, Khanh Hoa, etc. The pilot could include a database of actual transaction prices, digital land price maps, verified automated valuation, and parallel appraisal by multiple independent organizations. This mechanism would publicize the reference price margin by area, type, and location.

Only when data is transparent, mechanisms are clear, and closely reflect the market can land valuation effectively support state management and real estate development, he said.