Looking for property speculators a futile task: analysts

By Ngoc Diem   May 1, 2024 | 03:00 am PT
Looking for property speculators a futile task: analysts
Apartment buildings in Hoang Mai District, Hanoi. Photo by VnExpress/Ngoc Thanh
Hanoi authorities want to identify and punish possible speculators who may have been driving up apartment prices by flouting laws, but analysts call it a futile quest.

Prices have risen for 21 quarters in a row, and the Ministry of Construction has called on the city to find out if there have been any "unusual" price surges and punish people if they have violated the law.

But lawyer Pham Thanh Tuan said this would be an almost impossible task as the Housing Law and Real Estate Business Law do not describe speculation and no one has ever been penalized for it.

Speculation is a complicated scheme that often involves many people and its nature changes all the time, he said.

The head of a property development company with 17 years’ experience in the industry, who asked not be identified, said speculation often happens in the secondary market and is difficult to distinguish from normal market occurrences. "Sellers always set the highest price possible and buyers can either accept or refuse. How can someone be fined for a violation that has yet to be defined?"

Several laws need to be changed to define speculation and what penalties should be slapped, he added.
Pham Duc Toan, CEO of property developer EZ, said prices go up when supply is low, and new projects have not been approved in Hanoi for a long time.

"If prices rise across the board how can the city identify which one rose unusually? The [problem] remains with supply. Whoever has apartments to sell decides the price."

Industry insiders said other countries have different ways to prevent speculation using policies. South Korea, for instance, levies a 50% profit tax on residential property sold within a year of purchase.

Those with three houses have to pay a 12% tax on additional properties. In France, those who do not use a property for business or residence have to pay taxes starting at 12.5%. In Germany, those who sell more than three properties a year for consecutive five years are considered speculators and have to pay a speculation tax and a 3.5% profit tax on the sales.

Tuan said Vietnam should impose a tax on anyone owning a second property and higher taxes on properties sold quickly.

Some industry insiders have proposed a special consumption tax on any businesses that makes a profit of 150% after hiking prices.

Nguyen Van Dinh, chairman of the Vietnam Association of Realtors, said prices are likely to stabilize in the long run when apartment supply increases by thousands of new units, especially in the affordable segment.

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