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Abandoned villas may face new tax

Update: August, 30/2012 - 10:13

HA NOI — Authorities in Ha Noi have proposed a new tax to be imposed on vacant villas in the city in an effort to curb land waste and speculation.

Owners of villas that have been abandoned for more than three months will have to pay 5 per cent of their market value, and 10 per cent for those abandoned for over a year.

Investors or owners of vacant villas will also be fined from VND10-20 million (US$480-960).

The Ministry of Finance will be in charge of re-examining and collecting fines.

Statistics from the municipal Department of Construction showed that as of June, the city had 655 villas and 574 semi-detached houses that were unused, despite having been completed.

In Van Phu, My Dinh and Quang Minh urban areas, many villas have been left vacant, covered by wild grass and creepers.

Tens of villas in the Co Nhue-Xuan Dinh area in Tu Liem District are in the same condition. Most are undecorated and unfurnished, and some have become dumping sites or places for street vendors to set up shop.

Many of the villas are over a hundred square metres in area, and on sale for around VND10-30 billion ($480,000-1.44 million).

Tran Minh Hieu, owner of a 180-square-metre villa in My Dinh 2 Urban Area in Tu Liem District, said the proposed tax levels were too high and would cause difficulties for investors, especially given the state of the real estate market.

Hieu owns a villa worth VND25 billion ($1.2 million), and would have to pay VND1.25 billion ($60,000) if it is left vacant.

He said he was trying to sell the villa, but had received little interest from buyers.

"I will do something to avoid this tax, but I can't move in there because my job, my relatives and my children's schools are all here in the centre of town," he said.

Dang Hung Vo, former deputy minister of Natural Resources and Environment and a senior consultant at the ministry, told Viet Nam News that there were three reasons for abandoned villas.

Firstly, developers were waiting for property prices to go up. Secondly, speculation. And thirdly, people had invested in property as a means of depositing spare money.

He said the proposal was a good idea, but added that authorities needed to carefully consider the level of taxes.

"The key purpose of this solution is to force the owners of these villas to use them. The tax should be imposed annually and gradually increased each year," he said.

For example, the first year could be 25 per cent and increase to 50 and 75 per cent of the property value for the next two years, he said.

For investors who were having trouble selling their properties, Vo suggested that they should let them out. This would reduce the high demand for accommodation in the city and help them to avoid the new tax. — VNS

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