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Impact Of Coefficient K On Ho Chi Minh City Property

The property market in Ho Chi Minh City is said to be booming compared with the property market in the South in particular and in the country in general.

Along with that development, there are thousands of worries about land bubbles, virtual land, the land frozen from the city government. Since the beginning of 2017, the HCMC People’s Committee has issued a new tariff and a change in coefficient K to adjust and control land prices more closely and effectively.

What is the coefficient K?

The coefficient K here is understood as the coefficient of adjustment of land price used to calculate the land use fee of the State in the cases of land allocation, land ownership certificate, land lease or conversion of land use purpose…

Coefficient K will be assessed by the Department of Finance based on geographic location; traffic; area and conditions of economic and social development in each locality. The coefficient K after being determined will be submitted by the Department of Finance to the Provincial People’s Committee for issuance and the opinion of the People’s Council of the same level.

In case the location, traffic, planning elements of a real estate item or a land area differ from the regional average (density, height …), the People’s Committee Provinces and cities shall have the right to adjust the coefficient K higher or lower than the average for calculating land use fees in these cases.

Coefficient K of HCMC in 2017

The land price adjustment coefficient of HCMC in 2017 was issued on April 2, Accordingly, coefficient k in 2017 is unchanged compared to 2016. In which, the coefficient K is divided into three groups depending on the land use purpose and location of the land plot.

K Index for Real Estate HCMC
In 2017 the coefficient K of HCM City has not changed

Group 1 has a coefficient of K of 1.0 applied to family members and individuals who are recognized as residential land use rights or convert land use purposes.

Group 2: The coefficient K divided into 5 areas with 2 different price levels for land renters, tenants .. including:

For land for service business, the coefficient K is 2.0; 1.8; 1.6; 1.4 and 1.2 from region 1 to 5

For leased land for industrial production, workshops … coefficient K is 1.2; 1.1; 1.05; 1.0 and 1.0 from region 1 to region 5.

Group 3: The coefficient K applies to those who are not allocated land by auction with the adjustment coefficient as the group of business landlords, respectively 2.0; 1.8; 1.6; 1.4 and 1.2 from region 1 to 5.

Area 1 is divided into District 1, 3, 4, 5, 10, 11, Tan Binh and Phu Nhuan districts. Area 2: Districts 6, 7, Go Vap, Binh Thanh, Tan Phu; Region 3: Districts 2, 8, 9, 12, Binh Tan, Thu Duc; Region 4: Binh Chanh, Cu Chi, Nha Be and Hoc Mon districts; Region 5: Can Gio District.

You can read more information at Vietnam Real Estate Investment

Coefficient K for the front of Ho Chi Minh City

With the general psychology of the majority of Vietnamese people like the front of the house, the price of housing as well as the coefficient of the land price difference of the front house in general and the area, in particular, is pushed up prices. , out of regulation.

K Index for Real Estate HCMC
The coefficient K for the facade is several times higher than the average

According to the Decision 35 of 2017, the HCMC People’s Committee stipulates that the coefficient K of land price adjustment in comparison with the land price list for separate high-yielding houses such as frontage houses and townhouses is higher common average

Specifically, if the front house is adjacent to a large load of 3m or more, the differential coefficient of land price adjustment calculated as 1.2 times of the land price index and less than 3m shall be equal to 1.0 times of the land price. This coefficient applies to all areas in the whole city.

Accordingly, the facade is not only of high value but also comes with the difference of the mainland price difference. This is also considered as a safeguard measure that Ho Chi Minh City authorities want to focus on building and sustainable developing property.

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