Dealing with Vacant Villas: Difficult or Easy?

 In terms of administrative punishment to unoccupied villas, a taxation expert said that imposing taxes on such villas is only a psychological method because in fact the owners of unoccupied villas did not use legitimate money to buy them. If homebuyers are enterprises or investors, they have had to hire for capital turnover. 

Pham Si Liem, Former Deputy Minister of Construction said that it is no few methods to deal with vacant villas. But importantly we need to define how to be uninhabited homes. Regarding punishment sanctions, it should be based on the real usage purpose because many investors keep buildings rough.    

Mr Liem added that Article 107 of the Law on Land regulates land users have to register the land use right and use in right purpose. Another article relating to environment protection and social order regulates that properties must not damage legal benefits of users as well as surrounding environment. In fact, many villas which have been unoccupied for years have become destination of social evils and crimes. Besides, leaving homes uninhabited also makes the urban scenery charmless and damages the environment. Moreover, the Law on Housing has an article on obligations of the homeowners not to damage legal rights and benefits of others. Accordingly, the owners of vacant villas violate the Law on Housing as they make the urban scenery charmless and create places for social evils. 

 

Representative of the Ministry of Construction’s Department on Housing and Real Estate Management, however, said that it is necessary to put administrative punishment on finish villas which are uninhabited because the housing is under individual ownership and owners have right to live in or not. That the owners leave their villas unoccupied or don’t hire them is impossible to be considered administrative violation.

 

In Vietnam, there has not had any individual property which is imposed tax because of vacancy. As mentioned above, authorized agencies are only possible to fine vacant villas which just have completed rough construction for the reason of affecting urban aesthetic. However, there has not yet had specific stipulation on this matter. To possibly fine such violation cases, it is vital to supplement stipulation on Decree 23/2009 on punishment over construction violations.  

The expert suggests we could prevent the vacancy of villas by taxing on the house instead of on contract’s value. In fact, it is very difficult to know the contract value or purchasing price of each apartment because the clients can set up a contract at low price to escape taxation.

 

Professor PhD. Dang Hung Vo, Former Deputy Minister of Natural Resources and Environment, also agreed that it is impossible to punish administratively vacant houses and villas because these don’t include in the Ordnance on Punishment over Administrative Violations. It is also impossible to tax based on the housing area since we want to tax vacant villas, but vacant land. Besides, many people argue that the lands with villas are not vacant land. Taxing based on the contract’s value is also not logical. Almost all of investors often offer an imaginary price which is much lower than the real purchasing price as they pay tax. Thus, imposing tax based on the imaginary price is not enough strong to deter violators.    

Nguyen Van Duc, Deputy Director of the Dat Lanh Real Estate Company, affirmed taxing on vacant houses and villas is very difficult because the owners will have many ways to dodge the tax. For example, an owner of three vacant villas can hire a person to live in these houses in turns. Moreover, authorized forces are not capable to supervise and check all vacant villas. 

 

To limit the vacancy of houses and villas, it is better to tax the house in general. The tax level should be at 2 per cent – 3 per cent of the house value per year. Currently, Vietnam just imposes the land tax, but the housing tax and the level of land tax also remains low. The land tax level should be raised by 1-3 per cent per the land value per year. In foreign countries, the land and housing taxation is very high, so people don’t dare to leave their houses vacant.

 

The most reasonable method is taxing the housing value. The housing value is counted based on the list built by local authorities, after that multiplying with the housing area. At first, it is possible to apply tax on vacant villas if necessary. But, the long-term method to prevent the vacancy is still the application of tax on the house. It means that people will be imposed both house and land tax. The house without use will be applied higher tax level, at least equaling to half of the renting price. If the tax level is inconsiderable, the vacancy of house will still continue. Obviously, we need to adjust the law article on taxation over non-agriculture land, Mr Vo said.