Proposal to raise land auction deposit to 50% of starting level

Recently, the Ministry of Justice proposed to increase the maximum deposit when auctioning land use rights from 20% to 50% of the starting price, in order to prevent the situation of taking advantage of the auction to push up the price and then abandon the deposit for profit, distorting the market and affecting the investment environment. This proposal was made in the context of Ho Chi Minh City preparing to auction 3 prime land lots and nearly 3,800 resettlement apartments in Thu Thiem New Urban Area, thus attracting more attention from the business community and investors.

Right at the Thu Thiem New Urban Center, there have been several unsuccessful auctions, because investors paid high prices and then abandoned their deposits, causing significant consequences for the city's investment attraction environment. And with the new proposal from the Ministry of Justice, it is expected that this situation will be limited. For example, a plot of land with a starting price of about 1,000 billion VND, investors must deposit 500 billion VND to participate in the auction.

According to experts, increasing the deposit level will help select investors who are truly interested in preventing investors who just want to compete for price to create waves or short-term speculation. However, this regulation can also create adverse reactions, causing the auction market to narrow down the competition, especially in auctions of projects with large investment values.

Dr. Duong Kim The Nguyen - Dean of the Faculty of Law, School of Economics , Law and State Management, UEH said: "It reduces the number of people who can participate in the auction and only reserves it for the big guys."

In fact, not all auctioned land plots apply the maximum deposit rate of 50%. Because according to the proposal of the Ministry of Justice, this deposit rate will be determined by localities within the lowest fluctuation range of 10%, the highest 50%. Therefore, according to experts, the appropriate deposit rate needs to have specific and clear application criteria.

Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association commented: "The provincial government must distinguish between land with low development potential and land with higher development potential, then decide on an appropriate ratio."

On the other hand, experience in many countries shows that there are no regulations requiring such high deposit levels, instead there are very strong sanctions for cases of deposit abandonment. For example, regulations on the level of compensation for damages after deposit abandonment, or removing the right to continue participating in other auctions from 5 to 10 years later.

"Such sanctions are like a way to supplement the solution of increasing the deposit that needs to be paid in advance too high," said Dr. Duong Kim The Nguyen - Dean of the Faculty of Law, School of Economics, Law and State Management UEH.

Some experts believe that raising the stake, combined with adjusting the starting price to match the current land price level, will help increase binding and ensure that only investors with real needs and capacity participate, thereby reducing the risk of loss and prolonging the project after the auction.

Source: https://vtv.vn/de-xuat-nang-tien-dat-coc-dau-gia-dat-den-50-muc-khoi-diem-100251007141057649.htm