Tighten land auction discipline

In Hanoi, a suburban land plot was once offered for up to 30 billion VND, 12,000 times higher than the starting price. In Ho Chi Minh City, a plot of land of more than 1 hectare in Thu Thiem was once pushed up to more than 1 billion USD, equivalent to 2.4 billion VND/m², then the deposit was waived and the results were canceled. Although the cases have been handled, the situation of paying high prices and then waiving the deposit still occurs, even showing signs of collusion, price suppression and market manipulation. Land auctions - which are expected to be an effective resource allocation tool - are being exploited for profit. Faced with this situation, the Ministry of Justice proposed two solutions. Increase the deposit from 20% to a maximum of 50% of the starting price. If the deposit is waived, the buyer must compensate for all damages and be banned from participating in the auction from 6 months to 5 years.

The proposal to raise the deposit level to help prevent the exploitation of the low deposit mechanism for profiteering, causing virtual prices, received public approval. However, opinions also said that it is necessary to choose a suitable deposit level. Because if the deposit level is too high, it will reduce competitiveness and make it difficult for investors.

Mr. Pham Duc Toan - General Director of EZ Real Estate JSC said: "We have to handle that from the root, not set the initial price, must approach the market price that investors are aiming for. That will solve many problems. We can deposit 20% but the amount increases a lot, even 50%".

Regarding the proposal to compel full compensation for losses when abandoning a deposit, it is considered to have a high deterrent effect. Especially in large-scale auctions where the cost of organization is very large. This will make investors more serious and responsible, avoiding considering auctions as a game of chance. However, it is necessary to add regulations to prove the financial capacity of participants and publicize the identity of those who abandon a deposit to ensure transparency.

Lawyer Pham Thanh Tuan - Hanoi Bar Association commented: "The starting price must be truly appropriate and have synchronous tools and measures. For example, we consider applying tax rates to people using many houses and lands or progressive taxes in the case of real estate transfers or regulations on transparency of real estate information or regulations related to declaration of real estate-related information. In our opinion, these are tools that, when used synchronously, will create efficiency in land auctions in the coming time."

Lawyer Nguyen Thanh Ha - Chairman of SBLAW Law Firm commented: "For example, if you win the auction for land use rights in area A, within a year or 6 months you transfer the land to someone else to make a profit, then you can use a high transfer tax tool. Or a tool when the person who wins the land auction already has the right to use the land but does not use it, then you can impose a high tax."

Completing the legal framework, tightening regulations and increasing sanctions, while controlling financial capacity and transparency of information of participants are prerequisites to bring land auctions back on track - where the interests of the State, investors and people are guaranteed to be in harmony. Along with tightening land auctions, in the real estate market in recent times, the Government and competent agencies have proposed many solutions to stabilize the market such as controlling capital flows and inspecting and handling slow-progressing projects.

Source: https://vtv.vn/siet-ky-cuong-dau-gia-dat-100251110144619559.htm