Raising the "deposit level" for land auctions
Compared to the draft versions, Resolution No. 66.11 has narrowed the scope of regulation, only stipulating deposits to participate in land use right auctions in cases of allocating residential land to individuals and handling violations for land use right auction winners in cases of allocating residential land violating the obligation to pay winning bid money. Thus, Resolution No. 66.11 narrows both the type of land (only applicable to "residential land") and the subjects (only applicable to "individual" subjects participating in the auction).
Resolution No. 66.11 was issued with the aim of tightening auction discipline, especially to overcome the situation of individuals bidding high to win the auction and then abandoning the deposit, with the aim of inflating land prices, causing market manipulation. A prominent regulation is to increase the deposit amount (commonly known as "deposit level") for individuals participating in residential land auctions from 10% to 50% of the starting price (the old regulation was from 10% to 20% of the starting price, according to Article 39 of the Law on Property Auction).
The Resolution does not apply to economic organizations that auction land use rights to allocate land or lease land to implement projects (in this case, the deposit rate from 10% to 20% of the starting price is still applied).
The fact that the maximum "deposit" level is up to 50% will force auction participants to be cautious before submitting dossiers and deposit money to auction land, thereby overcoming the situation of paying high prices and then abandoning deposits for the purpose of inflating land prices or other unhealthy behaviors. However, according to lawyer Nguyen Van Dinh, this new regulation still reveals some problems. Firstly, the regulation of a very broad margin (from 10% to 50% of the starting price) for the "deposit level" will give very broad authority to localities when organizing land auctions, which may cause confusion (not knowing which level to choose). On the other hand, in principle, localities can choose a "deposit level" equal to 10% of the starting price, lower than the maximum level of the old regulation (20% of the starting price), raising questions about the effectiveness of the new regulation.
Second, if the locality chooses a "high stake" (equal to 50% of the starting price), it will inadvertently create barriers for auction participants, reducing the competitiveness of land auctions.
For example, a group of subjects with bad intentions may collude with a land auction organizer to put a large number of residential land plots up for auction at the same time and stipulate a "deposit level" equal to 50% of the starting price, causing people to not have time to mobilize money to deposit in advance, from which this group has the ability to "collect" a large number of land plots and "save" them for sale to make a profit.
Land auction ban for a maximum of 5 years
A new regulation of Resolution No. 66.11 is to supplement sanctions for violations against land use rights auction winners in cases of residential land allocation. Accordingly, competent authorities approving land auction winning results for cases of allocating residential land to individuals will issue decisions prohibiting participation in auctions: From 2 years to 5 years for cases where the auction winner does not pay money; from 6 months to 3 years for cases where the auction winner does not pay enough money.
According to the current regulations of Article 70 of the Law on Auction of Assets, sanctions prohibiting participation in auctions from 06 months to 05 years only apply to businesses that abandon deposits when participating in auctions of land use rights to implement projects or auctions to grant mineral exploitation rights. Resolution No. 66.11 has supplemented sanctions prohibiting auctions for individuals participating in residential land auctions.
This new regulation aims to overcome the "legal gap" in Article 70 of the Law on Auction of Assets, supplementing the new regulation on raising the "stake level" to rectify the phenomenon of individuals winning the auction and then abandoning the deposit. However, the actual effectiveness of this regulation is still a question mark because individuals can completely ask others to stand in their name to participate in the auction (more flexible than in the case of businesses participating in land auctions to implement projects). It should be emphasized that precisely because the assessment of individuals can be "circled" through asking others to stand in their name to participate in the auction, when amending the Law on Auction of Assets in 2024, the drafting agency did not propose sanctions prohibiting individuals. However, after 2 years, this sanction has been included in Resolution No. 66.11.
In the opposite aspect, "tightening" land auctions by raising the deposit amount to a maximum of 50% of the starting price and adding sanctions prohibiting participation in auctions for up to 05 years may create a "technical barrier" to limit the number of auction participants, thereby failing to promote the effectiveness of auctions as a tool to maximize the value of assets that are land use rights.
